"Deeds Clear" Do not fall into the trap!!!

The paperwork stage can be a killer and an eventual deal-breaker. So many factors into play but the important of them all is the bunch of ownership papers.

We often see clear title or clear deeds on ads, trust me - It's not so clear when that is said. You have to get a proper lawyer to check on this. All lawyers are not equally smart and its best that you go with a reputed lawyer - (Yeah I know what you are thinking - THEY are expensive) but then you don't want to end up going to courts and fighting cases for years.

There are stories that directly relate to the above. The information is so sensitive that a blog post cannot be made on such stories although it's quite tempting to do so.

One good way to buy properties is to go through a bank loan, they check everything thoroughly before approving the loan. If the bank agrees to give you the loan, then the property looks okay in terms of paperwork but otherwise you can be in a spot of bother. Very Important!

RENEW or NOT RENEW?

So you have rented out your place to someone and they want to renew the contract, what should you do? What's normally done? How does it work?

OR

You have been on rent and the term is coming to an end and you are wondering what to do. What's best and how to go about the situation etc.

If you are not aware of the answers to the above, then this blog post is definitely for you.

First things first on the topic of renewal - Read the agreement and see what it says if you didn't get it in your favour at the outset. Some owners are smart and generally demand a 10% increment on the second year's rent whereas some tenants on the other hand sign up flat for 2 years for the same rent and thereby eliminate the increment aspect. 

If either of you is thinking about calling it off:

Do your research on this properly, if you are getting a really good deal, then just let the status quo remain. It could be that the prices have gone / down, check out the market rate, talk to a proper property professional who can actually advise on what best could be done. 

It's rare to find many people in Sri Lanka staying on rent for long periods of time unless the place is exceptionally exquisite. The locals generally like to stay for long periods of time but the owners here are not too pleased with the not-so-great lifestyles. A lot depends on the type of person you are dealing with and also the type of client you are turning out to be. 

Cutlery - Crockery - Inventory Checking - Do you know how it works?

Checking in can be a challenge to a certain degree if the owner is not too friendly. Below is a list for you to peruse just before you head into the lawyer's office to sign up:

Furnished Apartment/ House- Serviced 

There is very little to worry about as this is a short term stay and most of it will be there and is recorded without any items being missed unless you bump into an owner who is doing it for the first time and does not know what and how to do it properly. Generally, from the cutlery, crockery to the bills and changing of linen, everything is included in the price as it's a SHORT term stay. 

Furnished Apartment/ House-Long Term Rental 

This is where it gets tricky which is why it has been reiterated on many of the Blog Posts in this BLOG that maintaining a good relationship with the owner is of paramount importance.

Plan it your way - Always be very particular about the inventory and somehow get the typed inventory emailed to you. Regardless of where the signing the takes place, it's a must to cross-check the inventory with the owner or the owner's property manager and as soon as you find any discrepancy, send in writing (via e-mail) copying the lawyers notifying what is missing or what is extra or what is broken etc. 

There are certain property owners in town who cannot stomach basic wear and tear and they try very hard to cut as much as possible for the security refundable deposit which is why clients are encourage to maintain a good rapport with the owners and ensure that there is an honourable ending to the deal when the time comes.

Generally for long term rentals, it's a bonus if the owner is throwing in the cutlery, crockery and linen as they are usually not provided mainly because the client would have a certain taste or may be in love with certain brands which fit their lifestyles and hence, the owners leave it to the prospective tenant when it comes to the above. 

Unfurnished Properties 

There is not much to say when it comes to an unfurnished property, if it is a property with a structure, then it's still best to capture the fittings and other built-in furniture or items which may or may not be that important to the owner. The key with such properties is to look for construction flaws / damages etc. 

Accommodation has become a very hot topic in Sri Lanka and there are new developments in almost all the parts of the country not only boosting the real estate in the country but also making it look inviting and pretty. The gap is slowly being filled especially when considering the tourist arrival statistics. 

Terms to know when RENTING!!!

The whole system of paying rent needs to change in Sri Lanka. Firstly, the terms or rather definitions need to be learnt and understood properly and not assumed. The issue with assuming terms and conditions is that it would lead to an eventual cancellation of the deal, which is not what we want.

Property owners need to be educated and that is also one of the prime purposes of setting up this BLOG!

