The Buyt
Off late NRIs are investing in properties in India as the interest rates were low during pandemic buying properties was a lucrative option and also as their retirement home in India.
Indians have always considered investing in real estate a good deal and believe that every family should own at least one property. This mindset is passed on from generations. Even NRIs are interested in investing in Indian real estate as most want to spend their post retirement life in India. During COVID pandemic, interest rates were record low and rupee was weaker and this attracted many NRIs to buy properties in India.
Why are NRIs investing in Indian properties?
Ease of buying – Maybe a decade back it was a little difficult for NRIs to buy property in India being in another country. But now that is not the case because of internet and online business technology. Even the difficult /remote places can be reached now because the advanced internet and technology has brought down everything to click of a button.
Safe bet – For investment purposes, real estate is considered a safe bet by Indians for generations. Even NRIs find it lucrative to invest in immobile assets in India.
Emotional reasons – NRIs despite staying in other countries want to move back to India at least post retirement if not sooner. It is the emotional attachment to mother land and family back in India.
Financial reasons – Non-Resident Indians investing in real estate in India have the associated tax benefits. Investing in Indian rupees is profitable to them compared to the currency of the country they stay in. The COVID pandemic has made rupee weaker and also interest rates the lowest this has made buying properties in India a lucrative option for NRIs.
What challenges do NRIs face while investing in properties in India?
Buying property in India sitting elsewhere needs adequate research, effort, time and maintenance. It starts from finding the right property, good seller, good terms and conditions, preparing it, finding the right tenants or person to take care of the property. The other issues include lack of transparency, legal complications, complexity in taxations, maintenance of the property, tenancy maintenance and more. There are organizations that help NRIs buy and maintain properties in India. These are known as proptech companies.
What is Virtual Landlording?
Owning property can generate consistent income and help to increase wealth. But this same act also brings the long-term responsibility of maintaining it. Not living near the properties in India will make maintenance of the property a big task. It is either relatives or reliable friends in India who help NRIs to maintain their properties in India. These are vested with the power of attorney so that they can execute and advise around major decisions when the owner is not around. From buying, selling, renting out, rent agreements, painting, maintenance, to navigating tax regime changes they do the entire job for owners. If you do not have friends or relatives to take up this job for you then hire professionals from organizations that help NRIs buy and maintain properties in India.
Virtual landlording is being the owner of a real estate asset and earning the rental income along with capital appreciation without having to physically be there to manage and protect the asset. Professionals manage the assets for property owners. They are real estate industry experts who are responsible for the identification, due diligence, acquisition, maintenance, leasing and securing exits for you. The property owner needs to pay them a management fee and a percentage of the returns earned from property.
Why is there rise in Virtual Landlording?
Currently, the Indian government has not restricted NRIs and OCIs on the number of immovable properties they can hold. Also the government has provided many benefits for NRIs owning or buying property in India including zero tax implications at the time of acquisition. This is the reason that many property technology (proptech) companies are coming up and also there is a significant increase in enquiries for investments from NRIs in these companies. These help property owners to onboard tenants virtually with property images and video walkthroughs even when physically not around in the country. The comprehensive property management by protech companies has given a boost to Virtual Landlording for NRIs. These companies provide a robust service in the market not just by maintaining the properties in India of NRIs across the world, but also protect the properties from becoming a liability (financially and mentally) to the NRI owners. They help NRIs to generate an easy source of regular income through rent and means of generating wealth.
