₦airaland Forum

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

“When you invest, you are buying a day that you don’t have to work.” Aya Laraya

kristonium:
Great write up!

Thank you.

Over time, the real estate sector has stood out as one of the most profitable ventures all over the world. This can be attributed to various reasons some of which are: Security of investment, predictable cash flow, the appreciating nature of the land, and tax benefits.

The real estate sector is quite an interesting sector because of its vastness and diversity. Real estate covers the purchase, ownership, management, rental of properties for commercial and residential use, and/or sale of real estate for profit. The diverse nature of this sector makes it easier for people to invest in it.

However, people are oblivious to this fact and as a result, are still holding back because they do not fully understand how investment in real estate works. To understand how real estate works, one must first start from the basics, for instance, it is very pivotal to understand the factors that drive the sector and are four factors that drive the real estate investment in Nigeria.

1. The State Of Naira: The state of the Nigerian currency has affected so many businesses and Real Estate is not an exception. This is because the Nigerian housing and construction industry is heavily dependent on foreign importation for the raw materials used in building. With the fluctuating state of Naira, the cost of purchasing these raw materials and equipment become unstable and makes it difficult for builders to smoothly run their business.

As a result of the high costs of doing business, property developers to remain profitable will have to pass on these additional costs incurred to the market. According to industry experts, the estimated rise in the costs of housing is 25% – 35%

2. Interest Rate: Interest rates play a very vital role in Real Estate. When considering buying a property for a mortgage, the current interest rate must be put into consideration. This is so because the changes in interest rates affect a buyer’s purchasing power. If interests are lowered, it will lower the cost of getting a mortgage to buy the home likewise and vice-versa, all things being equal. In other words, interest rates determine the demand for real estate.

3. Government Policies: Government policies is another factor that greatly influences real estate investment. Examples of government policies that affect the real estate sectors are Tax Credit, Subsidies, and Deductions.

For instance, real estate investors are subjected to multiple taxations, the taxes and levies paid by them include development levy, income tax, building plan approval levy, property tax, land use tax, and we also have cases whereby real estate investors are expected to pay renovation tax whenever they want to renovate their properties. All these put together can either dissuade or persuade people from investing in real estate.

4. Market Demand: First of all, it is pivotal to establish the fact that real estate is always in demand because of constant growth in population and increased unavailability of land. However, sometimes, this demand drops or increases. This is therefore an important factor in the real estate sector. An oversupply of homes or land in a given area usually results in a drop in prices while an overdemand usually results in the rise of prices.

5. Demographics: When the word demographic is being mentioned, a lot of interpretations come to mind but what does demographic truly mean and what role does it play in real estate? Demographics describe the composition of a population of a particular group.

Demographics are a huge determining factor in real estate investment because they determine the market trends. For instance, Baby boomers who were born between 1945-1964 are an excellent example of how demographics change real estate. The transition between these boomers to retirement led to more generational trends.

If time can be dedicated to properly understanding these factors and the roles they play, then investing in real estate becomes easy to maneuver. It becomes trouble-free for interested parties to explore the potentials of real estate.

“90% of all millionaires become so through owning real estate.” Andrew Carnegie

The most basic real estate investment strategy is “land” investment. “Land” is one of the oldest property types to exist. Since the days of old, man has always traded landed properties and throughout the years this form of investment has proven to be a reliable source of income. In the Nigerian real estate market today, there are several real estate investment opportunities available, however, none of these investment opportunities can compare to land investment. This is because it offers versatile options on how to utilize your property.

The concept of investing in land and purchasing a piece of land is one that is not well understood in Nigeria. Quite a number of people do not completely understand how land buying works and even fewer people understand how investing in land is a smart strategic move for diversifying your portfolio. Trust me you don’t want to be one of these people. People often ask several questions about investing in landed properties like; Is buying land a good investment? What are the benefits of owning a piece of land? Why should I buy land? Or How do you make money buying land? The benefits of investing in land are endless. However, there are factors to consider when investing in a property if you are looking to make good returns.

1. Versatility and Options: Owning a piece of land provides you with diverse options, it is flexible and can serve several purposes. Land can be used for residential and commercial purposes. You can decide to rent, sell, or develop the land depending on your financial expectation and ability. Deciding to rent out your land for the construction of commercial buildings means two things; you are guaranteed a steady income and an increase in property value. Selling the land to commercial or residential investors for added value after some years is another option.

On another hand, the land can also be used for farming and livestock purposes. As a landowner, you have the option of either renting your property out for a number of years or for farming purposes. This serves two main purposes for a landowner, generating money from rent and from appreciation.

2. Land Increases in Value: Over the years the value of land is said to double or triple as times go by and only those who purchased would reap its long-term benefits. One fact is that land when purchased in the right location, has no depreciating value. For this reason, it is a perfect real estate investment strategy. Land is a very veritable resource; it can never depreciate in value. In Nigeria, deciding to invest in land means investing in an asset that cannot be destroyed, moved, or affected rather it would appreciate as development keeps coming to the location.

3. No Competition: The beauty of land is that it differs so there is little or no competition. There are several sizes, location, and even shape that it is near impossible to get the exact land. Compare that to property owners who have to stay afloat in the overcrowded property market. Deciding to invest in land means you would not have to burden yourself with the never-ending process of bidding with other competitors.

4. Limited Management Issues: With an investment in land you don’t have to worry about maintenance, unlike residential and commercial properties. Lands require little or no maintenance but in the case of properties, a lot of energy and money is set aside for maintenance. For maximum profit to be guaranteed in purchasing land, one important criterion if not the most important is that the land has to be suitable for construction. There are certain investors who are too busy to deal with tenants, maintenance, and managerial issues, land is a great strategy for making money in real estate passively.

5. Investing in Landed properties provides you peace of mind: Land is a tangible asset which doesn’t depreciate, wear out over time, or get stolen, owing to this fact, it provides you with the peace of mind you need knowing your investment is secured and you don’t have to be burdened.

Land is a tangible asset and it is easy to purchase. Land requires little or no maintenance, unlike other real estate facets. Land ownership requires no additional work from you, leaving you with peace of mind. This real estate niche has low competition and is just waiting for you to get involved. Land as a real estate investment strategy is possibly one of the best options for investors who are not cut out for the hard work of residential real estate properties.

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”
-Theodore Roosevelt.

“Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values and the least risk.” - Armstrong Williams, entrepreneur

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“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

“It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.” ~Donald Trump

“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”
-Theodore Roosevelt

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”
-Winston Churchill

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

“90% of all millionaires become so through owning real estate.” Andrew Carnegie

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”
-Winston Churchill

“When you invest, you are buying a day that you don’t have to work.” Aya Laraya

WThe philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.” Robert Kiyosaki

“90% of all millionaires become so through owning real estate.” Andrew Carnegie

“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”
-Theodore Roosevelt

Everyone wants a piece of land. It’s the only sure investment, it can never depreciate like a car or a washing machine.” Russel Sage

“When you invest, you are buying a day that you don’t have to work.” Aya Laraya

Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”
-Winston Churchill

“The wise young man or wage earner of today invests his money in real estate.” Andrew Carnegie

“You will come to know that what appears today to be a sacrifice will prove to be the greatest investment that you will ever make.” Gordon B. Hinkley

Everyone wants a piece of land. It’s the only sure investment, it can never depreciate like a car or a washing machine.” Russel Sage.

The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.” Robert Kiyosaki