Indian Real Estate Market: 5 Strategies To Increase Rental Income In Metro Cities

It’s common knowledge that real estate generates passive income in the form of rental returns. Finding a good tenant is the perfect motivation for a real estate investor along with capital appreciation that gets generated on the asset value. Sounds easy and convenient, right? But, the dire question here is: How can you maximize a consistent influx of rental income?

Rental income is the first item that comes to mind when purchasing a property for investment purposes. Despite commercial properties having a higher rental return than residential properties, buyers still choose to invest in residential real estate. It owes higher costs and less risk than commercial real estate properties.

The ultimate goal of any real estate investor is to profit from their venture. The most prevalent type of real estate investment that may assist you in becoming wealthy is purchase and rent. A real estate investment makes money by collecting rental revenue from rental units. Assetmonk, for example, is a WealthTech Platform that offers rental property investment in places such as Bangalore, Chennai, and Hyderabad, and IRRs ranging from 14 to 21 percent. The bigger the rental revenue, the higher the profit for the investor. As a result, every owner of an investment property is constantly seeking ways to improverental income to make more money in the real estate investment industry. So, let’s look at some strategies for increasing your rental revenue.

But, firstly, what is rental income?

Rental income is money earned through renting out property that you own or have access to. You can own property either alone or jointly with another person. So, rental income gets earned by renting a house, apartments, rooms, office space, or immovable property. The amount of rent paid by tenants gets referred to as rental revenue. Rental income is payments for the rented place, the usage of furniture, and prices for any additional services provided by the landlord. Cleaning of shared rooms, hot water, heating, and property repairs are examples of such services.

Rental income varies depending on the landlord and the property rented. There are differences in the services supplied, the size of each property, the fact that certain places are hotter than others, and so on.

But, what are the best rental income properties in India?

The Indian real estate market provides investors with many options to invest. However, investors must choose the investment option to generate rental income. The following options offer the best rental income properties in India.

• Affordable rental housing: The need for rental housing is much in the country’s low-income demographics. Rental housing is the sole option for daily wage earners and migrant workers from the informal sector. The government reports state estimates 26 to 37 million households in metropolitan India live in informal housing. As a result, investing in India’s low-cost housing sector yields higher returns.
• Airbnb rental properties: Airbnb rental properties can range from a cabin in the countryside to a big 6-bedroom home in the metropolis. These sorts of dwellings have grown in popularity in recent years. It has several advantages over regular rentals, but it also has drawbacks. One advantage is that you may charge a higher nightly fee. In a usual model, if you have a hot property that gets booked for most of the month, you may make considerably more money than if you only have one tenant.
• Co-living housing: The untapped demand in India for co-living homes among millennials is enormous. It consists of students and migrant working professionals aged 18 to 35. Millennials make up more than 30% of India’s population, so if you’re thinking about where to invest in real estate,’ investing in co-living homes gives both demand and opportunity. Young professionals and students living away from home, according to real estate experts, prefer co-living space. It is so because the rental value of the room reduces when it gets shared by two or more people. Co-living is a better alternative for tenants because the bedroom takes up 40% of the total area. Consequently, because the bedroom only accounts for 40% of the total rental cost, co-living is a better alternative for tenants. As a result, co-living spaces have a better chance of earning rental revenue.

Strategies to increase rental income in metro cities?

The most secure way to boost maximum rental revenue is to learn how to produce money from real estate by renting out your investment property in metro cities utilizing the suitable strategy.

• Choosing the most effective rental strategy: It is vital to evaluate the potential of your rental property. If you own an investment property, such as an apartment in a more central location in a city, you should consider renting it out on Airbnb. It is since tourists and business visitors in cities frequently seek short-term rentals. The occupancy rate is another metric. It reflects the average percentage of the month or year that rental properties get occupied. These real estate investment indicators are a powerful tool that all landlords must use to boost rental revenue. As a result, the higher your rental income, the higher your cash flow and cash on cash return. Meanwhile, having high rental pricing, which boosts your rental income, may lower occupancy rates. It also decreases your rental income.
• Amenities enhancement: There are various ways to increase a rental income through a property’s amenities. However, a landlord should never lose sight of his investment property’s fundamental aim. The primary motive is to generate revenue and profit from real estate. By improving your real estate asset, you may be able to raise the rent on it and increase your rental income. Here are some suggestions to help boost your rental income: Paint the walls, upgrade the kitchen, concentrate on the bathroom, and have the floors professionally cleaned.
• Tax break: A tax break can get advantageous for a landlord. He can save on tax for which rental income can get raised. Perhaps you’re wondering how this is even possible. However, many of the expenses connected with your rental investment property can get subtracted, lowering your costs and increasing your revenues. In addition to insurance, mortgage payments, and any travel expenditures incurred, any landlord can deduct maintenance charges for his income property. Sections 24 and 80EEA give tax benefits when investing in rental income property if the investment gets funded using debt. Section 24(b) permits a deduction of up to Rs.2 lakh on interest paid, but Section 80 EEA allows a deduction of up to Rs.1.5 lakh on interest paid for affordable housing. It is also possible to pay municipal taxes and gain tax benefits. You can also claim deductions for expenses spent under the standard deductions.
• Preserving the occupancy of your rental property: When you have an empty rental property, you are losing the rental money that the property could be providing for you. If you’re a real estate investor with a vacant unit, it’s always a good idea to lower the rent by a certain amount to attract a tenant. A 5-10% rent cut will assist you in finding a temporary tenant, as an empty investment property loses you money and diminishes your annual rental earnings.
• Advertising and marketing: Proper property marketing is also necessary for optimizing rental revenue. A homeowner should use all available offline and online media to promote a home. A positive first impression of the house enables them to request a higher rent. Another advantage of advertising online is that the homeowner may publish and display photographs of their property, which can assist an interested party in analyzing and selecting a home before making a physical visit. As a result, online channels aid in expediting the process of renting out unoccupied property.