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Real estate like every other form of investment is more beneficial if you know the rules and regulations that apply to the investment process before making any financial commitment. It’ll be very tacky to undertake an 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 certain market conditions might affect the return on investment. For example, during 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
The amount of money you have has an impact on the type of real estate investment you would want to get involved in. If you’re an investor with great financial capabilities, whatever the type of investment you decide to get involved in you can acquire properties on a larger scale and combine 2 or 3 types of real estate investment.
There is real estate investment for every income level, so you don’t have to spend all your savings on investment. There are some owners that allow you to pay in installments, You can also share your investment costs and rewards with other people if you cannot bear the financial burden alone.
Do not invest in any form of real estate without knowledge of what you’re getting into, there’s a high risk of losing money if you invest blindly. Clear knowledge and information about the type of real estate you want to get into and the property itself will reduce the risk of bearing a loss due to unforeseen circumstances. If you decide to buy a property, it is important to request documentation, check for government acquisition and meet the owner or representative. If you miss out on any of the following, then you’re investing blindly which could result in being misled.
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 away because you don’t want to end up spending all your money on a lawsuit if it all goes wrong. It is also important to make inquiries about the location so as to know whether there’s a high demand for properties or not, this will give you an idea of what your return on investment would be.
Whether you’re buying 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 continue your search except you want to be in and out of courtrooms for a time period. The authenticity of land rests in its documents if they can’t be provided or there’s an issue with the owner/ family, walk away. After you buy your land/ house make sure you perfect the documents for future purpose.
Click here to learn the types of documents
When you hear the saying the best time to buy a property is now, don’t doubt it because after a while the value of properties do not double or triple as they have initially, they remain constant/ rise gradually. At this time early investors are starting to reap the rewards of their investments. The best place to invest your money in landed property is in a newly developing area, the value rises very fast for the first couple of years 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 real estate as a developer then you must be able to pull a huge amount of cash and have an amazing building team at your disposal. Building in fast-growing neighborhoods will help sell your properties faster as the demand for properties in such locations is higher. It is also important to look out for infrastructure and proximity to schools, hospitals, markets, etc when scouting for neighborhoods to invest.
How much your property will be worth in a prospective area in the next 2-3 years or 10-15 years is a very important estimate to make. The only way to project by how much the value of properties will rise in a prospective location is by doing research. If you’re going to put your money to acquire an asset then it better be worth it. The type of development/ infrastructure being put in place in a given location will determine how quickly the value of the properties there will rise over time.
Take for example, ibeju lekki, land was selling there at N200,000 in 2010, as at 2015 land was worth about 500,000 in certain areas, by 2016 with the ongoing Dangote refinery project, land value increased to N2m in those areas and now in 2019 land is worth about 4.5m and we’re expecting a 200% increase within the next 3 years. Now that’s a place you want to put your money to buy land, you can never go wrong. People will start relocating towards that area because there’s employment opportunities waiting around there and they will be needing places to live. For the people that are well informed, development has already begun in wait of pending opportunities.
You’re free to choose your preferred investment based on how much risk you’re willing to take. Once you’ve done your homework on the property you want to invest in. There’s also the issue of commitment and time. Some people don’t want to follow the building process all they are interested in is returns (investors), such a person should not supersede the construction process rather he or she will be better off investing in ongoing development. There’s a clear difference between an investor and a developer, although a developer can be both. If you can’t manage the development process stick to what you can do and engage professionals.