The right time to be considered to exit a real estate investment is when it pays off, probably in a time duration of at least 3-4 years. There is no scientific method to calculate but one should exit a property based on its return on investment achieved and cost of funds.
Making the exit safe
Ipsita Tomar write on Magicbricks Forum, “I want to sell of my studio apartment in Noida. Should I sell it off now or maybe wait till next year to earn maximum earnings?” These kind of questions are common on Forum. Everyone who has invested would like to earn lucrative returns from the purchase and definitely not incur losses.
The only safe and consistently profitable route is long-term investment. This is why it is extremely important to know what will happen a few years down the line – to the property market in general, the location, the property in particular and one’s own finances.
The housing society where the property is shares certificate and the sale/purchase deed of the property are the main documents required to sell a residential property. If the property has been sold and bought multiple times, a copy of previous deeds may be required to prove the authenticity of the deal. Other than these, copies of Stamp Duty and registered house documents will also be needed.
Irrespective of the timing, a property investor must always focus on having the highest-quality asset base. This means the quality and specifications of the building, the specific location, the depth of the infrastructure and accessibility.
Exiting in the present scenario
Irrespective of the property status – under-construction or ready-to-move-in, buyers and investors who own real estate assets and are contemplating on moving out of the market should analyse the current market condition.
Most of the investors looking to exit at this point are unlikely to make any gains. In many cases, when the return is indexed to inflation, the return might actually be negative. This is because the prices have either been stagnant or have seen insignificant increment over the last few years.
This is because the prices have either been stagnant or have seen insignificant increment over the last few years. The following graph shows percentage change in the City Price Index for 14 cities from Sep 2013 to Sep 2016.
Cities like Delhi and Ghaziabad, the price levels have declined.
Quick pointers on selling it right
• Property market in your city/locality: The residential property market is location specific and the prices will vary for different areas. How soon do you need the money? Do not sell your property in a hurry if you do not need the money urgently. Getting the best deal may require patience or even spend some money to add value to your house. You also need to consider the rental return from the property as it will be a source of steady income
• Price it right: The biggest mistake sellers make is in pricing their property too high. The best way to determine the ideal price for your property is to check with brokers in the locality or by listing it on property portals online
•Consider the taxes: How much you actually get after you sell the property will depend on how long you held the investment. If you sell your house within three years of buying it, you will lose the tax benefits
• In case of a mortgaged property: Selling a house that has an outstanding loan requires a lot of documentation. So, try to pay the loan and then sell the house
Real estate is not a ‘get rich quick’ investment route. It pays off only when one invests in a property for at least 3-4 years. Even with a long-term investment horizon, one needs to have a clear exit strategy in mind before one buys real estate as an investment.
[Source:-ET Realty]
