₦airaland Forum

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Acidosis:
Real estate is a long-term investment, T-Bills is not. Let's not forget this.

No one buys a land or builds a house and expect a return on investment in 91 days, 1 year, or 5 years. It could take 20 years or more.

However, there is no guarantee that a liquid investment like TBills will remain after 5 years. Just a little liability, and everything is gone. The easier it is to sell/liquidate, the more difficult it is to sustain over a long period.

We are only carrying out a comparative analysis between investing in the capital market today and investing in real estate for a young investor with the volatile Nigerian business environment in mind.

By a young investor we are looking at the young passionate Nigerian who struggled through to get at least a university education. Searched and got a job that is not too fantastic but at least he can get by. Such does not even have a rich uncle supporting etc. In this instance he has to decide between these options, which should take precedence.

Ijeoma660:
We are only carrying out a comparative analysis between investing in the capital market today and investing in real estate for a young investor with the volatile Nigerian business environment in mind.

By a young investor we are looking at the young passionate Nigerian who struggled through to get at least a university education. Searched and got a job that is not too fantastic but at least he can get by. Such does not even have a rich uncle supporting etc. In this instance he has to decide between these options, which should take precedence.

I think a mix of both wouldn't be a bad idea, especially when the goal or dream is big. With capital market, a man with so much struggles is less likely to achieve a big dream. There's little or nothing an investor can do to influence returns on investments. He's always at the mercy of financial powers and investment houses. And most of the time, returns are usually static or, at best, fall within a known range whether economy booms or not.

With real estates, however, a young investor can put to use his forecast and research prowess (based on government and institutional policies, FDIs, etc). Just a 9PM breaking news about a proposed university, or refinery in Ibeju-Lekki can turn the young investor to a multi-millionnaire in 10-20 years.

The other feasible avenue to achieve this dream is entrepreneurship (business). Monies invested in the capital markets are usually diverted to real estates and businesses anyway.

Capital markets simply channel the wealth of savers to those who can put it to long-term productive use, such as companies and governments.

The best a capital market would do to a young investor with a non-fantastic job is "capital preservation", improved savings culture, and some returns to keep body and soul together.

The last 3-4 pages have been simply mind blowing. Some intelligent, objective, and factual bundle of analysis. I would rather not mention specific names.
Although, I'm not new to investments, but I have been exposed to so much information and experiences.

Thumps up to everyone here.

Barrytone:
My house is up for sale but nobody is asking, maybe am not shouting enough. House is worth 35m to 50m. I realized that if i invest that amount then i will use the interest to rent a duplex in the choicest estate in town and still have money remaining then i. 5 years my interests can buy or build a befitting home for.my family. A duplex is 1m to 1.5m in best estate in my town. 35m gives me 4.2m at 12%. Even i use 2m to pay rent, i have 2m to reinvest. I should be able to own my dream mansion in my dream area in next 5 years.

Seems you are missing out some things!
Assuming building with 10m at a remote area gives
750k m per annum from rent

And

Assuming 10m in Tbills gives 1.5m per annum.


You don't just conclude that Tbills is better because the property that yields just 750k also appreciates in most cases. This translates to a better return ultimately.



Again, inflation or devaluation MAY slightly affect the physical cash.

Note that inflation doesn't affect all sectors same way.




Compare and see the post below:

ahiboilandgas:
Another example ( real life ) My Neigbour bought a land for 800 k and built a duplex 10 years ago in a developing area (c.o) total was 5 million naira ...he didn't renovate for 10 years by 2018 he sold the house for 29m ....so if I add the oppurnity cost of the 500k rents he was suppose to pay for 10 years will also be 5m...so his total profit is 29m + 5m + 2m ( increase rent ) total 37 m ....i put the 2m cos the rent of duplex in the area is now 1.3m ....so this 5m generated 37m over 10 years net profit is 32 m

cc
ahiboilandgas

Finelinks:
Seems you are missing out some things!
Assuming building with 10m at a remote area gives
750k m per annum from rent

And

Assuming 10m in Tbills gives 1.5m per annum.


You don't just conclude that Tbills is better because the property that yields just 750k also appreciates in most cases. This translates to a better return ultimately.



Again, inflation or devaluation MAY slightly affect the physical cash.

Note that inflation doesn't affect all sectors same way.




Compare and see the post below:





cc
ahiboilandgas

I think tbills is better. You just talked about the property appreciating without considering the other angle, empty flats, difficulty in paying rent by tenants, property damage etc.
this thread really opened my eyes about rental apartments! I also see what landlords go through with tenants including hiring and paying lawyers too and I just think it’s not worth it

NL1960:
I normally tell people that a young man having in his mind to build a property to live in just to be called 'landlord' is archaic. You will hear some people say 'na rent i go die put'. I believe property is worth it when it is an estate with several flats.

