People occasionally ask me if investing in real estate is more or less profitable than other business options when they are attempting to decide where to put their money.
I always respond by saying that investment in real estate outsourcing frequently offers long-term advantages in addition to the possibility for great financial gain.
I go over five of these benefits below:
- Real estate can be renovated to increase its value.
After purchasing a stock, you retain it for a while with the intention of selling it for a profit. The stock’s performance is based on corporate success and company management, both of which are outside your control.
Real estate investments are directly within your control, as opposed to other traditional investment vehicles like stocks, whose rate of return depends on external factors (like corporate management, for example).
There are many more factors that you may control to increase the returns on your investment in it, even though you won’t be able to influence changes that might occur in demographic and economic aspects or the impact of nature-induced changes.
Examples include matters involving the addition of repairs or enhancements to the real estate and renters you permit to occupy it.
If you do it correctly, the value of your investment will increase, bringing you greater riches.
- Successful real estate investing has been demonstrated to be profitable. It has frequently been utilised to effect a bail out from financial difficulties, such as those that many have encountered during the economic slump currently taking place in Nigeria, even during a recession (like the one we’re in right now).
Many of my clients have confided in me that they are unsure of advantageous ways to invest their money in light of the current economic climate. Some of them have run through their treasury bills and bonds, but they urgently require a new investment.
After in-depth conversation, I suggested investing in landed property as the most acceptable and secure alternative channel of investment based on my knowledge as a real estate adviser.
This is due to the fact that property will always appreciate significantly, even if all enterprises fail. I then shared the following appropriate statement from a former American president to emphasise my point:
Franklin Roosevelt once said that real estate was one of the safest forms of investment because it couldn’t be lost or taken advantage of.
Unsurprisingly, the client decided to follow my recommendation and sign up because it was the right decision in every way.
- Investments in Real Estate Are Not Affected by Inflation
To put it another way, investing your money in the ownership of real estate that is financially sound will shield you from the negative impact that inflation typically has on other traditional assets.
This is due to the fact that inflationary pressures and the value of real estate generally tend to increase one another. This explains why rising inflation causes an increase in property prices and rental costs.
Due to the nature of real estate, owners have the distinct advantage of being able to raise or lower their rates to reflect inflation.
For instance, raising monthly rents to account for inflation can act as a buffer against the losses other financial investments experience due to inflation.
- Real estate is exceptional in that it is always accepted as collateral to obtain funding from banks.
In Nigeria and other areas of the world, real estate in the form of buildings or lands with legal titles (i.e., Certificate of Occupancy, or “C of O”) is currently the most recognisable and acceptable type of collateral.
Its special ability to safeguard the interests of both the borrower and the bank (which is making the loan) enables money to be delivered only after proper verification and an agreement on terms and conditions.
One of the main advantages of a private C of O over a global C of O is that the intended borrower will need the former (i.e., a private C of O) in the event of any future financial transactions with a bank in Nigeria.
- Real estate investing permits the use of third party funds.
So even if you don’t have enough money, you can still accomplish it. All you need to know is how.
Real estate is a tangible asset, or what is referred to as a “hard asset,” making this possible. That is a quality that appeals to financiers, or those with money to invest.
This is why real estate items are frequently purchased with debt, as opposed to more traditional investment products like stocks, which are considered as more riskier to invest in because they are NOT tangible.
Therefore, buying real estate can be done with cash or mortgage finance. In the latter scenario, payments may be set up so that you or a willing third party can contribute small starting sums.
These payments will be made on landed property, which will continue to appreciate in value throughout and after the payment period. This gives people who are financing the acquisition even more assurance that their money is secure.
It’s no surprise that real estate investing has been successful for so long.
[WARNING: BE CAREFUL] Despite the advantages outlined, I continue to advise potential investors that doing their homework is an absolute necessity for success.
You must take prudence and arm yourself with pertinent knowledge and expertise whether you handle everything yourself or hire pros like me.
I constantly advise my clients to do this so they can make wise investment decisions.
The significance of the aforementioned cannot be emphasised, particularly in Lagos where quite a few people have had their fingers severely burned as a result of failing to take the necessary precautions.
