Everything you need to know to become a real estate investor with CLIMAX PROPERTIES CONSULT LIMITED
Everything you need to know to become a real estate investor
If
you are looking for a way to invest your savings, why not consider real estate?
Such investments are always very lucrative. If you are in doubt, just look up
any of the wealthiest people in Nigeria, or the world; you will find one form
of real estate investment or the other in their portfolio.
Today, we are going to look
at how you can make your first investment in real estate and earn some serious
profit, regardless of the amount of money you want to put in.
Real estate is property
comprised of land and any structure(s) or natural resource on it, including
water bodies and mineral deposits, as well as any flora or fauna.
Based on its use, real estate can be grouped into three broad categories:
§ Industrial
properties, e.g. factories and mines.
§ Commercial
properties, e.g. office buildings, retail store buildings, and warehouses.
§ Residential
properties, e.g. undeveloped land, condominiums, and private residences.
Buying a house or building
one is not the only way you can make a real estate investment. The market has
lots of opportunities. Here are some of them:
1. Real Estate
Investment Trusts (REITs):
This is one of the easiest ways to make real estate investments
without actually acquiring a physical property. REITs are regulated by the Securities and Exchange Commission (SEC).
They are a form of collective investment scheme, which pools funds from investors
and use them to acquire income-generating real estate.
The portfolio of underlying
assets is managed by a professional whose job is to maximize your returns. With
REITs, you hold an indirect interest in real estate on a flow-through basis,
which means that you hold the property as if it were a direct investment.
REITs are traded on the Nigerian Stock Exchange (NSE). To buy one, you have to go
through your stock broker. It’s just like buying or selling shares.
REITs are a solid investment stock that can earn you regular income. The benefits include the following:
§ Requires no
minimum investment.
§ Offers tax
advantages.
§ It’s a
highly liquid way to invest in real estate. You won’t need a realtor to cash
out your investment.
§ REITs pay
high yields in the form of dividends.
§ Provides you
the opportunity to share in non-residential properties like malls, industries,
and hotels.
Another great way to invest
is to buy land and sell it at a higher price. It is particularly profitable
when you buy in a rapidly developing area, in which case you can make up to
300% in profits within a few months, or years, as the case may be.
You can start small by buying
just a plot. Or if you have enough capital, buy as much land as you can and
keep selling all year round.
While
acquiring lands, keep the following in mind:
§ Buy in areas
that are rapidly developing if you want to sell within a couple of months. Some
areas are faster than others.
§ Ensure you
obtain all the documents for the land that show you are buying from the
legitimate owner. The documents should include a Certificate of Occupancy or a
Governor’s consent. Ensure that you don’t get mixed up in land issues. Acquire
lands with the appropriate land titles.
Benefits
•
Low or zero maintenance costs.
• Ease of sale
• High profits
3. Become a real estate agent
This is a good option if you
don’t have the capital to make an investment. You can simply offer your
services to property owners who are looking for a buyer.
Becoming an agent means you
get a commission after you find a buyer for the property. The common rate is
10%. So let’s say you find a buyer for a 40 million naira property, you stand
to get a commission of 4 million naira.
To become a successful agent,
you need to possess good networking skills in order to locate buyers and
sellers. Here are some of the roles you’d have to play:
§ List the property to the public through notices, banners,
fliers, and so on. But things have become very easy in the 21st century, in
which case, advertising on the internet is the easiest and cheapest method you
can use.
§ Be readily
available to answer any questions buyers may have.
§ Take buyers to
see the property (property inspection) and negotiate prices on behalf of the
seller.
§ Screen the
buyers to make sure that they are qualified to buy the property.
Benefits.
§ Grow your
network.
§ Great earning
potential.
§ Little or no
investment capital required
4. Open space leasing
In this scenario, you buy
land in a good location. While you wait for the property value to rise, earn
monthly fees by leasing the land to people for temporary use. For instance, you
can lease it to a church, mechanics or car wash, or other businesses that can
construct a makeshift structure that will be easily dismantled when you are
ready to sell.
