Successful real estate investing requires knowing when to hold, keep or sell
What type of investor are you – buy to hold or resell? In real estate investing, this is the single most important question that when answered can differentiate between an investor who wants generational wealth from one who just wants to be rich.
Seeing as there is no doubt that being better off financially is the key reason that we invest and try to grow our capital – it might surprise you to hear that as an investor, you should have the mindset of continuously creating wealth as that alone would change how you invest and end up being evaluated.
So the main question of this article then becomes – is one more important or better off than the other?
The major difference that either of the options gives to an investor is time; time in which to get your capital back as a whole; as capital + profit) or to get it back over time – as rent and capital appreciation.
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As human beings, the difference lies and sits in our mindset – how we think or see the outcome of our profit-making opportunities versus what our goals are.
For anyone looking to invest in real estate, it is pertinent that the person remembers that wealth creation, creating generational wealth and getting wealthy are all three different things. To be truly successful with investing in real estate, you should expect to stay in it for the longest term.
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Staying in it long-term, however, also means that you will need to maximize your actions and decisions for how to guarantee that you are continuously creating wealth through your real estate investment.
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Three long-term and sustainable ways that investors are continuously creating wealth in real estate
- GETTING RENT: This is the most common reason that you will hear out there because it’s true – you can earn from having people pay you to rent. But in the same vein, the majority of the people we have spoken to about this are underestimating the importance of these rental payments before they are considered “too small”. But here is the big deal, getting paid rent means that you have created another source of income for yourself that could serve as a bill payment you have. Which in turn means that you now have more cash flowing to do other things.
- CAPITAL APPRECIATION: For those of you who might be reading this and are new to the terms, I am definitely going to keep this simple. Capital appreciation is the measure through which your cash that was invested in the property is growing in value. For example, 20 million Naira in January should be worth 30 million Naira (an estimation) in months to come, and the longer you stay invested the more capital gain you get.
- CREATING FINANCIAL LEVERAGE FOR YOURSELF: Though it could be identified as the least favourite option for many, it is the sweetest part of being an investor in cash-flowing real estate. Another way that investors could define it is refinancing the property or releasing equity from it and if you are thinking to release equity then you could be getting up to 70% of the value of your property investment from your bank – as a loan that allows you to then have the cash you can use to do other things too including reinvesting and starting the cycle all over again.
So, today I am going to leave you with one of my favourite tips or reminders I like to tell myself especially when I start getting tempted to opt for quick returns is that “Real estate investing is not about getting rich quick but getting rich for sure” – it’s only if you stay in for a long term that you truly earn enough to make a difference to your financial status.
What type of investor are you – buy to hold or resell?
It is always a pleasure to hear/read from you, so please click below and share your comments and your opinion on the article.
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Till next week when I will once again release another article that helps keep you invest successfully in real estate and create wealth, I wish you all the best in the second half of 2022.