Major cities in India have a combined stock of unsold properties of 66 months on their books, which means the desire to rid their books of “redundant stock” is at an all-time high. For investors and businesses, this is the ideal time to swoop in and take those properties off the hands of the realtors. For investors, this could provide the opportunity for rental income. For businesses, however, having a property on their list of assets has far greater potential.
Properties look great on the balance sheet
Although the mortgage on a property is viewed as a liability, the asset value cannot be neglected. Businesses who have assets in their book have a greater chance of gaining future investments and funding. This is because properties tend to have an appreciative value in most instances and the difference between the amount owing and the value of the property is referred to as equity. Equity is a major boon for businesses as it can act as security for a loan or purely improve the value of the balance sheet.
Assets in the business name are protected from personal financial crisis
Perhaps one of the biggest reasons business owners tend to register their properties in the business capacity, is to ensure that personal issues cannot affect the property. Whether taxation, legal action, divorce, or death, if the property is registered to the business, it won’t follow the exact same path as when registered in the personal capacity if all the right steps have been taken. Those who happen to approach financial institutions for additional assistance on mortgages during financial hardship may find non-traditional solutions to their problems, thanks to the extra clout the business may carry.
Properties could serve a double purpose
There are few things as frustrating for a business owner than having to renegotiate their leases every couple of years while trying to ward off steep rental increases and unfair utility charges. By owning the property, the rental money is paid over directly to whoever holds the mortgage and the owner doesn’t have to renegotiate the terms. The property can also be subdivided if needed and the owner can have their own tenants in the property, allowing it to generate a passive income for the business.
For property investors in India, the time to strike is now while property prices are low and the market is flooded with good options. When the months start dwindling into single digits as far as the realtor book goes, that’s when steep prices can be expected.
