If you are reading this post then you are probably interested in investing in the real estate business in Nigeria or perhaps you are already in the business of real estate, you could even just have stumbled across this write up by chance or the title drew you to the prospects of investing in real estate business in Nigeria. Whichever of the reasons, at the end of reading this write up, you will be glad you did. Feel free to read from top down or start from anywhere you are most interested in but be rest assured it will be worth your 5 minutes.
What is Real Estate?
Well I must admit my disappointment and slight embarrassment when I discovered real estate doesn’t mean the usual “estate” that we live in our everyday nigeria parlance.
Real estate simply means land and anything permanently attached to it, be it natural or artificial.
Take a wild guess, yes. Real estate includes buildings, trees, fences, ponds et cetera. So when next you buy that piece of land, the trees and natural habitats attached to it are all yours, feel free to lay claim to the fruits.
Of course, the unreal estates include cars parked on that piece of land, or jewelries within the building on the piece of land.
Examples of real estates in Nigeria are a shopping mall attached to a land in Lagos, an acre of land in Abuja with it’s many vegetation and natural habitats or an office complex attached to a land along lekki-ajah road. You can see how “real” the properties are, you can’t technically drive an acre of land or the buildings on it from Abuja to Ogun state.
That said, why would anyone want to invest in “real” estate as opposed to personal properties like cars, jewelries, goods, et cetera.
Why should you Invest in real estate business?
Before I go into the full details of why you should invest in real estate business, I will like to say that the benefits of investing in real estate business are numerous. That said, let’s delve into the many benefits of investing in real estate.
Appreciation: investors in real estates have noticed that the value of real estates tends to increase with time, whenever you decide to sell, be it a year, ten years or thirty years from now, you can always be sure of making profit. In fact, the longer it takes the more it appreciates in value. However, you must be careful with the choice of real estate you decide to invest in, as with most other businesses, there are good and bad investments.
Inflation Shield: Simply put, real estate tends to maintain their buying power by surviving the pressure of inflation, in the form of increased capital value and increase appreciation. Investors know this and they do not hesitate to make the best use of it.
Predictable cashflow: Cashflow means the amount of income derived from the investment after all operating expenses have been made. With a good real estate, you are quite sure of making a predictable cash flow.
Leverageable: Real estate business is leverage-able. You can use borrowed capital (debt) to increase the potential returns of an investment.
Equity buildup: Most real estates are purchased with a down payment that is usually small compared to the total payment to be made. This makes it possible to build equity as the principal amount is paid up over a long period of time. A simple formula to keep in mind is the lower the principal gets, the more the equity buildups.
All these benefits and many others make real estate the perfect business for you to invest in.
Kindly share your opinion in the comments section and make sure to check back for more informative write ups on real estates.