So what are the definitions which come into play? Let's take a look.

1. Advance

This is something that needs to be removed from the system but will take a long time to come into effect. Many property owners do not know the difference between this and the deposit (see below). Advance is the amount you pay at the point of signing the agreement. Of course, you can also pay a refundable advance (small amount) just to lock the property so the property owner will not show it to anyone else but that rarely happens in rentals. 

2. Deposit

This is the security refundable deposit and again a very tricky one. There are property owners who have varied terms and conditions, some expect you to pay a security refundable deposit of 6 months' (which is stupid and insane), some expect you to pay 3 months and some expect you to pay 1 month which is acceptable. 

There is no need to pay a high security refundable deposit if the property owner can visit once in two months and get the tenant to fix whatever he or she has broken or damaged. The security refundable deposit could be taken as the rent instead -why should you pay so much? I don't see a point in locking so much money and what if it's not returned. At times, clients forget to collect the retainer. It's a win-win situation for both if the owner has the right attitude towards the client. 01 month is acceptable and best to stick to it. 

3. Tax

This could mean a million things. Get your lawyers involved. Get the good lawyers in. You are paying them and they need to be impressive in what they do. It's sad to see some lawyers doing the realtor's job under the table. I am fine if it's done properly but doing the job under the table just to make a buck will only contribute towards the corruption of the profession. There is property tax, stamp duty, government tax and what not.

4. Legal Fees

This is the fee paid to the lawyer for drawing the agreement and looking after the interest of both parties and hence, it's always split.

The system requires a great deal of change and this will begin only when someone who knows the way shows the way to everyone in order to conclude a successful deal.

Rental Transactions - What is the paperwork procedure? How does it work?

This is one of the foremost requisites that needs to be checked / questioned / asked and inquired about when discussing and negotiating with the property owner.

Renting a property- Sri Lankan Context

A few years back, a rule was brought that if you are a non-sri lankan passport holder and you are renting out property, be it a house, land or apartment, you are liable to pay 15% tax of the total period you plan on staying as stated in the lease agreement. However, the good news is that this is being reviewed and chances are that this rule would be null and void in a few months, if not, it's a sorry scene for all the foreigners.

SO what's the solution if the rule remains so?

Where there is a will, there is always a way and I don't know whether this was something that was the brainchild of a lawyer or a property owner. In most cases, we have noticed that a mutual agreement is done and the papers are not sent for registration which in this instance, we are made to understand that neither party can seek recourse in court and that the money credited to the property owner's account is naturally unofficial as the transaction is not registered in order to avert the tax payment. 

Of course, the above is also done to save 1% stamp duty which is generally split into two. So, even if the rule is changed, there will be some naughty property owners lagging around just to save a minute fee. Lawyers on the other hand need to be well versed in explaining the consequences of such acts and keeping the clients well informed. I noticed that there are lawyers who are not aware of tax laws when it comes to foreigners and they are doing lease agreements and so on which is a shame. 

If you are renting any property, it's always best to go with an agent / agency, it gives you that extra bit of security and reliability. Once you have liked the place, ask the relevant agent what the next steps are how to sign up, do not confirm on the spot. Let your agent handle that for you and the best ones in town actually know how to seal the deal without too much hassle. 

Clauses in the agreement

This can be very tricky if you are looking to have it your way, some of the clauses in the agreement are inserted purely as security layers and have absolutely zero probability of happening for real. This applies to both the client and the property owner and the best advice I can give you is - DO NOT BANK ON THE CLAUSES IN THE AGREEMENT BUT INSTEAD BUILD THAT TRUST AND RELATIONSHIP OF RESPECT AND INTEGRITY where both the client and the property owner feel that they should be honourable and not lose their integrity. 

Die hard businessmen may laugh their hearts out what is mentioned above as it's always advisable to have everything clearly stated in black and white and hence what I have just mentioned above might be contradicting but let me tell you why - As far as I know, according to the Sri Lankan law, as a property owner, you cannot kick your tenant out!!! That is the bottom line. From a tenant's perspective, yes - you can stay for as long as you like and create as many problems as you like. This does make the property owners slightly vulnerable and hence it does not matter how the zero-probability clauses span out which is why I stress on the importance of the lines in capital letters above - please read them again.  

