Investing in developing cities requires out of the box thinking
As evidenced by the sale of land all around the free trade zone area, the focus of most investors is in residential housing and as with all things business – when a certain commodity is over-flogged, the chances of being successful are limited.
However, success is relative and there are a lot of people who would need accommodation in the area, so it may not be such a poor decision after all.
Nevertheless, here is the catch to investing, when there are thousands of houses and not much in terms of infrastructural amenities to make living there attractive – how would the value of the developed city appreciate?
Do you see where I am going with this?
THE OUTLIER MINDSET & OPPORTUNITIES FOR REAL ESTATE INVESTING
This mindset is the type that sees not the common opportunities but the necessary and value-adding ones that will make almost as much money too. People with this mindset do not see the bulk payments that can be gotten from people – the work is too much.
Go lower and reduce the amount of input you are expected to make.
Now you might be asking or wondering, “How can anything other than real estate or accommodation make more money?”
Do not forget that there are many ways of making money even though they can lead to the same destination.
For example, the people who set up football-viewing centres are literally making a kill with their unrefined business idea. With their very low startup capital, they are able to rake in up to N3m yearly. In addition, they hardly ever see that money in bulk to the point where they care much for upgrading their centres. The smart ones might get to reinvest the money.
Do not believe me? Here is the breakdown:
- Watch a match – N100
- Number of viewers – 60 (remember its benches so no fancy chairs or tables to take up space)
- Total revenue: N6,000
- Weekends have an average of 4 matches per day – N24,000 * 8 days in a month = N192k
- Showing 1 match (or whatever else that catches their fancy for the day) for the remaining 20days of the month = N120k
- Total revenue = N312k.
Expenses are basic – sometimes there is no fan and just a lot of windows and no door (I hear that it increases the heat from the game, lol. Meaning the only power that is needed is for the TV. They pay for a GoTV subscription not DSTV and costs like benches and rent remain one-off and once a year.
- Investing in real estate the Rockefeller way: 4 strategies to consider
- REAL ESTATE FUNDING: Improve your chances of getting approved with these 4 tips
- How to know if your real estate investment is going to be viable
The most interesting part of all this is the fact that you might never know the real owner and if you do, he is an unsuspecting fellow who has a day job somewhere in the area.
Now, you with a degree, a white-collar job and escalating bills – how are you thinking of setting up shop using basic real estate at your disposal?
If you are still figuring this out, here are a few ideas on how you can be the outlier investor while investing in developing cities, thereby supporting real estate development and leveraging it to increase cash flow along the way:
- CONSTRUCTION SITE LOGISTICS: Material storage is one of the bigger reasons why contractors cannot engage bulk buying on their projects. Can you get containers to fit into a store and site manager’s office? Plan your numbers in a way that you are paying off the cost of acquiring your container in 18 – 24 months and the rest becomes profit. Add a mobile toilet for good measure and contribute to discouraging workers from defecating in the environs
- CONSTRUCTION WORKER LOGISTICS: Do you have a bus that you do not want to be traveling too far out without making its due returns or one that is hardly working? Offer the workers transportation from the site to a central bus stop daily and have a ticket system so you are paid weekly and you can even arrange this with the site owner so that it is subsidized for the workers. Have a first aid enlightened driver who is also able to help with simple site accidents
- CONSTRUCTION RENTALS: Every site will have things they rent – ladders, scaffolding and the likes. Leverage your contracts & build the reputation of a handy person who has the resources usually rented on site. Sometimes, the workers will even need to buy replacement tools because one was damaged in the course of work. Set up shop within a reasonable radius and shorten the time they spend away from the site “looking for x to buy” and let them come to you.
- RECREATION CENTRES: Scout an area you like or can see a lot of upcoming or ongoing construction and buy an acre or two of land there to build a sports and recreational center. Within the center, have a few commercial retail outlets that parents can use as their kids play. You may even setup your own football-viewing center and have a pub there.
The idea behind these suggestions is that most of us wait for the development and friendly living conditions to come to us in the areas we have invested in without realizing that we can actually be the drivers for the development that will bring about the appreciation we seek.
In addition, this my dear reader is the thinking we need to change with investing in developing cities.
So what is it going to be for you? Are you going to be the outlier or just the normal investor?