I live in a 6 flats compound. Four of us that are the early occupants pay our rents constantly. The Landlord then saw that as a weakness and opportunity to exploit and started increasing rent anyhow. He was trying to increase our rent to catch up with the new tenants. One flat became vacant and it took 6 months to get a new tenant. The rent of the new tenant expired and has not been able to finish paying and now another rent is due. Another flat became vacant and it took 9 months to get an occupant. We were now surprised when the landlord gave us an increase for the next year rent and it was just between 8-10%. This is somebody that will wake up and do 40% and say 'anybody that does not want to pay should pack out'. Iam sure he was now starring at the prospects of 4 flats being vacant as we had already made up our minds that if he does his 30-40% again, we will pack out. A tenant is still owing part of a year with another year due. The new tenant is yet to complete agency and agreement fee.

The upfront interest from my TB pays my one year rent with some good change to flex whereas the capital would not have built me a bungalow in the same area. I no come Lagos come build house. Na money i come make for Lagos.

Oga forget.

Even Bill gates and and his likes own their houses.

If you are big you are big.

Some level of freedom comes with ownership of one's house coupled with latitude to behave the way you like, avoiding landlords policing you about.

People differs in investment choices. There is nothing wrong in building your mansion if u can afford it. I love to live in my own house anytime anyday but using your first money to build in an attempt to rent it out and make money has rendered a lot of young prospect youth useless including my myself. The house we built in phc before relocating to canada has been there without tenants. We put it for sale last yr but we didnt get a reasonable buyer. Now we have one tenant who want to occupy it on the condition of paying rent twice, infact, the house need renovation right now. Meaning that should we collect his half payment, we will use it to renovate.
This real estate thing is just a luck. The fact that u are lucky doesnt mean that another person will have the same luck. Build your own house when u are well balanced financially.

chigo4u:
I think tbills is better. You just talked about the property appreciating without considering the other angle, empty flats, difficulty in paying rent by tenants, property damage etc.
this thread really opened my eyes about rental apartments! I also see what landlords go through with tenants including hiring and paying lawyers too and I just think it’s not worth it

Compare first hand experience as related by ahiboilandgas.

As per ownership of one's residence, the advantages have been stated elsewhere.

What is the interest rate of 1million deposited for one year? How much will it yield monthly? If there is a way I can calculate it myself please show me. Thanks

coolangel54:
What is the interest rate of 1million deposited for one year? How much will it yield monthly? If there is a way I can calculate it myself please show me. Thanks

yes I have the formula for calculating it, will post it wen am chanced.

Thanks. Expecting

murphyrichy:
yes I have the formula for calculating it, will post it wen am chanced.

needful:
People differs in investment choices. There is nothing wrong in building your mansion if u can afford it. I love to live in my own house anytime anyday but using your first money to build in an attempt to rent it out and make money has rendered a lot of young prospect youth useless including my myself. The house we built in phc before relocating to canada has been there without tenants. We put it for sale last yr but we didnt get a reasonable buyer. Now we have one tenant who want to occupy it on the condition of paying rent twice, infact, the house need renovation right now. Meaning that should we collect his half payment, we will use it to renovate.
This real estate thing is just a luck. The fact that u are lucky doesnt mean that another person will have the same luck. Build your own house when u are well balanced financially.

If you want to do real estate,deal strictly on lands.If you want to build,build one you are either leaving alone or one that you have your own tenants

Structures come with a whole lot of stuff and it's not really as profitable as people think.It comes with maintenance,tax etc that must be done.Lack of renovation can easily scare away prospective tenants especially if your environment has houses that conform with modern designs,facilities etc

Rent is not guaranteed cause you may have some tenants that are unwilling to pay or may have one financial crises or the other.You now have to pay for court fees or lawyer fees depending on the situation or you may decide to wait it out

if you want to sell,its actually hard to see a buyer thats willing to pay the hefty price in the real estate market especially if that house needs some serious renovation.6 flat houses of old designs cost 40 mill and above .When you eventually sell,you may not make a large profit if you deduct Maintenance and some many costs spent on the structure over the years

Imagine dropping 40 mill and then doing renovations that may be more than half the price you bought it only for you to collect 35k-40k/month cause anything higher will see prospective tenants looking for an alternative.On top of that you are not even collecting up to 10% of your investments per annum

Real estate is good but apart from land,its not really the best form of investment especially if you have alternatives like T-bills

You area wise man and you know tge rudiments of investing.Exactly what real estate guru's preach..Only buy properties that bring in steady cash flow!

