If you don’t like to lose money, you should read this. In Nigeria, the constant devaluation of naira has people considering ways to guard their money to ensure that they are not losing money with inflation. The retaining of money value is an important aspect to growing wealth.
The real estate investment market guarantees that the value of your money is retained as the years go by. According to a report by Reuters, an averagely successful real estate investment yields about 30% return on investments. This figure is on properties that are bought. On the other hand, rental properties yield about 10% return on investments in cities of high demand like Abuja and Lagos.
Considering that prices generally increase with inflation, the buying price increases further with the inflation hence creating a higher return that guarantees the value of your investment will not change.
5 Ways to invest in Real Estate
There are many ways to invest in real estate and all these ways come with different pros and cons and different profitability. Here’s a list that guides you on picking the best option:
1. Buy a Property
Whether it is a land or property, buying at a cheap price and holding it until it appreciates into the value and selling it off is always a good idea.
There is a two way option to suit your budget. If you don’t have enough to buy a fully developed property, you can buy land in an area of high demand, both will yield good ROIs. Buying lands over property also has the advantage of being low maintenance. A property may need to be maintained from time to time but asides from probably ensuring that it is kept clean and that weeds don’t overtake your home, there isn’t much to be maintained. The buying of multiple plots of land and holding it to sell at a later time is termed franchising and is capital intensive.
An important thing to note is to buy places that are developing well or have the prospect of developing well. This will guarantee that in only a little time you just could be smiling to the bank. It is also important to buy properties in areas that are high rent and low tax areas, this way you will avoid spending your ROI on paying taxes.
House hacking is another notable form of real estate investment. This probably seems unfamiliar to you but it is quite commonly practiced. You have probably seen a situation whereby the owner of a duplex lives in one part of the duplex and rents out the other unit of the duplex to someone else. This is exactly what House Hacking is.
House hacking not only provides a means for the property owner to closely monitor the other ujit of their property being let out. It also provides an income source that is passive and relatively convenient. This investment means it is also relatively cheap and offers some sort of flexibility and control over the housing unit.
3. House Flipping
Ever walked past an old home and just knew that with a little renovation the house could look way better and could earn so much more when put in market? Well, the implementation of that bright idea of yours is house flipping. In house flipping, you consider what can be with a little improvement.
House flipping doesn’t involve as much effort as house hacking but it definitely is lucrative. You could consider this option if there’s an old house within your reach that with a little improvement will compete with some of the best homes around. With house flipping, old is not less profitable and condemned doesn’t mean lost.
4. Building a New House on Speculation
This is another great way to work around investing in real estate. The downside however is that you’ll most probably need to work with a real estate agent or developer. In building on speculation, you take the initiative to build a home in line with the taste of a prospective buyer.
This option runs at a little risk in that the property may not be sold to that particular buyer. The good side however is that another buyer may then be sought for the property.
This form of investment is also great because the target audience is usually wealthy buyers who want their properties to be in a certain way and have certain features. This almost always guarantees a great selling price.
While this seems almost the same as house flipping, they are actually different. While house flipping converts old houses into money generating machines, land flipping involves buying lands and reselling them quickly. This is very similar to franchising but it happens much faster and most times yields a lesser profit.
Whichever option you are considering, while real estate investment will not change the reality of inflation and devaluation, it will however give you the opportunity to protect your money and its value. Take a chance on real estate investment and retain the value of money.