Benefits
• Extra monthly profits
before actual land sale, etc.
5. Property development
Property development requires
a huge capital investment. It involves acquiring depreciated properties that
you can renovate and rent or sell at a very high profit margin. As with any
real estate investment, a good location is crucial if you want to make
reasonable profits.
•
Earn a higher profit than when you buy and sell undeveloped land.
6. Franchising
Franchising is a brilliant
way to acquire and hold land in different fast growing locations. It however
requires considerable capital.
It’s as simple as when you
acquire land and use it to establish a business, such as a fast food
restaurant. You then buy land in various other locations, build your structures
and find franchisees who will manage the restaurants on your behalf.
It may seem that brands, such
as Mr. Biggs, McDonalds, Chicken Republic, and many others that exist today are
only involved in the fast food business. But real estate acquisition is a major
part of it. These lands quickly appreciate in value over time.
• Run a sustainable business
while acquiring high value real estate.
• Own land in several major locations across the country.
7. Build or purchase rental properties
Investing in rental
properties is one way to keep earning for life. As a landlord, you receive
monthly or yearly income after you build or buy properties and rent them out to
tenants. You’d have to regularly maintain the building to keep it in good shape,
so that you can attract new tenants or keep up with the competition from other
landlords in the neighborhood.
You’d also have to find out
the price other landlords in the area charge on rent so that you can fix a
reasonable price. Over time, your property will appreciate in value, especially
if you are in an area of high demand.
The
biggest difference between investing in a rental property and other types of
real estate investments is the time and effort it demands, especially if you
accept bad tenants who damage your property or delay rent payments. If you are
not in a good location or don’t invest in maintenance, you face the risk of not
attracting any tenants at all.
Benefits including:
•
Earning passive income for the rest of your life.
Top tips to
keep in mind before investing in real estate
Now that you have seen the
various ways you can make an investment, there are certain things you should
keep in mind to give you that push you need to take the first step. Some of
these tips will also see that you don’t experience any difficulties down the
line. Keep reading to discover what you need to know.
1. It’s
possible to invest without putting down any money
You can invest in real estate
with other people’s money if you can find a lender. This is especially so if
you can purchase and sell the land for profit within a few short months, or
years. This way, you don’t have to keep waiting till you build considerable
savings before you can spring into action.
Once
you find a good land in a good location that can appreciate in value quickly,
find a way to source for funds. After all, real estate is a stable investment
that won’t slip through your fingers, as long as you follow due process and
acquire all the necessary titles for the property from the appropriate
authorities.
Another
option is to collaborate with close friends or family and save up the required
capital. Let’s say that 4 or 5 of you save 50, 000 naira every month, in a
year, you would have saved up 3 million naira. After you buy a land and it
appreciates in value after some years, you can sell and split the profits.
However, be sure to sign well-structured agreements before going into such
collaborations.
2. Conduct
proper research
Ask a lot of questions before
you commit your money to any property. Also make sure that you are familiar
with the location. If you buy land in an area that has a bad history,
experiences flooding, or is in a location that does not have good road access,
you may have a hard time to get it sold.
You have to be able to
identify areas with a high potential to develop quickly in some years’ time. If
the area is in high demand and consequently overpriced, consider purchasing
your property from the outskirts.
3. Negotiate
To get the best deals, you
have to be able to negotiate. It is the one quality that differentiates a
successful investor. When you get the price for a property and you see that you
can afford it, don’t be in a hurry to agree at once. You may be able to negotiate
a lower price. The same idea also applies when you are ready to sell.
4. Renovations
may not necessarily mean an increase in value
Buyers have different tastes.
You may find that you won’t be able to sell for as much profit as you had in
mind.
5. Always put it in writing
In conclusion
Investments
are essential for wealth creation. It’s not enough to leave your cash in the
bank, where you will get negligible monthly interests. Invest in real estate
today. It is something you have to do at some point before you retire, if you
want to be comfortable financially. Why not give yourself a good head start?
for Contact info visit our website: www.climaxpropertiesltd.com
or call us on +234-(0) 805- 445- 2870
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