Loan Acquisitions for Buy-to-Let Investors
Being a landlord in India is not for the faint-hearted. The past few years have not been easy for the Indian real estate market thanks to numerous obstacles including new property laws, demonetization, and the Goods and Service Tax. Now, after a prolonged stagnant period, the sector is starting to show improvement and is on a structured path of recovery, giving hope to property investors across the board. After several home loan interest rate hikes in recent times, however, an increasing number of Indians are opting to live in rental properties. This has created a big opportunity for investors that acquire residential property for the sole purpose of renting it out. Unfortunately, funds are often tied up in investments and fixed assets in which case a buy-to-let investor will have to apply for a loan to purchase the property of his choice.
Why do landlords need additional finance?
Obtaining a property requires money. The cost of living in India may be in the region of 65% lower than in the USA but a house in a big city such as Mumbai can still cost anywhere between ₹50 and 75 lakh. Even if the sole purpose of the property acquisition is to rent it out, you will still be responsible for mortgage payments even if the house or apartment is vacant. Additional finance is often required to procure a home that can be rented out.
Property improvements don’t come cheap
Vacant properties result in a financial loss which is why it is critical to keep a property well-maintained in order to keep it occupied. Structures such as roofs, gutters, plumbing, walls, and fences lose their integrity over time and can decrease the rental value of a property if not addressed in a timeous manner. With 2.1% of the Indian population believed to be disabled, there is an increased need for accessible homes. A landlord can boost the appeal of his property significantly by making a range of improvements such as wheelchair ramps, wider doorways, lowered counters, and a roll-in shower. As important as regular maintenance is, and as appealing as a state-of-the-art kitchen, bathroom, or a fully-accessible home may be, it all costs a substantial amount of money, often necessitating the investor to take out a loan.
Where can buy-to-let investors seek financial assistance?
Once the need for financial assistance has been identified by a landlord, the next step entails determining which type of financial institution will render the most viable service. Prior to making any pertinent decisions, it is pivotal to conduct some research before applying for a loan from anyone. Depending on your own personal requirements you may opt to make use of a traditional brick-and-mortar institution, an online lender, or an investor-only lender.
Brick-and-mortar lenders
Long before the internet revolutionized the real estate and financial sectors, landlords seeking loans would have to venture into brick-and-mortar institutions such as the State Bank of India or the Canara Bank. These traditional loan providers are ideal for individuals who are seeking finance in a personal capacity from an entity that is very familiar with the Indian real estate market. Banking institutions also often forge close relationships with their high-end clients which results in better service and a speedier application process.
Online lenders
The internet has revolutionized the real estate industry in countless ways. Making use of the services of online lenders is often far more convenient than dealing with a conventional service provider. An impressive amount of time is saved as there is no need to go into the bank or office of a loan provider to fill in any documentation as the entire application is done from the comfort of your PC or smartphone. Online loan providers typically benefit first-class lenders the most as they typically have the funds available for the somewhat steep down payment. Loanyantra is a perfect example of an online home loan provider that prides itself on its sought-after, reputable online presence.
Investor-only lenders
Investor-only lenders specialize in supplying finance to business organizations to allow them to invest in properties of a residential nature. If your organization fits this brief you may benefit substantially from making use this type of lender. Due to the clientele of investor-only lenders being so limited, the application process is streamlined significantly, saving you a hefty chunk of precious time. An IO lender can be of great benefit to a business who is investing in a number of rental properties through a legal establishment as well as if your long-term plans involve more than straightforward residential properties, including things such as fix & flips and properties with a multi-purpose appeal.
Acquiring a loan with the purpose of investing in a buy-to-rent property is not uncommon and may result in lucrative financial gains. At Loanyantra you can expect not only to find fast and efficient service but also the best repayment rates available that will help you secure the property of your dreams.