The paperwork process / procedure

This is quite simple, let me give it a shot in showing it baby steps:

Step 01 - A confirmation e-mail from the client or the client's agent/ agency. 

Step 02 - Vetting the draft of the agreement 

Step 03- Finalizing the final draft of the agreement if the deal is still on from both sides. (Yes, the deal can fall through when in step 02. I have observed this many times)

Step 04 - Arranging to meet up and sign the agreements.

Standard duration period of the above is generally between 4 - 7 working days while some deals happen on the day and some in a day or two as well. 

IMPORTANT TIPS

While the above steps take place, it's important for someone to take the leadership and to ensure that the deal happens. Often, it's the property owner and that's the best person to get the job done. The effective property owner will agree that this is the way to go.

Punctuality plays a big role, try to make it 15 minutes before the actual time and be on time. It makes a world of a difference and the impression it creates goes a long way.

Good luck and happy renting!!!

Please write to info@mrtgiant.com if you have any deals on the table or require any of our services. *Terms & Conditions Apply* 

10 THINGS TO KNOW ABOUT SECURITY IF YOU ARE AN EXPAT IN SRI LANKA

Frequently asked questions with regard to security in apartments.

Q: What are the most preferred locations by expats?
A: Colombo 02, 03, 04, 05, 07 & Rajagiriya


Q:Are security personnel trained?
A: In Luxury & Super Luxury Apartments - Yes
In Basic & Normal Apartments - Not Really


Q: Do all apartments have a camera in the lift?
A: No


Q:Is the security really super tight in apartments?
A: In Luxury & Super Luxury Apartments - Yes
In Basic & Normal Apartments - Not Really


Q: How trustworthy are maids and security personnel in Colombo?
A: Not one bit.


Q: Have there been any serious situations in apartment complexes in Colombo?
A: Yes


Q: It is safe to live in a house or an apartment?
A: It's safe to live in an apartment but a house with security is equally good.


Q: Are the security personnel nice to the residents?
A: Yes, they are especially if you are white skinned.


Q: Is Colombo generally considered to be safe to live in?
A: Of Course.


Q: How is the attitude of Sri Lankans towards expats/ foreigners?
A: Friendly. Sri Lankans are friendly people that like to win hearts. Treat them with respect and dignity and they will not fail reciprocating the same.

KEEP FAMILY AND CLOSE FRIENDS AWAY FROM YOUR REAL ESTATE AFFAIRS

This is one of the most important elements of any person's real estate portfolio. You cannot afford to get family and friends involved in real estate affairs unless you are extremely certain that their involvement is only going to boost the interest of all parties concerned and thereby get the job done.

Why should you keep family and friends away?

The answer is simple, because of who they are. Family politics is a subject that is known to the whole world but for some strange reason it's always buried under the carpet and people turn a blind towards it. Yes, there are times when you need their support and there are instances and situations where the above is null and void but for the most part of it, it's best advised that you do not get them involved.

It's okay to obtain advice and keep them informed etc. Sometimes you might also like to have them represent you as their POA (Power of Attorney) but ensure that you give them something back in return either in the form of some payment or some kind of compliment to mark a goodwill gesture and keep that family or friendship bond held high with respect and dignity. There is no such thing as a free lunch. So don't get caught to that trap.

Sometimes we are too nice

Yes, if you agree with the above and have been hurt by a number of people. You need to go on the professional lines with your real estate affairs. Have all dealings in black and white, nothing agreed or confirmed upon verbally. Everything should be based on a contract either via email or print. This gives both parties equal binding and the level seriousness is felt, understood and realized.

When you are too nice to people, in most cases, they take advantage of your humble quality and sometimes wriggle out of the problem they put you into without you noticing that it was them that created the whole fiasco. Our experts have seen and experiences how family interventions eat up a deal and drive the whole deal to a totally diverse direction.

Under the table matters are also done by such people. Always keep a distance with family and friends when it comes to business. It's best to keep them at arms length but yeah, there are certain exceptions and sometimes it's best to let be around you just so you know someone has your back and will punch if you make the wrong move.

Agent Culture in Colombo

How do Agents operate in Colombo? Are they cultured? Are they good, honest and trustworthy?

