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Every investment on earth to some capacity has its pros and cons. However, it’s a well-publicized notion that 90% of the world’s wealthiest men have huge stakes in real estate. So the question is..
There are different forms of real estate investment. However, one very prominent form that is gaining ground in Nigeria currently is land banking. Land banking can be described as the process of purchasing land at a cheap price, holding it for some time so it appreciates, then selling it at a higher price to make a profit. Investors have discovered that land banking is the best means of maximizing wealth as leaving money in the bank may not be as profitable due to inflation and economic recession.
Investing in landed property is often seen as a smart choice as opposed to acquiring liquid assets that could be easily converted to cash, withdrawn, and spent. This is why smart investors interested in long-term investments go for land banking. There are several reasons why real esate investment is very popular amongts world richest class, this write hopes to hightlight few of the reasons to hlep you understnad why you should be investing in real estate.
Most types of investments are difficult to comprehend as a lot of them involve abstract ideas and clever algorithms, which makes it difficult for the layman to grasp. Consider forex trading or the stock market, it takes at least 3 months of intensive training to understand the terminologies involved. Another 2-4 years of demo trading to fully become independent. This timeline is longer in the stock market which is why most new traders opt for trading firms, where they end up loosinga lot of money.
The first thing to note about real estate investment is the simplicity associated with it. It takes about 2-3 weeks to conduct proper research, verification, or physical inspection required before making any purchase. It also requires some effort to get the desired result but is not as complex as other investment options. If you are a new investor, our ultimate guide to real estate investing for beginners can help you kickstart your journey in real estate
Investments could be risky and out of your control, take for example the stock market, you could purchase stocks hoping to sell them sometime in the future with the aim of making a profit. The appreciation or depreciation of the stock is totally out of your control and solely depends on the success of the company. On the other hand, you can have some control over real estate investments in terms of the physical property and facilities on it, with good management of the overall property one can improve the value and income generated from the investment. A likley instance will be lagos island, A plots in sangotedo was selling for 800k as of 2003. Currently it goes for 30 million naira. Plots in top estates in lagos are selling for nothing less than 40-50M, this can help you visualize the potentials in real estate
Inflation is the decline of purchasing power of a given currency over time. In an inflated market, real estate is your best to maintain a steady income flow and staying above the general purchasing power. In Nigeria today, Today, the interest rates of savings accounts and fixed deposits interest rates are lower than the inflation rates. Hence, inflation is a nut every investor is seeking to crack. The value of real estate/land appreciates against a currency during inflationary times, this is why it’s a good hedge against inflation. Demand for land can only increase because it’s a limited resource and can not be produced. This could serve as a hedge against inflation as real estate tends to maintain its value or even appreciate over time despite inflation. This benefits make real estate investment a major drive for the wealth in manintain wealth even in a declining economy
An interesting and popular benefits of real estate investment is that it appreciates over time. Veterans in the industry often invest in real estate property, and hold it for a long time. This period of time can range from 8-10 years. With the ever increaseing human population and development, investors are guaranted a good ROI. It is as simple as; if you purchase or invest in real estate property today, its value 15 years from now will be more than the current value.
It’s no secret that investing in real estate yields long-term benefits for investors. these appreciate could be narrowed down to few reasons
Recommended read: 17 guide to real estate investment for beginners
Investing in real estate also allows you to be your own boss, and affords you absolute control of your investment. Real estate offers a wide variety of options for investors, you can start with short-term or long-term investment. You are in control of how much to invest, duration of your investment, how many units to invest in etc. With the right knowledge of the market, you can predict and control how much you make from your investment.
If you purchase land today and come back to it after 30 years, the land will still be intact. This is because real estate cannot be broken, stolen, or depreciated. You will most likely meet the asset in a better condition, with an appreciated value. Now, compare this same scenario with crypto, forex or stocks. The volatility differs. A commodity in the stock market can tank in a matter of weeks, leaving investors in a no man’s land. This is the most assuring benefits of real estate investment, It is the best investment option when considering minimal risk.
Another benefits of real estate investment is making a profit from development projects going on around the environment your property is located is situated. For example, construction of roads, hospitals, schools, and estates could have a positive impact on the value of the land as it will attract residents and investors to the developing environment making the property more valuable.
real estate affords investors access to loans for their projects because real estate can be used as an asset to secure a loan could be used as collateral in loan application. having an investment that serves as collateral seems like a smart choice.
Depending on the strategies, an average forex trader monitors the chart at least 5 times daily. Day traders and scalpers can go as high as 20 times per day. Atleast investors who let out properties are saddled with the responsibility of fixing vandalized facilities, paying maintenance costs, and more while land banking which is also a form of real estate investment only requires the expense of the initial purchase of the land and that’s it requires zero maintenance cost.
Land banking is an investment that remains profitable over time and can be passed down for generations, many believe real estate is the only an investment that is appropriate for achieving generational wealth, therefore individuals who intend to invest for their kids tend to invest inland banking as it retains its initial value and appreciates despite inflations and economic resections.
Benefits of real estate investment are not limited to our list, their are much more to gain. However, our purpose is to open up your mind to the endless wealth creation opportunity in real estate and give you a chance to won a peice of earth.