Barrytone:
My house is up for sale but nobody is asking, maybe am not shouting enough. House is worth 35m to 50m. I realized that if i invest that amount then i will use the interest to rent a duplex in the choicest estate in town and still have money remaining then i. 5 years my interests can buy or build a befitting home for.my family. A duplex is 1m to 1.5m in best estate in my town. 35m gives me 4.2m at 12%. Even i use 2m to pay rent, i have 2m to reinvest. I should be able to own my dream mansion in my dream area in next 5 years.

DigitalMallam:
I'm hoping 02/10/2019 Tbill rate climbed to 14% amidst speculation of Naira devaluation. 2019 rates at a glance.

Thanks for the figure

Finelinks:
Oga forget.

Even Bill gates and and his likes own their houses.

If you are big you are big.

Some level of freedom comes with ownership of one's house coupled with latitude to behave the way you like, avoiding landlords policing you about.

There is a difference between owing your house and investing in real estate. Let's set this straight. The analysis you run in deciding between owing your house and paying rent every year might make sense especially when you include the emotional benefits of avoiding landlord wahala. Building for investment purpose is completely different. For people that have the patience for a 20-year payback period, good. Some of us don't. Infact, some companies have policies of investing in projects with payback period of less than 10 years, etc. So, let's differentiate between building a personal home and building as an investment. Anyday anytime, I believe building a personal home (that you can actually live in) is a good idea.

Jesusbabygirl:
There is a difference between owing your house and investing in real estate. Let's set this straight. The analysis you run in deciding between owing your house and paying rent every year might make sense especially when you include the emotional benefits of avoiding landlord wahala. Building for investment purpose is completely different. For people that have the patience for a 20-year payback period, good. Some of us don't. Infact, some companies have policies of investing in projects with payback period of less than 10 years, etc. So, let's differentiate between building a personal home and building as an investment. Anyday anytime, I believe building a personal home (that you can actually live in) is a good idea.

Building that house with your basic capital is wrong. Grow the capital before using the proceed of your business to build a house. Dont take your first 50m to build a house, after the house what else? Grow the money in a risk free portfolio and get a stand alone duplex and still keep change. In few years you can use your profits to buy or build a house with your capital intact. I own houses and a regret owning them too early, they bring little or nothing to the table and as a speak what they bring is still the money i invested, no sight of interest in many years to come. I have one tenant that is due out by 31st of October, i pray he leaves in peace but am sure he wouldn't. I will pay a lawyer and lawyer has advise we get a "bailiff". Front the outside of the house i can see damages to the building already. Meanwhile, my tbills interest and maturity drops unannounce even to me most times. I am a kind of person that dont have time, always too busy so any day i spend dealing with a tenant other than getting rent is a big minus to my life.

ahiboilandgas:
I [b]really don't how to explain it [/b]may be when u start approaching 50 years u will understand .....it beyond just having money in the bank in tb ....i have a personal resident of like 30m and above average investment in tb ,and bond ....my home can generate 1.5 m if I choose to rent out or generate 3.5m if I put in t.b but there is an inert happiness the home bring ...no tenancy agreement , so stupid letter from landlord no quit notice, I can't renovate any time ,I can add improvement

The house u build to live in is a liability (cos u av to maintain it) while the one u rent out is an asset(cos u get paid for it and tenants do d maintenance). The bigger your house the bigger your liabilities. The more apartments u av for rent, the more assets u av. Thats a better way to explain it.

What? Where do tenants do maintenance for the landlord? Except of course it's is counted as part of the rent.

tumababa:
The house u build to live in is a liability (cos u av to maintain it) while the one u rent out is an asset(cos u get paid for it and tenants do d maintenance). The bigger your house the bigger your liabilities. The more apartments u av for rent, the more assets u av. Thats a better way to explain it.

tumababa:
The house u build to live in is a liability (cos u av to maintain it) while the one u rent out is an asset(cos u get paid for it and tenants do d maintenance). The bigger your house the bigger your liabilities. The more apartments u av for rent, the more assets u av. Thats a better way to explain it.

the wife u marry and kids u have are also libilities,just put everthing in tb and become a priest (zero liabities)

Finelinks:
Oga forget.

Even Bill gates and and his likes own their houses.

If you are big you are big.

Some level of freedom comes with ownership of one's house coupled with latitude to behave the way you like, avoiding landlords policing you about.

