Income from rental properties helps landlords to consolidate their financial status. It also helps them to use the definite monthly income to involve in other business activities and earn a decent income every month. At a time when the cost of life and useful goods are increasing rapidly with each passing day, everyone loves extra income. Most of the NRIs are involved in buying and selling of properties in India.
However, there are there are many NRIs also rent their properties to tenants and earn a definite monthly income every month as room rents. However, when you get involved in this business, there are some precautions that you need to follow for your safety and comply with the law. Have a look at some tips you must follow while renting your house:
1. Take All Basic Details From Tenants When you give advertisements in newspapers, magazines and other places for rental rooms, a lot of people get in touch with you and take your room on monthly rent. Apart from discussing other issues, you should ask for the basic details of your tenants, such as his/her proof of identification, residence, active contact numbers, their native state/place, workplace, etc. This will help you to track the previous record of your tenants and lend your house/room to the right kind of people. Avoid those people who hesitate to share these details with you.
2. Sign A Room Rent Agreement When you rent your house/apartments/rooms to tenants, you should sign a rental agreement with them. It is actually a legally binding agreement which clarifies the duties, responsibilities, and expectations of landlords and tenants as per the applicable law. Your agreement should include some key terms, such as the time duration of the rented house, exact rental amount, household rules related to cleaning, overnight guests, Alcohol/drug use, studying/quiet hours, Music TV, pets, conflict resolution mechanism, privacy, deposits, rent, etc. Based on your needs, you can make necessary changes in consultation with your tenant. If you face problems to prepare a room rent agreement with your tenant as per the applicable Indian law, you can seek assistance from real estate lawyers without any hassle.
3. Police verification There are many NRIs who run paying guest accommodations illegally without any proof of tenants staying in them and because of this, they run into problems on several occasions. Always keep in mind that a person living in your house without police verification could pose a threat to law and your safety too. It is against the law and you could be punished for it if a tenant living in your house is found to be involved in anti-social activities. Therefore, whenever you rent your house to a tenant, get the police verification done within 15 days from the at the nearest police station no matter your tenant belongs to your state or is an outsider.
4. No Objection Certificate In order to save the costs, most of the people like to live with their partners. In order to avoid any problem in the future, you should get NOC from the Society or any partner from the tenant.
5. Ask For Security Deposits And One Month Advance Payment You must ask for security deposits and one- month advance payment from your tenants. It will keep you aloof from any kind of financial loss if tenants leave your house/room all of a sudden without paying the rent in a particular month.
6. Pay The Tax On The Right Time NRI can collect the rental amount in NRE or NRO account. If you don't have an NRE or NRO account, you can get it remitted to the country you are currently living in. But, for this, you need to pay the due taxes and get an appropriate certificate from a chartered accountant certifying that all taxes have been paid off.
Final Words: Earning a steady monthly income through rental business is not a bad idea. These are some tips NRIs must follow when they rent their house to tenants in India.