Article by Vikas Sharma
Entry & Exit Time in Property is a Very Important Factor to Gain.
There is a common belief that investing in real estate never gives a loss. Many people think that if the property is held for a long time, its value will definitely increase. But the truth may be different. Many times we fail to understand the whole picture. We think that we came out with a profit, but the reality is that we came out with a loss. How? Let’s understand.
Common investors do not calculate the Entry & Exit Time in Property. Ignoring this leads to losses. Most investors measure their profits and losses based on the price at which they bought the property. If they sell the property for less than the purchase price, they consider it a loss. And if they sell it for more, they think it is a profit. But one important thing has been missed, which is Entry & Exit Time in Property, and which is the most important factor to calculate the profit.
Understand this by an example
Suppose you bought a flat for ₹1 crore. You kept it for 4 years and decided to sell it. You offerd for said unit ₹1 crore 70 lakh at that time, but you did not sell it because you wanted to sell it for ₹2 crore. You thought it better to wait for some time. While waiting, 4 more years passed. Now after a total of 8 years, you got a price of ₹2 crore and you sold it and left. If you feel that you have made a profit of ₹1 crore on the flat, then wait a bit.
Let’s calculate it properly. You waited for 4 years for ₹30 lakh. If you had sold it four years ago for ₹1.70 crore and kept that money in a fixed deposit in a bank, how much money would you have got? Normally Bank gives 7 percent interest on this amount. If this amount was kept in FD for 4 years, you would have got a total of ₹2,24,38,799 (₹2 crore 24 lakh). For four years, interest of a little more than ₹54 lakh would have been added. Now this calculation says that you have suffered a loss of ₹24 lakh.
The example of FD is given here because it is one of the safest mediums. If the same money was invested in a medium with high returns, it could have been much more.
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