You should learn to read well and comprehend before responding to a post. We are talking of young people here just starting life and you are giving an example of Bill Gates. At what age did Bill Gates own his house?. Who is talking of being big here?. When you want to give an example, give an example of a young Nigeria. Iam sure your next example will be Michael Dell.

Finelinks:
Oga forget.

Even Bill gates and and his likes own their houses.

If you are big you are big.

Some level of freedom comes with ownership of one's house coupled with latitude to behave the way you like, avoiding landlords policing you about.

how many houses does Warren buffet have?

This house argument can be likened to other archaic advices that dont work in the present economy. our parents told us go to school, study hard and get a good job. That does not apply now. The education system is not even at par with the new type of jobs which are springing up. So what your kids learn in primary school would be obsolete when they get to secondary school.

same with houses. Go to Abuja and see empty houses losing money daily. Why would I use 75m to buy a house because of the social tag of landlord? if I invest that money in businesses ot even bills my profit or interest is more than enough to rent a duplex in a choice part of town.

Yes the house appreciates in value, but that argument only holds water of you intend selling the house which most people dont because of cultural connotations that come with owning a house.

My best bet is buying land or developing the property half way and selling off. Not waiting for rent that may take you 20 years to recoup your capital talkless of profit.

las las na next of kin go squander the money

ahiboilandgas:
the wife u marry and kids u have are also libilities,just put everthing in tb and become a priest (zero liabities)

your wife and children are never liabilities. Your kids could take care of you when old. Take over or your company or heck even be the next president. I'm sure if Jude thought this same way we would never have known p-square

StellarThesis:
how many houses does Warren buffet have?

This house argument can be likened to other archaic advices that dont work in the present economy. our parents told us go to school, study hard and get a good job. That does not apply now. The education system is not even at par with the new type of jobs which are springing up. So what your kids learn in primary school would be obsolete when they get to secondary school.

same with houses. Go to Abuja and see empty houses losing money daily. Why would I use 75m to buy a house because of the social tag of landlord? if I invest that money in businesses ot even bills my profit or interest is more than enough to rent a duplex in a choice part of town.

Yes the house appreciates in value, but that argument only holds water of you intend selling the house which most people dont because of cultural connotations that come with owning a house.

My best bet is buying land or developing the property half way and selling off. Not waiting for rent that may take you 20 years to recoup your capital talkless of profit.

las las na next of kin go squander the money

their notting archaic owing a property Trump still hustling to build Trump tower in Russian,bua estate abuja is own by abdulsamad rabiu . Empty houses in abuja is as result of the source of capital ... ( from corruption and money laundering) if I steal 5 bn from govt I will not buy tb at 20 percent, I will build estate and might not worry if they rent it or not

StellarThesis:
how many houses does Warren buffet have?

This house argument can be likened to other archaic advices that dont work in the present economy. our parents told us go to school, study hard and get a good job. That does not apply now. The education system is not even at par with the new type of jobs which are springing up. So what your kids learn in primary school would be obsolete when they get to secondary school.

same with houses. Go to Abuja and see empty houses losing money daily. Why would I use 75m to buy a house because of the social tag of landlord? if I invest that money in businesses ot even bills my profit or interest is more than enough to rent a duplex in a choice part of town.

Yes the house appreciates in value, but that argument only holds water of you intend selling the house which most people dont because of cultural connotations that come with owning a house.

My best bet is buying land or developing the property half way and selling off. Not waiting for rent that may take you 20 years to recoup your capital talkless of profit.

las las na next of kin go squander the money

But at least one need to own a house he will call home. How can a man be paying rent at old age? Not a good thing especially if you want to remain in the city.

Nb owing property can come in various way it might be an enterprise like a hotel, or a mall like palm lekki or a school building or shops inside a markets or a ware house or filling station this are all property or residential home

ahiboilandgas:
the wife u marry and kids u have are also libilities,just put everthing in tb and become a priest (zero liabities)

Hahhahhaha...this baba funny o

Hope it helps.

coolangel54:
Thanks. Expecting

Example 2 young investor a with 10m capital ,b with 100m capital what advice ?investor a should invest 10 in tb used 1.4 to rent a home 400 k and use 1 m to buy land or pay bill if having other source of income...not using the entire 10m to build a house

Investor 2 can use 20m to buy up an apartment in lekki to avoid paying 1.5annully and keeping his 80m growing in tb living well

Bennycollins:
What? Where do tenants do maintenance for the landlord? Except of course it's is counted as part of the rent.

Paid for. Service charge.

The back and forth is as result of people been in different investment stage and having various sum....u can't tell a family man of 45 having 200m not to own a house of 30m for his family to rent .but a 30 years old single guy with 10m can fix all in tb