Looking For a Property on Rent?

Hi There,

 

Having done hundreds of deals for rentals, I have come across many things that the tenants can take advantage of or they can take care of so as to not face trouble later on. I am segmenting that into phases.

 

Phase 1: Looking for a property

You have 2 ways:

  1. Find a broker and he will show you properties. Most people go to multiple brokers although finding one competent broker is way better. More on it later.
  2. Log on to property listing websites like 99acres.com, magicbricks.com, housing.com etc. Maybe you find your right property directly and save on the brokerage as well. Around 5% of listings are from owners directly and about 95% of properties are not listed there, directly by the owners. Chances are you will end up liking the properties posted by a broker.

 

Whether you choose to look online yourself or to get a broker to show you, is your choice. But you are never going to get as many options looking for them yourself online as you would with a competent broker who specializes in rentals and can open up the market for you. Also consider having to set up times with different landlords and visiting different places, sometimes having to change the appointment. Each landlord has to be sold on your profile and some may say no. When all of this is being done by a broker, you don’t get the bad news of who said NO!, you only get a list of properties to be shown to you and everything behind the curtains is not your problem. Also the other things that ensue are also taken care of by your broker like negotiating, paperwork, arranging registration etc. I think that’s worth the brokerage you pay. But still it is your call whether or not to use a broker.

 

You don’t want to go looking for a property with a guy who has a small specific set of properties that he wants to rent out. You want someone who has a large number of properties. You want someone who understands your requirement fully, asks you questions to understand your likes and dislikes and why you are moving in the first place so that he can think right and show you the right properties. Such a guy/ company has to be doing rentals business actively and should know the criteria of landlords for choosing a tenant and should be able to guide you to the properties where deals can be struck. Why I mention this obvious thing is that in most cases, brokers have a field boy in their office who does the rental work for them and the main focus is usually sale-purchase (because frankly that gets a lot more revenue for any broker). Usual thing is that when the requirement comes in they run around searching for properties. That adds time and he would call you to show you whatever comes up, not what’s suitable, since he has just these options coming up for now. That increases the number of visits you have to make adding time and effort.

 

A company that specializes in rentals will be able to give you a lot more options, show them fast without delay, show you the right ones where deal CAN be done, not just showing fancy properties where the criteria comes to light later and landlord says “Well I will only rent out to an embassy!”, or “We need a company lease only”. Do you realize how much time gets wasted in talking to various people, making visits and then later finding out the owner will not rent to you! Also a good agent will also be able to help you later in the deal by advising on the Lease agreement and the usual market terms and help you in case the landlord has unusual demands.

 

Now the question in how do you locate such a competent agent. Following are the things to check:

  1. Is rentals their main line of work or is it a side thing left to someone incompetent who will “try”?
  2. If you found them on an online portal, have they advertised a large inventory or just a few places? That will give an idea of how much they are actually into rentals.
  3. Can they instantly rattle off a few deals available?
  4. Are their good reviews on their Google or Facebook page?
  5. Is the guy interested in knowing what exactly you want? Did he ask many questions about your liking etc?
  6. Did the guy inquire about your profile? If he didn’t he is probably going to just show a few properties without knowing whether the deal can be done or not.
  7. Have they done any RENTAL deals in the area recently? That gives an idea of how current the guy/ company is.

 

Once you have the right guy/ company, your search will be shortened and the deal can go through at lightning speed with all things taken care of. Why use someone incompetent when you are going to pay a full commission?

 

Phase 2: Finding the right properties.

 

I say finding the right properties and not property because one must have at least 2-3 in hand when negotiating, otherwise it gets very tight and pressurizing for oneself when negotiating. Of course at times it is not possible due to a very particular strict criteria or limited availability, but one must always try to have more than one shortlisted.

 

Your broker will help you locate the property but you need to make sure you fully describe what you want to your broker. Also you should explain why you want those things. That helps the broker find alternate solutions that you may not have thought of. For example if you just say that “We want a ground floor only”, he will try to locate only Ground Floors for you which are scarce and you get fewer options. But say you want a Ground Floor because the Balconies for Ground Floors are bigger. Now having explained to your broker that you need a bigger balcony so that you can sit outside and sip tea in morning with family, he may have properties which are higher floors but have huge balconies and even come at a lower rate. He does this every day and will know what’s available to suit your actual needs.

 

If even after having explained your requirements the broker still keeps offering unsuitable properties, it’s time to change the broker. Having too many brokers working for you isn’t a good idea since the same landlords get calls from these different brokers and they seem to feel there’s a lot of demand, raising their prices, or reducing the scope for negotiations.

 

When you go and visit properties, make sure you look yourself at all the important points. Like car parking space, quality of common maintenance, underground water tanks and any other important points that matter to you.

 

As a tip, if you want to be sure of how the parking space is outside the building, go late night or early morning or on a public holiday and observe how many car parks are available outside. That gives an accurate idea of additional parking space available outside.

