02 Dec 2018
Real Estate Investment Tips For Newbies
Investment is often said to be the best way to create wealth; real estates investment is not just a piece of the wealth puzzle, it stands head and shoulder above the rest. Although one might argue that it remains one of the untapped areas of wealth creation in Nigeria, it is still one sure way to acquire wealth. The goal of investment is to put your money to work today and reap the benefits in the future. Understanding real estate investments is not rocket science once you understand the basic factors of investments, economics, and risks.
It is, however, good to note that as much as the real estate industry is a fast-growing one in Nigeria with several ways you can make money, it also has its downside like every other industry. Below are some real estate investment tips for beginners.
REAL ESTATE APPRECIATION
One way in which you can make profits on your real estate investment is by appreciation. This usually occurs when there’s a change in the real estate market which leads to an increase in the value of your property. For instance, owning a land and selling it five years later. There is a probability that you would be selling for a price higher than you bought it because of the change in the market value. The likelihood of the environment developing over the years will increase the value of your property. You still don’t lose when it doesn’t increase because you have your land.
CASH FLOW INCOME
This type of real estate investment is quite popular. It focuses on buying real estate property, such as an apartment building, and having it up for rent. It is not unusual to see people practice this, with the number of landlords around. It allows easy cash flow of income through the rents paid by the tenants for a specific amount of time. Cash flow incomes are generated from office buildings, car washes, apartment buildings, rental houses etc.
REAL ESTATE RELATED INCOME
This is another form of income often generated by ‘specialists’ in the real estate industry, like brokers who make money through commissions from buying and selling of properties. Also, the real estate management companies get a particular percentage of rent in exchange for the day-to-day operations of a property. This is one of the easiest real estate related income to understand. For instance, a hotel management company gets to keep a particular percentage of the hotel’s sales for taking care of the day-to-day operations such as hiring maids, washing the towels, running the front desk etc.
ANCILLARY REAL ESTATE INVESTMENT INCOME
Ancillary real estate investments income include things like vending machines in an office building or laundry facilities in low-rent apartments. These services serve as mini-businesses within a bigger real investment, letting you make money from a semi-captive collection of customers. For some real estate investments, this can be a huge source of profit.