Buying property requires careful considerations and planning
INVESTING IN REAL ESTATE IS NOT JUST ABOUT BUYING PROPERTY
Have you wondered how and why some people are successful in their real estate journey and for others it is a continued ripple of errors, mishaps, near-misses and a lot of other things that you are told to think of as learning moments?
How is this even supposed to be acceptable?
Why are you with the limited financial resource being made to ‘suffer’ these pains whilst those who are more financially capable are reaping massive returns?
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These might be the way you feel about your experience as you have been trying to invest in real estate and they are totally valid. Valid because not everyone is actually investing and too many are just buying property under the guise of getting invested.
In the Western world mostly, real estate investing is a day job for some who have mastered how to get it done – even though they keep learning on the go but they stay investing and invested for years whilst adding on more ‘doors’ (properties) to their portfolio.
Seeing as our currency and financial economy has gotten so poor in comparison, we are not buying anything at prices close to what we are used to and it would only get worse. Grocery shopping has tamed the best of us into having precise pre-budgeted shopping lists and the rest of us into increasing our budgets to meet up with what we want to have in our lives and bellies.
For those of us, who have missed out on making an investment into an offer that turned out right and a winner, our thoughts are along the lines of “How do I make up for this?” OR “How do I find a similar opportunity to invest in that can at the least give me equitable returns?”
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And my reiterated answer would be buying property or real estate.
Buying property or real estate investing as is commonly referred to is the secret to successful wealth creation by many because it creates cash flow, gives you leverage, gives you ownership of a tangible asset and offers not just passive but the most sustainable earned income possible.
If you read my last article on this column, you would note that I highlighted on 3 ways to overcome the bias for real estate investing – if you missed it, you can read here.
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Today, I am going to expand on that by sharing some knowledge or tips on how successful investors choose where, what and how they keep investing in real estate and stay winning.
1. LOCATION: This factor is heavily dependent on the investor persona, their risk appetite (tolerance for risk) and/or preferred goals. For example, a middle-aged property investor would be better able to consider investing in rental properties within an upcoming environment because they are able to wait longer for their returns to yield.
An older investor might not be interested in this as he/she is looking more for retirement financing or to buffer up their trust funds for the kids and/or grand kids.
Once you can identify who and what you are after as a result, then you can choose your location to suit that.
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Aside from age, the current financial status of the investor would also come to light during consideration – how much he/she has as disposable income would determine the working budget for investing.
This financial investment series that I particularly enjoyed, captured different age groups as was recently anchored by Sola Adesakin, founder of the Smart Stewards.
2. FUNCTIONALITY: Since COVID-19 hit in 2020, we have experienced the fastest evolution of choice for home designs and preferences by home buyers and rental clients alike. The more modern and service adaptable it is, the faster it goes off the market. Obviously elements like price and interior finishing have also played a part in this.
3. COST: For many, this is even on the front burner and dictates what a buyer would consider but not so much so in the case of an investor. Investors understand the power of their most salient power – a readiness to buy and they capitalize on it immensely to negotiate for a more favorable purchase price. Now the thing about cost, is that it doesn’t end at how much it is to buy but it transcends also to how much it will be to maintain and sustain.
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A typical example, right now, there is a limited supply of diesel in Nigeria – which has in turn driven the price up and some form of scarcity to the point where developers and property owners are reconsidering their options for keeping their assets serviced at a relatively affordable cost to the residents.
Would solar panels become a fixed inclusion in the design of homes to come? Only time will tell, but if you are considering an investment in real estate, then your decision to stay on or off the grid would be a very smart one to make from the onset to help your business case when you need to put the property on the market.