The above questions are some of the questions that come to your mind when you think of real estate agents and brokers that operate in Colombo and how you can hire the best. There are certain types of Agents which operate in Colombo. The main two categories are the full time professionals and the part time amateurs. The professionals are the ones that are advisable hiring but if they are not in a position to help you, then you are left with no choice but to seek refuge under the umbrella of the amateurs who are sometimes luckier than the pros. 

The Sri Lankan mindset when it comes to agents and brokers also need to change. It's sad to see some people who are fully occupied in their profession (not real estate) demand 50% from the agents and brokers just to mediate when the owner is abroad. Sometimes, these people are family and friends. Owners should never let family and 

friends get involved in their real estate affairs. There are very few trustworthy agents and you must do your homework before you figure out who or which agent is going to represent you, after all, agents and brokers always represent someone, it is either you or the client they bring in. 

Sri Lanka is going through a phase where there are too many agents in town and majority of them are there in the market purely to make a buck. There is animosity and hostility among agents too and it makes serious competition come to life. Unfortunately there is no government regulation or system of governance in the country where an agent is trained and polished before they brought into the market. Sri Lanka's only real estate agency that trains agents in Mr. T. There is so much that agents can learn just to maximise their earning potential and be better professionals in the market. 

It's not easy to become an agent and then to be a famous broker in Sri Lanka. People look at you condescending and they think you are a couple of notches below them. Some even judge you and put you in a very different circle. The truth is that the best agents in the country are sometimes treated like poop and that is when the industry experience either the exit of a good agent or a paradigm shift in the life of that particular agent. 

Agent / Agency Involvement in Rental / Sale transaction!!! Super Important!!

It is always advisable to keep the Agent / Agency aware and keep them bound to the deal purely because it is because of them that the deal is taking place and they are responsible if something goes wrong terribly. You may be the landlord / Potential Tenant / Buyer or Seller etc. It does not matter as long as you keep the Agent / Agency involved and properly updated, you have done your bit. The professionals love to get involved and learn more and more. It's amateurs who only want the money. 

Not only does it help to have the agent or agency involved but you could also use them as witnesses in the same transaction and that truly helps a great deal.  They are able to understand matters more clearly and advise if something goes wrong or is not done in the manner it should be done. There are very few people who have a not-so-great impression about agents in Sri Lanka, this mentality is surely going to change especially with the professional agents and agencies that are in town. There is a big difference in the experience you receive from the amateurs and the pros. 

Do not single out the agents or write them off, there is a good chance that you would come across a poor agent who gives you a hard time, try to work with as many as you can. You would know which agent fits into your matter with little difficulty. When it comes to sharing information with agent / agencies, it's best to have most of it in writing and thereby keep things professional. Some Agents hate to put matters in black and white while the pros simply love that aspect of communication. 

Have a pleasant experience with the agent/ agency you choose to work with. 

Tuk Tuk Drivers and their ways! Must read if you are using Tuk Tuks in Colombo

Using tuk tuks / Auto / three wheelers can be a challenge if you are an Expat / Tourist or even a local for that matter. Nowadays, with the growing number of foreigners coming over to Sri Lanka, the tuk tuk drivers have become very cunning and rude. Needless to say, there is always a bunch of honest and hard working tuk tuk drivers who are innocent in every sense of the word. 

Tuk Tuks without a meter

Do NOT get into these tuk tuks. Nope. I have learnt it the hard way and have often been ripped and disappointed with tuk tuks without a meter. Why would someone have a tuk tuk without a meter when 9 out of 10 tuk tuks have meters installed? The point it that they want to make more money and fool the foolish. 

Tuk Tuks with a meter (Buy hey! It's not working) 

Another no-go. This is more of a cheating technique where the board says that it has a meter and when you get in, the meter is just there but it's not on and if you don't bother asking, it will remain without use as it is and if you do ask him to turn it on, you would get a reply like 'It's not working' or he would quote the amount and say 'Even if you take the meter, it's the same thing' 

The catch between normal meter tuk tuks and company tuk tuks

The normal ones that you flick off the road charge around 40 rupees for a km while the company ones charge less (the range varies from 30 Rupees to 35 Rupees). It's best to call a company three wheeler if you are looking at a long distance. With short distances, the road ones will do. 

