How To Rent A Commercial Property To Install An ATM?
The need for ATMs in metropolitan centres is increasing as the population grows. Renting out your property to banks is an easy way to earn substantial returns if you own a commercial property. See the detailed instructions for a hassle-free and secure method of renting a business property for ATM installation!
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The leasing industries for homes and companies are distinct from one another. For instance, whereas renting a home has relatively low costs, renting a commercial space comes with substantial operational costs and danger of vacancy. Therefore, it is crucial to lease out your space in a way that it obtains consistent rentals in order to recoup the money you invested. Nowadays, the majority of commercial property owners choose to lease their properties to banks in order to simplify the rental process. The newest real estate trend involves renting out commercial space to financial institutions for the installation of automated teller machines (ATMs), and it is quickly catching on in places like Hyderabad, Bangalore, & Chennai, among others.
What steps are involved in installing an ATM?
The following is a list of the general requirements for requesting an ATM installation 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 and Non-Banking Financial Company (NBFC).
- The application should contain all relevant information about the property, such as location, neighbourhood, and neighbouring landmarks, among other things.
- The institution will examine the application, evaluate the demand and traffic in the area, and process it accordingly. Banks typically favour freehold homes without mortgages or encumbrances.
- After the application is approved, the applicant must submit any further information that is needed in the prescribed standard form.
- Additionally, the landlord is required to set up a network connectivity facility and offer space for a server room.
- 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.
Which leasing models are available?
The three different leasing models for ATMs are White-Label, Brown-Label, and Franchise.
White-Label ATM
None of the banks own 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 incorporated 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. These ATMs are open to users from any bank, although there is a cost for the service. These ATM transactions are all charged.
ATM with a Brown-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 & network connectivity. The sponsor bank’s logo can be found on the ATM. It is a financially sensible option for banks.
ATM franchise
By acquiring an ATM franchise, you can make use of your business space in another manner. This model was introduced 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.
How are the associated costs and returns calculated?
The price of installing an ATM
“Monthly rentals and a security deposit to the bank, which may range from Rs 2 lakh to Rs 3 lakh depending on the location, space, and number of ATMs placed, are required in order to lease out your premises 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 maintenance, which might cost between Rs 25,000 & Rs 30,000,.
How much you may charge in rent?
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 income earned. 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 make at least Rs 50,000 to Rs 60,000 each month.
What things need to be taken into consideration before renting out space 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 shall be used for the ceiling, and all building occupants must give their NOC.
- Additionally, the landlord must make room for the installation of network connectivity on the roof and a server room.
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 system.
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