Tips on investing Real Estate

Tips on investing in real estate do not come with a map, and the road to wealth is oftentimes windy.

In other to be on the right path, there are some things you can do to increase your chances of success. A great start is interacting with real estate professionals and successful investors.

With the high demand for rental property, high-interest rates, and the potential for robust returns, real estate investment is gaining more popularity.

To have an investor mindset on real estate, there are some important tips and tools you need to become a smart real estate investor, maximize profit and your return on investment.

Types of Real Estate Investments

There are types of real estate investments that might pick your interest and you should consider them. These real estate investments include:

  • Residential real estate: These comprise single-family houses, condominiums, apartments, multi-family buildings, high-rises, bungalows, and terraces. These residential properties are good for first time buyers, buyers’ primary place of residence for their family or buy for rentals.
  • Commercial real estate: These comprise retail shopping centres, office buildings, apartment buildings for rental purposes, mixed-use properties with both residential and commercial space, large multi-unit buildings, and estate developments.

  • Industrial property: These type of real estate investments comprises storage facilities where people can rent and store their items, building warehouses where you lease them out, distribution centres, and research and development properties.
  • Land: for future development or use, which is a very good one, whether it is agricultural land, residential lands, commercial lands, or multi-functional lands. It’s not just about buying land in the middle of nowhere, you need to ensure you are buying into the future, where there will be possible infrastructural growth, movement of population towards that direction etc.
Article: Tips on investing in Real Estate

Tips on investing in Real Estate: Investment Opportunities in Real Estate

There are certain investment opportunities you can take advantage of in real estate, and these opportunities include:

  • You can purchase a primary property for your family residence
  • Buying properties like bungalows, terraces, apartments, semi-detached and fully detached duplexes for single-family rental purposes.
  • Another good real estate investment opportunity is building houses and reselling them at a profit.
  • Buying and reselling lands
  • Buying lands and leasing it
  • You can invest in real estate investment trusts and ETFs
  • You can invest in real estate crowd-funds, where two or more people come together and pull their resources to buy a property and after a while resell it and rent it out to get back their capital and profit.
  • Flipping houses, where you buy rundown houses or old buildings and renovate them to resell.
  • Land banking
Article: Tips on investing in Real Estate

Tips on investing in Real Estate

There are six real estate investment tips, we will like to discuss and that you should keep in mind:

  1. Diversify Your Investments
  2. Due Diligence
  3. Set a budget and timeline (and expect to go over both)
  4. Treat your investments like a business
  5. Know your tax laws
  6. Learn about market cycle theory
Article: Tips on investing in Real Estate

  1. Diversify Your Investments

It’s a common notion that the best real estate investment is the one in your backyard. Of course, it is easy to buy real estate in your comfort zone, where you are familiar with the market, there are a lot of advantages to knowing and understanding the area where you want to invest, but why limit yourself?

Sometimes you need to carefully look at what area the population is moving into, what geographical area the government is investing in, are there developing infrastructures in those areas? Are there new projects coming up in that area? These are tips that can guide you to diversify your investments into different geographical zones and areas.

For instance, what Donald Trump does when he was still very active in real estate was to invest in areas with a growing population, because with more population comes a high demand for houses in those areas. Investing across different geographical areas comes with more investment opportunities and it protects you against the volatility of local markets.

  1. Due Diligence

Before venturing into a real estate transaction, make sure you have a good lawyer by your side, a good real estate advisor, so you don’t do a pennywise pounds foolish, if you try not to pay a professional, you end up losing your money. Ensure you do your due diligence and know everything there is to know about real estate investment and the area you want to invest in.

Due diligence by a lawyer will help cover your bases, like the title, and the authenticity of the property you wish to invest in, to avoid being a victim of real estate scam and fraud. Due diligence by a realtor to advise on the profitability of what you are investing in.

For instance, some people will buy land worth 1 million Nairas five years ago and it’s still 1 million today, why? It is because they bought it at a future price which is a loss.

Answers to questions like; is this the best location? Is the best price I can get? What is the title of the property? What return on investment am I expecting on this investment within a period of time? Should readily be at your fingertips.

  1. Set a budget and timeline (and expect to go over both)

Before you venture into real estate investment you need to be sure of your budget and how you will be able to fund the project. Are you able you are to shift grounds if needs arise? Having a budget helps you remain focused. Sometimes some offers are very juicy, and without proper planning of budget, you can get stuck along the way and you lose a part of your deposit.

Also, when investing in flipping houses, a candid rule to follow is setting aside 50% or more of your budget as reserves, especially as a new investor. Oftentimes than not, your budget goes higher than anticipated and when you’re rehabilitating houses, one issue can lead to another one.

  1. Treat your investments like a business

Real estate investment is a business, and like every other business, it requires purposeful planning, execution, and management. Every successful business has high-quality people at every level of the organization running it.

Regardless of what scale you decide to operate your real estate investment on, ignoring this fact can lead to struggle or even failure.

Article: Tips on investing in Real Estate

  1. Know your tax laws

Now more than ever, it’s important for real estate investors to keep abreast with new emerging tax laws. This means more than simply knowing the basics, it’s also knowing how to file for the right deductions and taxes based on applicable laws in your city and state.

Knowing your tax laws before investing will go a long way in making your investment go more smoothly, without being worried about any negative consequences of your actions.

  1. Learn about market cycle theory

Try to invest in the right phase of the cycle. This is not about speculating, but trying to understand and predict what will likely occur in five years in relation to prices in the area where you are investing.

For instance, Purchasing properties /investments during the recession and early stages of recovery phases. This can enable you to earn significant capital gains. Also investing in developing areas with potential like the Sangotedo – Ibeju-Lekki axis.

In conclusion, investing in real estate can sometimes seem overwhelming at the beginning. It’s understandable that not everyone has the time or ability to handle tenants or flip houses. But the good thing is that there are various options available for investors at every level, with each option catering to different skills, goals, and time constraints.

Sometimes all you need is someone to set you on the right track. This is one of the reasons Efficacy Construction Company Limited is here to help you realize all your real estate investment dreams. From providing affordable housing for families to providing affordable houses with high resell value, and for rentals, land with potential for high return on investment etc. What are you waiting for? Remember the best time to start investing in real estate is 5 years ago.

Get the best deals in sales of Lands, Bungalows and Real Estate in Nigeria on NAIJALAND

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