 

If the landlord lives in the same building it is useful to see how good/ troublesome they are. If they are too interfering, it may be a good idea to leave that property. On the other hand some landlords are very helpful and nice to their tenants and are an asset to be in the same building.

 

Also find out who are the other occupants in the building and what they do. If you run into them say hello and observe their behavior. Usually you get some idea from their initial greetings etc.

 

Most important thing: Once you find a property that meets your requirements and you like it, do not waste any more time. It is alright to spend time in locating one that suits but after having located one you need to make the move. Sitting on a decision doesn’t help. And in my experience often spoils things. Go and meet the owner and see if you can finalize and get your happy home.

 

Phase 3: Meeting to finalise the deal and finalising it.

 

First and foremost, you need to know what the landlords actually want from their tenants. Then in the meeting you reinforce those points as in how you have those things that they are looking for.

 

Ever wondered why most landlords try to get a Europeans/ Japanese/ American or another expat? The reason is simple. They want that their house is taken care of well. No doubt Europeans/ Japanese/ Americans etc maintain properties very very well, compared to Indians, Africans, Middle-East etc. It is not always true that Indian tenants spoil the property but the truth is that the bulk of us do not maintain the properties nearly as well as expats do. So if the landlord had an option he would’ve rented to an expat, but say if you’re not an expat and he is still willing to meet and discuss, clearly he is open to renting it out to you. So when you meet just focus on this point that you take care of the place you live in and that you will return the property in the same condition as handed over. If possible, show them current pics of the place you are moving from, or even offer to show them physically how well maintained your current place is. That reassures the landlord and builds up a very good start to the relationship.

 

Second most important thing in a landlord’s mind is that whether you will vacate the property when asked for and whether the rentals will come on time without problems and delays? He does not want hassles. No one does. He may not say that but we need to assure him that

  1. We have a good payment capacity. For this you can share your company details and even offer financial statements. In some cases landlords would ask for the financial statements themselves. At a minimum, let him know that paying rent is not a problem for you at all.
  2. Let him know your reason of taking this place for rent. If you’re building your own house or moving out of another premises that you had rented, give him exact address and also offer your previous landlords number. That shows that you have a good relationship, you are vacating the previous house so you are not going to try to grab his either. And he is free to verify if previously rentals had been coming on time.
  3. Always find out what he does and where he works and where he lives etc. and find some common connects who can verify your credentials. This is the most powerful thing and gets the doubts vanished from the owner’s mind. Once this is done negotiating on rentals and other terms is much easier.

 

Clarify all terms like refundable security deposit, term of lease, lock-in period, notice period, maintenance charges, any other terms and conditions. Rent is the only variable left and we fix it. Before the meeting was arranged you had some idea of what he was asking and you must’ve offered some amount. Let’s bridge it now in the most friendly manner and close the deal. Simple. If the other above points have been taken care of the Landlord will be softer on rent usually.

 

Always pay some amount as a token for finalizing the property. It can be a month’s rent or even less. Unless money has changed hands it is not final. And try to reduce the amount of time between when you finalized the deal and when you sign the Lease agreement. Time gas almost always cause trouble.

 

Next either he has a lease agreement draft or you have one or your broker will prepare one for both of you to review.

 

Phase 4: Paperwork

 

You are not going to like what I am going to say. The lease agreement will always have more safeguards for the owner than for the tenant. Hear me out….

 

Let us see who has what risk. Let us say the property is worth 5 crores and you have agreed to pay a rent of 1 lakh per month and 2-3 lakh security deposit. The owner hands you his 5 crores worth of property and runs a risk that you may never return it, or stop paying rent or damage it. These points have to be covered up in detail. There are going to be penalties etc stated in the agreement. Just put yourself in landlord’s shoes and you will understand it is not unfair. (BTW if the landlord just sells and banks his money, he would get around Rs. 3 Lakh per month from an FD which has no risk at all, but that’s for another blog).

 

But there are points to be put in the lease to ensure there’s no confusion later. One should consult his lawyer and we are only putting down some points for educational purposes only, not as a legal advice. Following are some important points:

  1. Anything that has been verbally decided must be in the agreement.
  2. Agreement should state that any Major repairs will be undertaken by the Owner.
  3. When will the deposit be refunded. What is the penalty if it gets delayed.
  4. Clarity on parking spots.
  5. In case the Owner sells his property, your rights as a tenant mustn’t be affected.
  6. Registration expenses are usually shared 50-50.
  7. Any other special terms and conditions agreed.

 

Phase 5: Registration and possession

Once the Lease is finalised and signed and registered, the possession of the property is to be handed over to the tenant. Always inspect thoroughly before taking over the possession and point out in advance to the owner if certain things need repair/ replacement. When you return the property after a few years, no-one remembers what was discussed. Also always document everything on the email. Don’t make it sound legal but just say in a friendly manner that so and so has been discussed now and just putting it here in case we both forget later. This saves arguments from happening when you’re vacating.

The original Lease Deed always goes to the Owner of the property and the copy goes to the tenant.

I hope this helped and look forward to answering any questions you may have.

 

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