5 KEY REASONS WHY REAL ESTATE INVESTMENT IS AWESOME.

 The other day I had a friend ask me about investing. He has been saving up some money for a while and decided it was time to get serious about what he’s going to do with it.

A lot of the typical options came up. He asked me about stocks, bonds, mutual funds, and many other vehicles that are used for investment purposes. Eventually, we got to the topic of Real Estate.

He knows that I personally invest in Real Estate and that I think it’s a fantastic place to invest, but he wasn’t entirely sure why.

During the rest of the call I explained to him the main points of why I think Real Estate is one of the best investments you could make.

Below is a recap of the conversation, and why you should consider Real Estate as a great wealth-builder.

WHY YOU SHOULD CONSIDER REAL ESTATE.

There are 5 key reason why I think Real Estate investing is so awesome. But before I go through those 5 reasons, let’s look at the big picture.

Andrew Carnegie was one of the most successful businessmen ever. At its peak, his fortune was worth over $300 billion. Wow!

He is attributed with saying that “90% of all Millionaires become so through owning Real Estate.”

However, Real Estate is currently on the list for top-ten creators of billionaires.  

When I read and hear statistics like these I immediately think there must be some reason for the high level of success in wealth creation.

On top of it being one of the top ways to amass wealth, it is an area of investment that you can have much more control over the outcome.

Think about it. If you invest in a stock, bond, or even a mutual fund, you don’t have much control over what will happen.

Let’s say you invest in xyz company’s stock, and then a report comes out about how the CEO approved illegal activities and now the company is up to it's eyeballs in lawsuits. That stock price is going to plummet, and you had nothing to do with any of this! You are just a spectator, watching from the sidelines.

With Real Estate, you get to play an active role in how that investment is going to perform for you. Do you want to increase the value of the property? There are specific ways you can do this through renovations, increasing income for a rental property, and even lowering expenses.

This is of course assuming you want to be involved and have control over the outcome of your investments. Some people have zero interest in this type of stuff. Unfortunately for them, they won’t get to reap the rewards!

5 KEY REASONS WHY REAL ESTATE ROCKS

#1. Income

The first point is that Real Estate can help create a stream of income.

I’m sure most of you are familiar with the concept of paying rent.

The reason I think this point is so crucial is because of what it represents in the long-term.

Most people are focused on saving for retirement. But what does that mean, fundamentally? It means that you are trying to save up enough money so one day you can replace your current income from your job, and then stop working.

Each time you purchase Real Estate that pays you an income you move one step closer to your goal of income replacement.

You just have to get to a point where the income your properties are paying you is enough that you don’t have to work anymore.

And then boom, you’re retired!

One of the biggest issues people face when they are doing retirement planning is how to create a stream of income so they don’t have to work.

People work for years to build up a retirement “nest-egg” and then they aren’t sure of the best way to turn that “nest-egg” into an actual income stream.

Real Estate helps to alleviate this issue.

#2. Appreciation 

Real estate investors make money through rental income, any profits generated by property-dependent business activity, and appreciation. Real estate values tend to increase over time, and with a good investment, you can turn a profit when it's time to sell. Rents also tend to rise over time, which can lead to higher cash flow.

#3. Price is flexible.

If you buy a share, you buy it at the market price at that time: there’s no scope to negotiate. In the property market, it’s exactly the reverse: buying and selling is all about negotiation. You (or someone working for you) can talk down a vendor; equally, a motivated buyer could pay over the odds for the right property. There’s also huge scope to find undervalued properties, particularly deceased estate or mortgagee sales, or sales due to divorce.

#3. Demand is outstripping supply

Linked to this is that there is an ongoing demand for property – both rental property and property to buy. Nigeria population is growing – and housing supply remains tight in many areas (particularly capital cities and areas affected by the resources boom). This provides another floor under the market which makes it less likely that prices will crash. Do your research carefully, though, as some areas of the market do experience oversupply.

As long as people choose to live in houses, units & apartments, residential property will always be stable,” “From the young couple who have saved enough for a deposit, to the investor renting student accommodation through to the downsizer and retirement village, residential property is always sought after.” 

#4. Bricks and mortar.

Another factor which is comforting to many investors is that they’ve invested in something tangible – something they can ‘look at and touch’. 

“[Property is one of the few investments which you can actually see and feel, and this often makes it feel more real, You can’t take your friends for a drive on a sunny day past your share portfolio.” 

While much of this may be a psychological comfort, there’s also a monetary benefit. After all, even if the worst happens, the fabric of the property and the land underneath will still have some tangible value – unlike shares in a company that’s gone under. 

#5. You can pass to your kids.

When thinking long-term for your investment, you don’t just have to think your lifetime – you can also think about your children, too. Depending on the legal structure in which you own your properties, you can pass your investments onto your children either before or after you pass away. Sure, you can do this with shareholdings too, but how many top companies from 30 years ago are still at the top? Not that many – whereas a well-positioned property should continue to grow over the long term. 

 WELCOME HOME

Investing in Real Estate isn’t for everyone. To do it properly, you do need to put in some extra effort. But for anyone interested in building wealth, I think investing in Real Estate is one of the best ways to do it.

If this article has peaked your interest in Real Estate, stay tuned, I’ll be diving into the proper ways to evaluate an investment deal and how you can increase your chances of success.

Thanks for reading.