Night Hours 

Generally, the pricing differs at night and there is around 7 rupees increased for the first kilometer and then around 5 rupees more for every kilometer, understandably because it's at night. 

ALWAYS PAY IN RUPEES!!! 

This is one of the most important messages that I want to put across to all the users of tuk tuks. Make it a point to pay in rupees. Even if you have dollars and if they demand in dollars, simply tell them you don't have any dollars and pay in rupees. If you pay in dollars, chances are that you are going to get ripped off big time. 

Good luck with the Tuk Tuk experience in Colombo!

How to find out the market rate of a certain property / apartment etc

This is a very interesting aspect of property / real estate when it comes to pricing and costing. How can one get it right? As an owner you are put into this strange of whether, 'Am I asking too much or am I asking too little?' Below is a list of things you could do to figure out / investigate on market values:

1. Ask around and pretend to be a buyer of such a property

2. Call up Real Estate Agencies and inquire (Pay them for the service if you can)

3. Check out adverts of similar properties in the area on the newspapers and the internet. The internet is dominating the property market in many countries and you can easily gather facts and figures from the leading websites and thereby make your own report.

4. Talk to a bank and get them to do a property valuation, sometimes you may find real estate agencies that provide this service as well. Ask them how it works. (Pay and get it done if you think it's worth the job)

5. Use social media to get feedback from others and that way you would understand if there were any recent transactions in that area and gain a broader understanding of what's going on in the market.

Always remember that if you are getting a third person to find out about this, you got to pay them well otherwise the information is not going to be that accurate. There is no such thing as a free lunch. 

The prices can vary within days, weeks and months and it's important to have an idea on when to sell and when not to. 

You also have the option of testing the property in the market, although you may not want to sell it,you can still advertise and check the pulse of the market and see if there is less or more interest depending on the prices you advertise the property at. 

There is a rule when it comes to property prices, it either stays the same or it increases, property prices do not drop unless you have overpriced it or you are desperately in need of cash. Real Estate is the perfect investment for the future.

How safe is it to rent houses and apartments for expats in Colombo?

One of the prime concerns for anyone when it comes having a roof on top of their heads is this aspect of security. Regardless of the condition of the property and its luxury orientation, the first and the prime requisite or criterion for any renter or potential buyer would be the security and safety pertaining to that particular property. 

We, at Mr. T had a rather strange experience with a client when we took the client to the apartment on a rather high floor and to our surprise the client simply said that this is not safe. When asked why, the client said that rogues/thieves could jump over and enter into the apartment as it had large windows designed purely for light penetration and ventilation purposes Now then, this is an apartment on a rather high floor in Colombo 07 and the whole building is under camera surveillance and there are two security guards at the entrance with a control room that monitors movements seen through all the cameras. 

Imagine that. 'This is not safe' Oh well!!! 

This is partly to do with the mentality of the client that this is not a safe country and that there are drug addicts and robbers roaming freely in literally all parts of Colombo. Fortunately, that isn't the case. Sri Lanka has never been this safe and pretty especially the city of Colombo. Yes, the common notion of problems, accidents and crimes is always on the back of your mind wherever there is human life making its presence but that does not mean that Colombo should be singled out as a "NOT SAFE" area. In fact, Colombo is probably the most super-safe area in the country. 

So the answer to the above question would be:

Yes, it's generally safe to rent / buy a house or apartment in Colombo. We see more and more expats / foreigners asking for houses. A few years back, it used to be only apartments but now foreigners / expats do like to rent a place in and around the city, sometimes outside of it as well. There is just a bit of risk involved when buying a house as opposed to the apartment and that is the security factor, you can simply lock an apartment and go wherever you like but you cannot do the same with a house or if you have too many enemies, an apartment might be an easier option. 

Think smart when investing in property and yeah, it's safe to to buy/ rent houses and apartments in Colombo. Enjoy your time while you are here! What is meant to happen will eventually happen!

Good luck and keep smiling! :)

Pay Your Real Estate Broker / Agent on Time!

When it comes to payment matters, the professionals make it a point to pay on time. It's very important that these payments are made either on time or well before time as that strengthens the bond between you and the Real Estate Broker / Agent. 

