I’ll be honest, I always felt intimidated by this asset class; Real estate.
I know it’s a great way to build sustainable wealth but the risks associated with investing in real estate, especially in Nigeria, were always just too much for me. Maybe my bias came from listening to too many horror stories of fraud, low quality of output, court disputes etc, I honestly don’t know.
What I do know is, it’s definitely not for the faint-hearted.
This is one of the reasons why I decided to attend the Finer wealth series in Lagos.
I knew I needed to learn the key principles for investing in real estate.
The Finer wealth series is an event organised by Fine and Country (a global real estate brand) to teach interested investors how to get on the real estate ladder and profit from real estate.
I must admit, it was an insightful event. I learnt a whole lot and I thought I would share with you some of my key lessons from this event.
Why invest in real estate?
They don’t make them anymore, that’s why? Except maybe in Eko atlantic or Dubai..Lol
I’m sure you get the point, land is a limited asset. You stand a great chance of building wealth when you own a limited asset.
Going into specifics, investing in real estate;
Provides diversification of income and less volatility to an investment portfolio. This means while the stock market, debt, cash equivalents may experience volatility, real estate is less likely to experience a crazy cycle except in extreme circumstances. It also provides a hedge against inflation
Provides an opportunity for your portfolio to appreciate significantly in value when you invest correctly. As a beginner investor, look out for low price entry points. They offer a base that can grow significantly over time
How can you invest successfully in real estate?
Location is everything. Take out time to study and understand the fundamental activities driving growth in a particular location.
For instance, one of the key factors driving exponential growth on the Lekki expressway in Lagos, is the infrastructural development on that axis. Development is an indication of an opportunity when investing in real estate
Don’t follow trends blindly. Don’t make an investment decision because everyone else is investing. Real estate is not just about investing in brick and mortar, it’s about extracting value.
You can find or create value in an area of town no one else is checking out. The key point here, is you should consider other growth areas and compare potential returns before you make an investment decision.
Control is important. Don’t invest in property in a place where you don’t go to often.
This hit close to home. That’s because I have a close family member who paid for a piece of real estate over a period of time with no prior inspection. It took a while but finally, we learnt that it was a fraudulent transaction.
When purchase real estate, you buy terms. One of the speakers shared how it took much longer that she expected to sell off a piece of property she owned because she didn’t realize the terms she agreed to when she purchased the property would affect the sell side.
To extract value from a real estate investment, make it a point to read the terms of the transaction. Dot the i’s and cross your t’s.
Always negotiate. Never pay full value for real estate and avoid paying the total value at once. So, when a developer tells you this is the value of a piece of real estate, don’t take it at face value, negotiate for a lower price.
For instance, You can negotiate to buy more and pay over a period of time. (An investment club can help you do this *wink). The principle is to lock in a value and allow the appreciation of value help you profit.
How do I invest in the right opportunities?
It’s a numbers game. Look out for trends in population and development.
At the event, The facilitators demonstrated how the fundamentals are in place in Lagos for residential and commercial real estate. According to statistics, the Lekki axis is the fastest growing node in Nigeria today. ‘
The Lekki axis currently houses several estates, gated residential developments, agricultural farmlands, areas allocated for a Free Trade Zone, with an airport, smart city and a sea port under construction1
Lagos is fast becoming the economic capital of Africa. If you ask me, this is the time to position yourself for growth
Finally, what’s the mindset required to invest in real estate?
Real estate is a long term play. Sometimes, it takes a while to extract liquidity so invest wisely based on your stage of life.
You need to believe that it is possible to invest and profit significantly from real estate.
Also, think collaboration not affordability. Don’t ignore this opportunity because you think you cant afford it. Once there is a will, there is always a way.
There is no such thing as a bad real estate investment, there’s only an uneducated investor.
P.S If you interested in joining a real estate focused investment club, where you can contribute monthly towards owning real estate, Click here to fill this form so we can get in touch with you