Real estate investment tips

 

Just like every other form of investment, it is more beneficial to know the rules and regulations that apply than to just invest blindly. It’ll be very tacky to go into any form of investment without knowing the risks involved and how to take precautions. Fortunately, real estate compared to other forms of investment has a lower risk as the investor is guaranteed an increase in the market value of the property over time regardless of the economic situation. Although depending on the type of real estate investment you’reinvolved in, certain market conditions might affect the return on investment. For example, during an inflation, the rental value of a property will increase and in an economic downturn, the rental value might reduce/ remain the same but the money value of rent will be low.

Before you jump into investing in real estate keep in mind all of the following tips:

Money

It is the most important because you will invest based on your worth. A lot of people with lower incomes prefer to by and hold to increase the value of their properties and later sell. A substantial amount of income will mean you can purchase a house or land in a pricey neighbourhood and build to rent/ sell depending on how quickly you want your return.

Knowledge

Do not invest in any form of real estate if you don’t know or understand what you’re getting into, there’s a high risk of losing money investing blindly. Clear knowledge and information about the type of real estate you want to get into and the property itself will save you from losing money. If you decide to buy a property, the following are important documentation, government acquisition, meeting the owner, if you miss out on any of the following, then you’ve lost valuable money and time. A property under government acquisition is a lost cause, a property where you can not identify the owner/ family is one you should avoid, one without proper documentation, just walk because you don’t want to spend all your money on lawsuits.

Documentation

Whether you’re acquiring a land or a house, you need the documents. Start by getting the survey plan to get the coordinates and verify it’s authenticity at the surveyor generals office. If the situation of the land is unclear it’s better you leave it and move on to the next except you want to be in and out of courtrooms for a time period. The authenticity of a land rests in its documents if they can’t be provided or there’s an issue with the owner/ family, walk. After you buy your land/ house perfect the documents for future purpose.

Click here to learn the types of documents

Neighbourhood

When you hear the best time to buy a property is now, it is true because after a while the value of properties will not double or triple, it will rise gradually. At this time early investors are starting to reap the rewards of their investments.  The best place to invest your money in land is in a newly developing area, their values rise very fast for the first couple of years (depending on how long the demand is on the rise) and then growth becomes steady. By then the early birds are getting paid in millions and you are buying from them at the price you should be selling. If you’re going to invest in development then you must have a good amount of cash. Building in a fast-growing neighbourhood s will help move your properties fast as a lot of people are moving in there to live. Consider development and infrastructure before you invest.

Projection

How much will a property be worth in this area in the next 2-3 years or 10-15 years? The type of development/ infrastructure being put in place in a given location will determine how quickly the value of a property will rise over time. Take, for example, Ibeju Lekki. Land was selling there for N200,000 in 2010, as at 2015 land was worth about N500,000 in certain areas by 2016 with the ongoing Dangote refinery land increased to N2million in those areas and now in 2018 land is worth N4.5million and we’re expecting a 200% increase within the next 3 years. How that’s a place you want to put your money in to buy land. You can never go wrong. People will start relocating towards that area because there will be employment opportunities waiting around there, who is going to build?

 

Choice

You’re free to choose your preferred investment based on how much risk you’re willing to take. Once you’ve done your home-work on the property you want to invest in, you’re good. Then there’s also the issue of commitment and time. Some people do not want to know the construction/ development process, all they want is returns. Such a person should not supersede the construction process rather he or she will be better off investing in an ongoing development. There’s a clear difference between investor and developer although a developer can be both. If you cannot manage the development process stick to what you can do.

Click here to view the different types of real estate investment for more insight on development and investment

 

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