Flat refusal: tenants now a hot property

Flat refusal: tenants now a hot property
The Times of India

Bangalore: Finding it tough to find a tenant for your residential property? Many in Bangalore are.

A year ago, Latha B was offered a nice independent house near Malleswaram for a rent of Rs 30,000 a month. She tried to negotiate a lower amount but the house owner did not budge, and Latha decided not to take it. Today, Latha is receiving feelers from the same house owner to take the place for a rent of Rs 22,000. And she says the house has been lying vacant for all through the last one year.

Several new residential complexes today look like, as one developer put it, “ghost” complexes, with those who have invested in them unable to find tenants.

Considering that so many are buying apartments in Bangalore — and often more than one — and so many large complexes are being built, this was perhaps waiting to happen.

So if you have invested in a property or plan to invest in one for the purpose of renting, what do you do? For those yet to invest, here’s an emerging option. Mantri Developers is working on a concept of a full block of about 100 apartments to be offered to pure investors, which when complete will be managed by Mantri as a rental housing complex.

Mantri managing director Sushil Mantri says there’s demand for such large blocks of houses from major IT companies for their executives. “The investors will not have to bother about tenant hassles and will also probably get a better than average yield,” says Mantri.

This is a model that other major developers m ay soon be compelled to look at. Ankur Srivastava, managing director of property consultancy DTZ Debenham Tie Leung, says it’s a popular concept internationally. “The developer plays an active management role and typically assures a certain return to the investor,” he says.

For those who have already invested in a property, one option is to try and enter into an agreement with a service apartment operator. That again removes the hassles of finding and managing tenants, though it may take away some of the flexibility the owner otherwise has. While larger operators prefer to have 10-15 apartments in a single location, many of the smaller operators do not mind picking up single apartments.

H oweve r, this option too is now weakening. “So many operators have got into this business that supply has overtaken demand,” says Suresh Tota of Compact Guest Houses, a major service apartment operator in Bangalore. Tota says occupancy in his complexes is falling.

So if you have been lured into buying an apartment by a developer claiming you would easily get tenants at great rentals, maybe you should get the developer to find that tenant.