It is evident that real estate is one of the major sources of income and investment in India. But, is the real estate sector confined only to buying and selling properties? Definitely not. There are some other aspects to it too and two of them are renting out and leasing out.
What do we mean by rent out?
Renting out a property means to pay or receive rent for using a land or building. So renting out a school property means to give the land for school purposes for a stipulated rent.
Renting out properties can help build wealth and savings. People who rent out properties, especially for the establishment of schools, find it rewarding to get a stable and secure income throughout the contract period, as renting out land for school properties is usually for a long term.
What does it mean by leasing out?
Leasing out a land means to make an agreement by which someone pays money in order to use a land or a building for a particular period of time. The three main leasing types are: finance leasing, operating leasing and contract hire.
There is a need to differentiate between lease and lease out. Lease out is a contract that is maintained at the time of renting out a property to a tenant and Lease in is a contract which is maintained when we rent a property and be a tenant.
Difference between rent out & lease out
Sometimes the terms rent out and lease out are used interchangeably, but there is a subtle difference between both the terminologies.
A major difference between a lease agreement and rent agreement is the period of time they cover. A rental agreement tends to cover a short term which is usually 30 days. On the other hand, a lease contract is applied to long periods which is usually 12 months. There are also lease agreements that cover a time period of 6-18-months.
Another significant difference lies in the cost. In leasing, the lessee pays a fixed amount for about 40-50 times more than that of the rental amount. So if a particular company requires an asset throughout the year, then a lease is considered as a preferable option. However, if there is no such demand, then renting is usually considered a better option.
One important difference lies in the flexibility factor with which one can move out at the end of the lease. This helps to avoid tying up our money in the down payment and facilitate more tax deductions on the leasing costs. There is a room for freedom from the responsibility of maintaining the property in lease out.
Things to remember while renting out / leasing out
Before we decide to rent out / lease out our property, there are certain things to keep in mind. Here is a list of formalities to consider in general, before renting out a property:
Advertising : Whether it is renting out or leasing out a school property, the need for advertising is a must. The ads to rent out / lease out have to be placed in relevant media. It is a good idea to have websites dedicated to the dealings of school properties to place such ads.
Drafting rent / lease agreement : A well drafted agreement is mandatory in either of the cases and the amount to be paid as rent or lease should be fixed. It is crucial to register the agreement with the concerned authorities.
Security deposit & Police verification : Security deposit is mandatory in case of renting out. Police verification has to be done on tenants before renting out or leasing out.
Investment in real estate, even on a small scale, is a means of building wealth. At the same time, the value of a property is dependent on its location, conditions, and the market.
Various factors are to be considered before renting out / leasing out school properties. The agreement prepared must be flawless and should have all the credentials like correct address of the parties involved, contract time period, amount, late penalty amount & conditions and finally the code of conduct.
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