Are you a landlord and have a property to rent out in the posh locality around HITEC City? Do you want to earn some extra bucks on you rent? This is the opportunity knocking at your door. The trend of furnished apartments which took off very well in cities like Bangalore may hit the City soon. Even though, there is demand, the dearth of supply leaving the tenants to compromise with whatever they have or to settle in far locations from their offices.
The corporate companies are looking at these kinds of furnished flat services, when they generally bring in management or senior employees for few months for various purposes like setting up a branch in the City.
It is hard for them to provide furniture, which is useless once it serves the purpose. Service apartments also turn out to be a costlier option if the tenant stays more than a month. Bachelors who earn reasonably well with the corporates are also keen on these services and do not mind paying extra rent for the furnished services, said R Naveen Kumar, MD, easytolet.in.
Locations near HITEC City like Madhapur, Kondapur and Jubilee hills are preferred for renting furnished flats. Tenant can move in to the house without the burden of setting up all these appliances and furniture. Rent varies and depends on the quality and number of appliances and furniture provided.
Typically, tenants get appliances like microwave, refrigerator, air conditioners and furniture for almost at 50 per cent extra of the rental value, he said.
There is huge business potential for landlords, if they buy a flat for investment purpose and rent it at the right price. It may take around `2 lakh as an initial investment to buy these appliances but he gets the whole investment as rent in less than two years (depending on the investment). The furniture belongs to the landlord and whatever rent he earns after that will be a profit, said Naveen.
Hyderabad and Chennai are little conservative markets. It is important to study the market before furnishing a flat. But it is definitely viable option in some localities, For example, the landlord can get a home loan or a home extension loan for `2 lakh, he may pay `2000-3000 as an instalment but he can charge five times more from a tenant. The return on investment is huge in the long run, said Manoj Agarwal, real estate and renting expert.
Price is very crucial factor in choosing a furnished apartment. The landlord should reasonably price the house after the calculation of depreciation, investment, instalment of the investment etc. A reasonable price will create a win-win situation and push the business to grow in that area.
However, there are many challenges in renting a furnished apartment. The typical duration of tenant stay is shorter in the fully furnished apartment, compared to a semi furnished apartment. It is also important to provide quality and branded furniture as tenants are apprehensions about the quality of furniture provided, said Manoj.
There were also many cases where burglars occupying these houses as tenants lifting the detachable appliances from the house after few days. There is also concern of illegal activities like prostitution happening in these kinds of flats.
It is very important for a landlord to charge deposit in according to the investments, cross checking of whereabouts of tenant, photos and details of the last landlord. There should be proper rental agreement mentioning all the appliances and furniture. It is important to have rental agreement registration for solving the upcoming problems. Many ignore the registration process keeping the costs in mind but get in to troubles later. It is also important to insure the appliances keeping these burglaries in mind, said Naveen.
Semi-furnished flats have become a major trend in the city, where in tenant gets wardrobe, water geyser, kitchen furniture, lights and fans. The tenants are keen in these kinds of apartments and ready to pay 25-30 per cent higher rents, compared to a bare shell flat. It is very easy to rent off such apartments than the ones without furniture.
It is high time landlords understand that making few initial investments initially either semi-furnishing or fully furnishing depending on the need will bring long term returns, added Manoj Agarwal.