Perspectives That Matter On Real Estate Investment

Adeola Fadiran (Senior Associate) Harlem Solicitors

Real Estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water. It involves buying, selling or renting land, buildings or housing. Real Estate Investing involves the purchase, ownership, management, rental and/or sale of real estate for profit.

Real Estate can be divided into the following groups namely: residential, commercial and Industrial. You can choose to invest alone or in partnership with others. Such partner(s) must be carefully chosen and such partnership should be formalized to avoid unnecessary conflicts in the future.

The ever-increasing population in Nigeria is responsible for the sky-rocketing demand for shelter on a daily basis, most especially in the cities. As a result, rent prices are always on the rise, being one of the most basic human needs, thereby creating constant, steady and predictable income unlike other form of investments. Below are some of the benefits of investing in real estate in Nigeria.

Investment Planning for Your Children: Real Estate Investment is a very sure way to provide future planning for your children’s education. The returns on real estate are constant. Therefore, you can work out a plan on how to use the returns to fund your children’s fees annually etc.

High Returns on Investment: The value of real estate is ever growing, especially in Nigeria where there are limited matured properties, unlike in Europe. The huge demands for shelter in Nigeria coupled with the inability of a large percentage to afford constructing their personal buildings make the returns on real estate investment one of the highest in the Nigeria.

Steady Cashflow: When you build or buy a property, and you rent out the property to tenants or even sell same. On the first hand, the property starts to earn you rental income. On the other, you earn profit as the case maybe. Increase in rent prices means more income for you as the owner of the property.

Usable as Loan Collateral: To obtain a bank loan, there is always need to provide a collateral which many people find very difficult to make available. For a property owner, it is usually easier because, banks prefer real estate as collateral because real estate is known to continually appreciate in value unlike cars that lose value daily or stocks whose value can disappear overnight. Real estate investment appreciates with time. Lands almost never depreciate in value unlike other form of investments. The rent derived from the investment will serve as your interest while your money continues to grow.

Low Risk Investment: Real Estate is physical and tangible compared to stocks, bonds and other intangible forms of investment. In times of high inflation, economic boom and bust, real estate investments remain robust and will most likely continue to earn you income.

No Specialist Knowledge Required: Real estate is easier to research than stock and shares. A significant amount of research can be done online, by visiting open houses and auctions or contacting real estate firms.

Full Control: A real estate investor can have full control over the property purchased, be in charge of significant decisions and the processes involved in the purchase & sale or rental of the property. You can directly influence the asset worth (by adding value to it) and cash flow (by raising rent).

Perfect Retirement Plan: The long term benefit is one of the perfect ways to ensure that by the time you retire, you no longer struggle with paying your rent, rather, others are paying rent to you being their landlord.

It’s an Avenue for Open Space Leasing: For those who cannot afford to buy a building or erect one. The good news is that income can be realized from bare lands by leasing it out, you earn returns on it and the value of the land also appreciates.

In this era, technology has made real estate investments a lot easier. Advertisements for properties can be done online via Linkedin, Instagram, Tweeter and Facebook. Real estate investors can manage a portfolio of properties without really needing to leave their homes all the time.

Real estate investment enhances long term capital growth strategy, in the sense that, an investor can purchase a property and later sell same after a long time of purchase, hence, the property purchased delivers capital gain.

My conclusion is drawn from one of the quotes of Robert G. Allen “How many millionaires do you know who have become wealthy by investing in savings account”. Invest wisely, choose real estate investment.

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