Investing in real estate rental property is a highly profitable avenue for both short-term returns and long-term capital appreciation. Chennai's real estate market presents lucrative opportunities for investors to generate substantial income through rental real estate. Being one of the prime destinations with rapid urbanization and a reputation for safety, Chennai has been a most-preferred place for job seekers and entrepreneurs who are looking for houses for rent that the number of investors from across the country and NRIs choosing to park their funds in rental properties in Chennai for immediate returns is increasing year after year.
Significant growth in information technology, manufacturing, automotive, healthcare, and education sectors has driven the city's robust job market. Professionals from all over the country are drawn here, creating an increased demand for rental properties, which ensures a reliable pool of tenants for real estate investors. Moreover, employment opportunities, high-quality education, infrastructure development with convenient transportation networks, and a rich cultural heritage strike a balance between supply and demand of rental properties in Chennai.
How Investors Can Yield High Rental Income? A Comprehensive Guide
The increasing demand for rental properties in Chennai boosts a stable occupancy rate and the potential for higher rental yields, and the ongoing development drives potential value appreciation over time, offering investors the opportunity for long-term capital gains. However, investors need to conduct thorough market research, consider location factors, and assess rental market trends before making any investment decisions. Here is a guide to maximize profits from investing in house for rent in Chennai real estate.
Buy Flats to Rent: Once you have decided to invest in rental properties in Chennai, the first step is to research and identify suitable flats for purchase. You can also buy ready-to-construct plots and develop homes to rent out. Whether you buy plots/apartments, location, amenities, potential rental income, and future market growth are the major factors to consider before investing.
Consult experienced property developers to buy flats for rent in Chennai to get lucrative returns and for capital appreciation.
Choose Your Property: When it comes to enticing potential tenants, the prime factor is the location. In the quest for rental flats in Chennai, tenants prioritize the convenience and connectivity to different parts of the city. Amenities play a significant role in attracting tenants as well.
Advertise on Property Rental Sites: Utilize property rental sites, such as commonfloor, magicbricks, 99acres, or housing.com, to reach potential house tenants. Create a compelling listing with high-quality photos, detailed property information, rental price, and contact details. It will maximize the visibility of your property during their rental home search on the respective platforms.
Avail Tax Benefits: Familiarize yourself with the tax benefits available for rental property owners in Chennai.
What Are the Tax Benefits Available for Real Estate Investors in India?
Here is a comprehensive look at the tax benefits you can avail yourself of upon becoming a real estate investor in India.
Home loan tax benefits: If a house remains unoccupied, the homeowner can claim a deduction of up to Rs 2 lakh on the home loan. Once you rent your property, you can avail of a tax deduction on home loan interest.
Under Section 24 of the Income Tax Act, two exemptions are allowed for property owners, and they are as follows:
i. Standard Deduction: The standard deduction amounts to 30% of the gross value of the property and covers expenses related to repairs and maintenance. After deducting municipal taxes, the 30% deduction is applicable, regardless of whether the actual expenditure is higher or lower. However, homeowners can further reduce municipal taxes on paying within the financial year.
ii. Deduction on Home Loan Interest: Investors can claim this deduction for rental properties. The interest on the home loan is 100% tax-deductible on an accrual basis, provided the loan is used for purposes like construction, acquisition, repair, or renovation of the house tenant occupies.
iii. Section 80EEA of the Income Tax:
The act provides extra benefits to first-time homebuyers by offering relief from income tax to a certain extent under eligible conditions. Any individual purchasing their first home in India can avail of an extra tax deduction of up to Rs 1.5 lakh. This deduction is applicable when buying an affordable property using home loan.
It's important to note that tax laws may be subject to change, and it's advisable to consult a tax professional for personalized advice and updates on tax regulations.
Lease Agreement: While renting out a property, it is essential to draft a detailed rental agreement that clearly outlines the terms and conditions of the rental. It must have the rent amount, payment schedule, duration of the lease, security deposit, maintenance responsibilities, and any other clauses specific to your property. There are different types of agreements, and one must know the difference between a lease and a rent agreement.
Rental Agreement Online: Generating a rent agreement online has become convenient and accessible through various property websites. These platforms offer the option to generate a legally valid rental agreement. You can give the property specifications and once the agreement is ready, you can conveniently download it for immediate use.
Screen Potential Tenants: Last but not least, examine potential tenants thoroughly to ensure they meet your rental criteria. Request rental application forms and gather essential information, including employment history, income verification, and references. Conduct background and credit checks to assess their suitability as house tenant.
Wrapping It
Renting out your property in Chennai can be a rewarding investment opportunity. Chennai's real estate rent market is known for its diversity and vibrancy, catering to the varied preferences of tenants. However, it is essential to thoroughly research local rental trends, preferred neighbourhoods, and the amenities that attract tenants to position your property effectively.
Ensure a smooth and successful process by partnering with reputable house rental services which connect you with potential tenants and handle crucial aspects such as site visits and legal documentation.
Effective marketing is crucial to find suitable tenants for your property. Utilize online platforms, social media, and property rental sites to reach tenants looking for flats for rent. Highlight the unique selling points of your property, showcase high-quality images, and provide accurate and detailed property descriptions to create a positive first impression and attracting potential tenants.
Compliance with legal requirements is of utmost importance when renting out your property. Familiarize yourself with tenancy laws, lease agreements, or tenancy agreement to protect your interests.
With the right strategies and collaboration with a reliable property developer, renting out your property in Chennai can be a lucrative venture. By following this rental property guide, you can navigate the rental process successfully and maximize your investment returns.