Investing in Real Estate
Real estate is the modern term for land, as well as any physical property or improvements that are permanently affixed to the land, including houses, buildings, landscaping, fencing, wells, etc. Investment in real estate therefore, involves the purchase, ownership, management, rental and/or sale of real estate for profit or private gain. It is about more than just finding a place to call home, but has increasingly become a common investment vehicle to grow and nurture wealth.
It is interesting to note that an overwhelming proportion of today’s and past world billionaires made their fortunes through real estate and in most cases, the journey to wealth starts from just one property and the portfolio keep growing.
Have you ever wonder why property owners were called “lords”, or as now more colloquially known as “landlords”? It’s because owning properties gives power and financial freedom. There must be a reason why every rich person you know owns multiple properties. Even Donald Trump today remains a billionaire thanks to his real estate fortunes as most of his other businesses have declared bankruptcy.
It is particularly gainful to invest in real estate in a growing and volatile economy like that of Nigeria as the real estate provides a safe hedge and store of value against inflation. The low rate of inflation in the country is positive for those that have real estate as assets because as the inflation goes up, so does the value of your real estate.
However, in spite of the compelling opportunities that exist in investing in real estate, it also comes with its own associated risks. The most fundamental risk in real estate investment in Nigeria is the possibility of falling into hands of fraudsters. It is therefore important that you deal with the right people and invest in properties with genuine titles when investing in Nigerian real estate. After ensuring the integrity and genuineness of the people and properties with whom you are dealing with, the next important factors to consider are location, location and again, location!
The rate of your success in real estate investment is determined largely by the location where you are putting your investment. If you are ever to choose between a good location with a higher price or bad location with a lower price, consider the former: When considering good location, one of the key factors to look out for include: area with appreciating value, axis on the line of current development, nearness to other properties with current or prospective values and good transportation. It is also important to look at the locations in regard to the future, rather than that of the past for higher, long term returns.
It is also financially wise for prospective investors to consider investing dormant capital that’s sitting in low yielding Bank accounts into real estate. It may be a tough slog the first few years, but somewhat later, you’ll probably wish you had bought more. Investing in real estate is also becoming an increasingly favorable option for those eying retirement and who want to take advantage of real estate’s return potential and its abilities as a portfolio diversifier and inflation hedge.
Why you must consider investment in Real Estate
Other reasons why you must consider investment in real estate includes:
- Hedge against inflation. You only hate inflation if you don’t have an asset that is inflating. Inflation is increasing the values of your properties hopefully faster than any input costs and the costs to operate the asset. Some people used to think back in 1996 how ridiculous it was for anyone to pay N50,000 to purchase a plot of land in the Ajah area of Lagos State. Today, the same one plot of land is over N50M. Inflation is a powerful economic force that’s difficult to stop. You would rather want to own inflating assets than always be a price taker.
- Rise on growing economy. When times are good, assets tend to inflate quicker due to higher employment, rising wages, and rising corporate profits leading to more demands on properties. Real estate tends to be a major beneficiary during a bull market. Forget about protecting yourself against inflation, owning real estate is a gainful opportunity to make money with inflation. If there happens to be hyperinflation, your cash is devaluing rapidly whereas your real assets start surging in nominal value. When economic tightness returns sooner or later, it causes another surge in property prices.
- Generational asset. You can pass on property from generation to generation, conceivably making your family and loved ones lives a little bit better. Think about our university graduates nowadays who are complaining they might never be able to afford owning a home like their parents due to exorbitant prices. Now think how much worse it will be for their children. Everybody has heard a story of some grandparent buying a home for just N20,000 that is now worth millions of Naira. If you can buy a property to live and enjoy, and then pass it down the family to give your children a heads start, what an amazing gift you’ll provide. But besides working hard, a massive generational wealth transfer should help support future generations.
- Little effort to build wealth. The whole idea is to invest in assets that work for you, and not the other way around. Real estate is a relatively easy business to understand compared to investing in stocks. For instance, on a rental property, good location, good tenants, manageable maintenance, and rental growth are all it basically takes to make for a solid real estate investment, whereas stocks have so many more variables to deal with, including: management credibility, industry growth, competition, politics, regulation, tax policies, inventory turns, margin analysis, operating profit growth, and more. Meanwhile, to turn N100,000 into N500,000 through equity investing is no easy feat, neither is making an interest of another N400,000 on the deposit into a Bank over 7-8 years.
- Paying on installment with no interest. For people paying on a property over a period of time on installment, the rate is fixed and the payments never change. 3-4 years from now you might be paying the same amount that aren’t worth as much as when you first took out the subscription for the property on installment. As your net worth grows, the amount you pay monthly or so becomes a smaller part of your overall net worth, thereby reducing any feelings of stress associated with paying for the property.
- Collateral asset. Unlike cash, which serves no utility function, property addresses not only a fundamental human need, shelter but can also serve as collateral material against loans. If our financial system goes to hell, at least you will have an asset you can actually utilize. Remember, cash is just an ordinary paper and worthless unless it’s turned into a tangible asset!
- Tangible asset. Real estate is a tangible asset that will continue to add measurable value and enduring impact to everyday life and a valuable financial portfolio. It is an investment you can see, feel and touch, giving you a sense of accomplishment and success.
KAYODE-OBEMBE & CO LIMITED: Empowering you to become home-owners
If you must take the advantage of the opportunities that abound in investing on real estate in Nigeria, the company to work with is KAYODE-OBEMBE & CO LIMITED. The Company is a real estate firm incorporated and registered in Nigeria as a limited liability company. Setting new standards in the delivery of services in the real estate sector, our Company acquires, develops, sells, leases and manages properties and real estate products in choice locations across the Country. KAYODE OBEMBE & CO LTD is a company that stands totally on the trust placed on it by its valued clients. The company returns this trust by continuously working to provide satisfactory and affordable housing opportunities and real estate investment windows. We believe in empowering our clients to make better informed investment decisions in their bid to either create wealth or become home-owners’ through property development.
We are the promoter of serviced plot estate development projects within Lagos Megacity axis. Our estate development projects include:
- Portview Estate, (Lekki Free Trade Zone) Ibeju-Lekki, Lagos
- Victory Estate, (Lekki Free Trade Zone) Ibeju-Lekki, Lagos
- Gracecourt, Mowe, Off Lagos-Ibadan Expressway
- Vineyard Estate, Mowe, Off Lagos-Ibadan Expressway
ICPC & NIDO MOU: An added value for the Diaspora
The Diaspora Housing investment scheme will key into the independent corruption practices and other related offences commission (ICPC) of the Federal Republic of Nigeria and Nigerians in Diaspora organization (NIDO) Germany’s memorandum of understanding which allows collaboration in the areas of design, pilot testing and deployment of IT-based anti-corruption applications and tools towards effective and efficient public sector management in Nigeria and shall include but not limited to Land acquisition, allocation, registration, management and background checks on estate developers.
Interested investors in Germany and Continental Europe (Europe excluding UK and Ireland), please contact:
GKC Business Group
Continental European representative KAYODE OBEMBE & CO LIMITED
Tel + 49 170 98 78 495