Many of my clients have a problem which they think is unique.
This problem is called “Anchoring”.
It means you have heard (or seen) about transactions which have happened at a particular price, then they expect that price for their real estate.
Let me explain.
I have an office space in Mumbai bought for Rs. 6 Lakhs (circa 92). This property had seen a high of Rs. 30L but now has a market price of Rs. 15L. In case i need to sell it, I should sell it at 15L.
However, what happens is I get “anchored” at 30L and decide to rent it.
That is WRONG.
It is a negative feeling “I am not getting 30L, so I am waiting” is the message.
In case the price falls further, I am still waiting. This makes no sense. If you wish to sell, sell. If you wish to rent it out, rent it out.
What happens if it is a brand new flat or office which you have bought for reselling after 3 years? Should you keep it locked or give it on rent for 3 years? My view is YOU should keep it locked.
A tenant can cause serious damage to the premises – in terms of drawing wires all over the place. Scratches on the glass, the electric board looking old because of usage, floor being damaged, etc. This will reduce the potential sale price. What happens if after one year the market jumps up dramatically and tempts you to sell? You will be stuck. So there is a simple lesson to learn and remember:
Do not rent a property which you actually wish to sell.
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