How To Rent A Commercial Property For ATM Installation In 2023?
Rent A Commercial Property : A increasing population has increased the need for automated teller machines (ATMs) in both urban and rural areas. Renting out your property to banks is an easy way to earn substantial returns if you own a commercial property. Find out how to rent a business property for ATM installation in this step-by-step guide—it’s a hassle-free and secure alternative!
The majority of commercial property owners today choose to lease their properties to banks and Non-Banking Financial Companies (NBFC) as a hassle-free rental alternative. A increasing trend in commercial real estate (CRE) is renting out commercial property to banks and NBFCs for the installation of Automated Teller Machines (ATMs). In Tier-2 cities where you rent your space for ATMs, in addition to major cities like Hyderabad, Bangalore, and Chennai, among others, it is quickly catching up.
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What steps are involved in installing an ATM?
The following is a list of the general requirements for applying for an ATM on business property. To learn more about the procedure, one can also get in touch with a licenced broker or real estate agent:
- Make an application for the establishment of an ATM at a bank or NBFC.
- The application should contain all relevant information about the property, such as location, neighbourhood, and adjacent landmarks, among other things.
- The institution will examine the application, evaluate the demand and traffic in the region, and process it accordingly. Banks often choose freehold homes without mortgages or encumbrances.
- Following application acceptance, the applicant must submit the necessary information in the standard approved form.
- In addition to renting out space for ATM installation, the landlord must also set up a server room and a network connectivity facility.
- With regard to the property, the institution and the landlord will engage into a lease arrangement.
The rent that banks provide ranges from Rs 60 per square foot to Rs 200 per square foot. However, this may change depending on the current market rates, whether the ATM is located in an urban or rural area, and the daily possible transaction volume.
What kind of ATM leasing are there?
The three different leasing models for ATMs are White-Label, Brown-Label, and Franchise.
Rent A Commercial Property : ATMs with no labels
None of the banks possess White Label ATMs. They belong to the NBFCs. In 2011, the Reserve Bank of India (RBI) approved the opening of white-label ATMs by non-banking firms established in India under the Companies Act. With a sponsor bank and a network provider, these non-banking organisations sign a “Service Level Agreement” that guarantees cash flow in the ATMs. The NBFCs are require by the RBI to open a specific number of ATMs within a predetermined timeframe. Additionally, these ATM installations are concentrated more in rural areas than in semi-urban or metropolitan areas. For instance, the Tata Communications Payment Solutions Limited (TCPSL) must set up 15,000 ATMs, 10,000 of which must be in rural regions and just 5,000 in major cities.
These ATMs are open to users from any bank, although there is a cost for the service. These ATM transactions are all charged.
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Rent A Commercial Property : ATM with a tan label
The foundation of Brown Label ATM is the idea of cost-sharing or outsourcing the ATM operations to a different party. The hardware for the ATMs is owned by the service provider, while the sponsor bank handles cash management and network connectivity. The sponsor bank’s logo may be found on the ATM. It is a financially sensible option for banks.
Rent A Commercial Property : ATM franchise
By acquiring an ATM franchise, you may make use of your business space in another manner. This approach was introduce by Tata Communications Payment Solutions Ltd (TCPSL) in collaboration with Franchise India. However, locations with significant visibility and foot traffic are ideal for Franchise ATMs.
Top 10 Indian ATM Installation Companies
It is simple to lease real estate to a bank, but it might be challenging to select the best lessee. The top 10 ATM installation firms in India with a solid market reputation are listed below since making the proper decision is essential:
- HDFC Bank
- ICICI Bank
- Bank of Baroda
- Tata Indicash ATM Franchise
- Bank of India
- Kotak Mahindra Bank
- State Bank of India
- IndusInd Bank
- Punjab National Bank
- Axis Bank of India
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Rent A Commercial Property : What is the cost of ATM installation?
The price of installing an ATM
You must pay a security deposit to the bank that can range from Rs 2 lakh to Rs 3 lakh depending on the location, space, and number of ATMs placed when you lease out your space for ATM installation. At the conclusion of the lease, the deposit is refunded. However, there won’t be any monthly rent in an ATM franchise system, and you’ll have to pay for site upkeep, which might cost between Rs 25,000 and Rs 30,000.
How much rent can you make by installing an ATM?
In the case of white-label ATMs, NBFCs that install the device might make between Rs 15,000 and Rs 25,000 as a minimum profit. However, there won’t be any monthly rental money if you choose a franchise ATM system. The quantity of daily transactions will determine the amount of revenue generated. Franchise ATM dealers can withdraw up to Rs 15 and conduct non-financial transactions for Rs 5, respectively. For instance, if there are 200 transactions per day, including 50 non-financial transactions and 150 withdrawals, the total profit is Rs 2,500. Without accounting for all expenses, the landowner can generate at least Rs 50,000 to Rs 60,000 each month.
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Things to consider before renting your premises for an ATM installation
Before renting out the area for ATM installation, a landlord should be aware of the following:
- The leased property’s surface area should be between 60 and 100 square feet.
- Class-B concrete should be use for the ceiling, and all of the building’s occupants must provide their approval.
- Additionally, the landlord must make place for a server room and arrange for network connectivity to be installed on the roof.
Before signing the lease, landlords must pay a security deposit of up to Rs 3 lakh. The upkeep, operations, and security expenses must be paid for by the landlord if they choose the franchise model.
What distinguishes the ATM franchise and ATM leasing business models?
In rental models, the landlord is require to provide a one-time security deposit of around Rs 2-3 lakh when renting out a business space for an ATM installation. The landlord also receives a set monthly rental fee in this method.
The investment is far cheaper with the franchise model, but there is no monthly rental revenue. The landlord is also responsible for maintaining the ATM space. If the ATM is place in a busy area, such as a market, the franchise may be quite profitable. Additionally, it creates income in areas where the majority of transactions are made in cash.
The initial expenditure and prospective earnings from installing the ATM machine ultimately determine whether to choose the franchise model or the rental model.
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