What it also does is that you become a priority customer to them and winning their attention is never a challenge if you are able to pay up as soon as you can. The Sri Lankan property owners are gently gathering more respect toward the professional brokers/agents and this is a good sign. 

You real estate broker / agent is not just a person like anybody else, he/she is you property partner, your property advocate and can be very useful to you in real estate matters. After the police and the secret intelligence of any country, it's the real estate folks that know what exactly is going on. 

If you are thinking of ditching a professional broker / agent after you have used their services, be careful as this goes a long way, in a world where everything is available in the space of a few clicks, a lot can happen and can be done to tarnish and blacklist you if you mess around. 

Sometimes, the evil curse of money takes a toll on your head and you might think, 'Why should I let them make money from my property?' but the fact of the matter is that they have brought you the money in the form of a client and it is your duty to ensure that they too benefit just like you do. 

It must be said that there are property owners and clients in Sri Lanka who treat their Property Brokers/ Agents like family and when it comes to payments, they make it on time and sometimes offer a complimentary gift or an extra amount (tip) as a token of appreciation. 

'No one should say this to me - When I walk on the road, that man owes me money!' Were the words of a property owner who ensured that he left no debt and that is exactly the mentality of a perfect property owner. After all, the fee is a very small amount.

'Before the sweat on the forehead of the worker dries, you must pay him', were the words of a wise man when it came to honouring a business deal. Make your payments on time and make them count. The relationship you build with people is more important than any of the materialistic pleasures this world has to offer. Good luck!!!

SIGN IT OR YOU WILL PAY FOR IT!

It is super important that any agreement you reach with the client, broker or agent that you have the matters discussed / spoken  in writing. Sri Lanka is a developing nation and while this transition is taking place, the job of the conventional broker who works purely based on trust (verbal agreement) is slowly diminishing. From the honest broker's perspective, it is also quite a risky task to deal based on a verbal agreement. So it's actually a win-win for both parties to have things in written form. 

There are many local and international agencies that are hitting the Sri Lankan market because they see potential to provide their services and thereby make good money. It is important to have all what is said and discussed in writing. The same applies when it comes to the confirmation of a certain property, be it a sale or rental, it does not matter - every piece of information has to be in writing and that is what matters at the end of the day. 

It must also be said that many property owners are very nice people and I have personally come across many of them who have been taken for a ride and have lost a substantial amount of money. The whole purpose of writing this here is to educate and create awareness among all the owners / brokers / agents etc. that it's extremely important to have everything you discuss in writing. 

Do not buy the verbal bull shit, not only will you have to pay more but it would also impact your mentality and impression when it comes to certain people and their backgrounds, nationality and most importantly their profession. It's a dog eat dog world and there just as many good and bad people in the market, everyone wants to make a fast buck. It will not cost you to play it a little safe and get everything in black and white. Please do be extremely mindful about it. Sign it and be risk free.

Good Luck!

Determining the rent of your apartment. Get it right in the 1st time!

One of the most baffling situations any apartment owner gets caught to is the rental price of their apartment.
How do you figure out what a good rate is? What are pros and cons? Am you asking too much or too little?

Many a time, I have noticed that apartment owners are either asking for sky high rates or do not have an idea on how much to ask as the rent for their apartment. On a few occasions, I have come across a bunch of owners who are happy to give it out for a nominal rent purely because they want someone reliable to look after their place. The motive of such owners is not to make money or profits but to ensure that the house is maintained well and that the people living in it are honourable and dignified.

So what is the best way to set about pricing your place?

One of the first things you must do is to inspect your own apartment very carefully and fix all the flaws. This is only if the apartment is used and requires your attention.

There is always a range in which apartments could be rented out especially if they are in complexes and this range should be identified, if you are not living there or do not know how to do this, get hold of another owner in the same complex or simply get hold of an experienced realtor who might be able to shed some light on the numbers.

Once you know the minimum and maximum ranges, you should wisely arrive at what you think is a reasonable figure (preferable somewhere in the middle) and be flexible when it comes to negotiating with clients. Any sane person, once a few lines are exchanged with the potential tenant, understands the calibre of the client and is in a good position to gauge whether the client is worthy of the apartment or not.

This is the simplest way to approach this whole scenario. Do not go by the fancy numbers told to you by various people. There is always the market price and then there is your price which has to somewhere around the market price.