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Problems faced by NRI’s while investing in India

“A person without correct knowledge of his past or history or origin is like a tree without roots. It can’t grow”

No matter where we come from or how horrific the past was, we mustn’t forget it for the simple reason that it brought us where we stand today. When you think of an NRI, you think about Indians with a good command over English carrying aam ka achaar or pickle in their luggage while travelling through aeroplanes.

That’s the kind of image that bollywood films have set in our minds.

The reason is that we Indians love our country. We might complain about how we’re cheap and how power cuts are still common in our country and how street food has insects drooling over them but at the end of the day, we know how these power cuts have given us so many memories like going for a late night ice cream and how the same unhygienic street food is our first stop when we go out.

So when one of us goes abroad, we miss our motherland. To cater to this need that we have to connect with our homeland, NRI’s often buy property in India for the simple reason that they don’t have to waste money on hotels when they come back to visit or sometimes, for investment purposes as well.

Unfortunately in our country, what starts as love for the country ends with fraud and we end up despising it.

Maintenance of that property is a headache and a responsibility that comes with buying property. But NRI’s face several numbers of problems when they invest in our India.

Property Management Services in delhi ncr for nris
Property Management Services by MyFollo

Lack of clarity of legal rights

All real estate dealings by NRIs are controlled by the Foreign Exchange Management Act also known as FEMA. The rules clearly state that NRIs can only purchase residential or commercial properties. Any agricultural land including farmland or any kind of plantation property cannot be purchased by a NRI or person of Indian origin.

Yet, only because NRI’s are unaware of this, end up buying agricultural land through fraudulent practices of real estate agents.

Land Grabbers/Property Gatecrashers

NRI’s often end up outsourcing property management to local agents or family members or acquaintances which turns out to be a very poor decision.

Family members often take over illegal possession of the property and local agents often resell the property and disappear with the money earned.

Builders with dubious records

Builders or real estate agents in India often don’t have good work ethic. You could try your look but in 9/10 cases, you will end up regretting not screening the builder/real estate agent. They often make NRI’s sign false illegal documents and take over possession of the property.

Indian Law System

After all these problems, even if an NRI wishes to file a case against the guilty party, a civil case like this will end up taking years to settle. At the end, the parties will have to settle to just end the trail and the NRI will never get the good end of the bargain.

Indian law is slow and sloppy which is why 90% NRI’s would prefer bearing losses than filing a case.

Maintenance and management

Relative to all the other problems, this is the simplest of all. Managing a property so far is difficult. Especially in a country like India, where thefts and vandalism is so common, it’s even more difficult.

Propcare Services for NRIs in Delhi NCR
Propcare Services for NRIs in Delhi NCR

This is why NRI’s often hesitate to invest in Indian real estate.

At the end of the day, there are a lot of solutions. One could screen real estate agents properly and one could hire a top-notch lawyer to fight the case. But at the end of the day, nobody likes a headache.

Propcare, turns out to be a one-stop destination for all NRI’s as it not only guides you from the minute you buy the house, it also leads the way to every time you visit and need your keys.

Rental Property Management – The How’s and Why’s of it

Top 5 Rental Property Management Tips – The How’s and Why’s of it

Over the last decade the equation giving out properties on rent and managing them has changed quite a bit. It has become more professional for sure. But there are still times when the whole landlord – tenant equation goes for a toss like for example: The tenant won’t pay rent on time; the tenant will make unreasonable demands; the tenant may cause damage to the property and so on. It is always a wise decision to not be the bad guy as a landlord and hire a professional manager to take care of such issues. However one should always keep in the mind the “Top 5 Rental Property Management Tips – The How’s and Why’s of it” that will help manage rental properties a breeze.

Inventories: As a thumb rule, before giving a property on rent do document the inventories at the rental property. For example: A list of furniture and fittings and the condition they are in. It is done in the interest of both the landlord and the tenant. When a tenant is on their way out, the property manager/ landlord can match the list and in case of any deviation settle it amicably.

Create a Policy: As a landlord giving out one or many properties on rent, one should have a policy in place which can be shared with prospective and actual tenants. For example: Rent to be received by 10th of every month; the landlord will be available between 4 and 7 pm for a call; a late fee will be charged in event the rent is received late. This policy making may seem tedious in the beginning but it makes things very easy. For example a tenant may come and want to negotiate the payment date or pays late, then one can always refer to the policy and say “Well I am sorry, but our policy states that….” This helps in clearing any doubts.

Avoid Family: Include friends as well. Giving a property to friends and family is always tricky. It may swing both ways as a relation but most likely it is going to be negative, going by our experience. It is advisable to stay clear of family if they are looking for a place to rent. One can guide to similar properties, locations or agents but stay clear of giving your own property on rent to them.

Be Organised: Treat every transaction with your tenant as professionally as possible. Keep files pertaining to all the tenants that will include all documents like the Landlord- Tenant agreement, copy of all rent received and receipts issued, inventories of the property, damage and repairs done. The more organised one is, more easily things will be actioned upon.

Hire a Professional: If one is not full time into property letting out business, they should consider hiring the services of a professional who can act as a bridge between the tenant and the landlord. This way for a small fee all headaches like rent received, deposits, chasing late payments and looking after repairs, can be taken care of.

Real Estate Market Trends vs. Forecasts – What to go by?

In the last few years, the real estate market trends in India, have not been encouraging. The markets, especially in the residential properties segments, recorded a slowdown. The prices have remained stable with multiple options available for the buyers, though the commercial real estate has been optimistic. Also the capital appreciation in the short term has not been significantly high.

Given the background, the real estate industry is also regrouping themselves with major players working on delivering projects and building their portfolio to gain trust. Also with the new government policies like Make In India, FDI and 2020 vision, things are looking optimistic for the real estate market. The recent Start-up India will also give an impetus to the real estate market. Based on studies and experience the forecasts for the Indian Real Estate Market looks very promising. The top 3 highlights are:

Tier II cities: The meteoric rise of the Indian real estate market, specially in metros like Delhi, Bangalore, Mumbai and Hyderabad can be attributed to the technology and start-up hubs. It is now the time for the Tier II cities like Indore, Lucknow and Chandigarh to taste success. Local and national level developers are now focussing on the Tier II cities like Pune because of aspirations, successful business start-ups and steady growth in employment opportunities.

Simple payment structures: The developers and banks are working towards easing the pressures of the payment plans. This would lead to more participation from buyers to invest with small monies and pay off gradually with easy payment plans.

Smart Cities: The government showing active interest in building 100 smart cities and increasing the FDI participation in the reality will give a positive boost to the real estate market. Hopefully with participation from local investors as well as NRI’s there would be a growth in these smart cities as well.

For the prudent investor it is advised to move from the wait and watch strategy to slowly start expanding portfolios to newer markets, especially the tier II cities and prime pilgrimage locations. One needs to move out of the comfort zone of familiar localities and start Identifying and investing in feasible properties for better returns.