The Real estate business is one of the forms of entrepreneurship that people can get involved in either as a realtor or as an investor. when most people hear “real estate business,” they tend to imagine that it is a kind of investment that involves wealthy people alone, but that is not the case. Real estate is an investment that attracts both the rich and the middle class.
The real estate industry involves purchasing, owning, managing, renting, and selling properties to make money. Real estate investments are lucrative and generate a healthy profit.
Real estate investment is definitely not the only type of investment in the world; there are other types of investments like stocks, bonds, and cryptocurrencies. However, investors should invest in what they can control, depending on how much risk they can afford.
The real estate industry has contributed significantly to the growth of the Nigerian economy. With a promising future and low risk, real estate is a manageable investment. Luxurious homes, shopping malls, hotels, and other real estate are still available despite the poor economy.
If you want to invest in real estate in Lagos or elsewhere in the country, you need to grasp how it works and the fundamentals of doing so. Even if there is always more to learn, an investor should be knowledgeable with the fundamentals and facts of this industry.
Do you know facts on Real Estate Business?
Low Entry Barrier
Barriers to entry are things that discourage or make it difficult for newcomers to enter a market or industry sector.
One fact about real estate is that it has a low barrier to entry. To start a career as a realtor in the real estate industry, you don’t have to be extremely wealthy. You also don’t need a lot of cash. Additionally, you can start with 15% and gradually increase it, if you’re interested in investing in the real estate sector by essentially purchasing pre-construction sites.
This is what makes people prefer real estate to stock or bond investments. In the stock and bond market, startups are prevented from entering a market and competing with other companies due to excessive costs or other types of barriers.
Real Estate is a Good Retirement Plan.
Real estate investing is one of the many strategies to save money for retirement. You may save a ton of money for your retirement by purchasing a home and renting it out. In your later years of life, after you are retired, you can also get a monthly income from rent.
On annual basis, the average rent increased by 4.7% from 2010 to 2020, so retirees can consider integrating real estate into their retirement plan if they want to diversify their savings. Owning real estate is especially appealing because it allows you to diversify your income and increase your retirement savings.
Related: Profitable ways to retire with real estate
Real Estate Increases Net Worth.
According to research, financial assets make up about 20% of the world’s net wealth, while real estate makes up about 67 percent. Equity is built as we pay down our mortgage or as the value of our home rises, increasing our overall net worth. You will need to employ real estate investing to increase your net worth if you want to achieve accreditation status. This would also grant you access to unique investment opportunities.
Your net worth could be greatly increased by a single real estate investment, and having a sizable portfolio of real estate assets could allow you to become an accredited investor without having to use any of your own money.
Investing in commercial real estate also enables you to reap the benefits of tax breaks, leverage, and passive income, once you get the rent payments from renters. Renting out your real estate might help you save money.
What happens to Real Estate during Inflation?
Because property values frequently increase over time, real estate can be a fantastic inflation hedge. In terms of value growth, real estate investments have the potential to outperform inflation, providing investors with a source of prospective recurring income.
Inflation benefits real estate investors who profit from their rental properties, particularly those with short-term lease agreements like multi-family complexes. As a rise in housing expenses equals a rise in rent. A rental property is the best inflation hedge. Contrary to most assets, which tend to depreciate in value over time, real estate thrives as prices rise. With inflation, both the price of your rental property and the income it produces rise.
In contrast to stocks, bonds, and digital currencies, real estate is an asset that provides consistent income streams and value growth over a longer holding period. For these reasons, real estate is frequently referred to as a “hard asset.”
One way to ensure that the solution won’t negatively impact your portfolio is to use assets that are thought of as hedges. Since it can reduce losses in the event that the market sees significant swings in response to variables like inflation.
You will be able to put more money in your pocket if you can boost your rent while keeping your mortgage the same. Although there are some parts of inflation that can’t be avoided, such as higher consumer goods prices and higher interest rates. But the good news is that real estate is one method to protect yourself from some of the detrimental consequences of inflation, even if the predictions come true.
The Real Estate Market Will Continuously Expand.
In spite of some unfavorable responses a few years ago, the Nigerian housing industry is predicted to do well in the near future.
The COVID-19 and the conflict between Russia and Ukraine have made more Nigerians aware of the value of owning real estate in their nation. Locals and residents of other countries are therefore very interested in Nigerian real estate, primarily as real estate investors.
Below is a summary of the significant ones:
- Fresh opportunities are presented by the job market, and the unemployment rate is low.
- Lesser Buyers are using interest-only mortgages.
- Real estate investment interests the younger generation.
- Taxes don’t cost much money.
- Spending has increased across the economy.
Your loan can be paid off through Real Estate Business.
You can reduce your debt faster by renting out an investment property. Moreso your tenants’ monthly contributions will successfully aid you in boosting your wealth and equity.
Payment of debt is made easy when you have monthly returns from your investment. The expansion of your wealth and equity is essentially fueled by each monthly payment made by your tenants.
Real Estate is the only investment you can fully control.
Real estate is my preferred kind of investing for a number of reasons; The fun and financial rewards. The freedom it gives me to choose and oversee my own investments, as opposed other types of assets such as stocks or commodities. I have a significant impact on how my investment performs too.
For most individuals, money is one of the most stressful aspects of life. This happens because a lot of people feel powerless about their financial situation. You have complete control over the entire transaction when you invest in real estate. Everything is up to you, including the approach you take and the mortgage company you choose to work with. You also have the option of screening prospective tenants and only renting to those who meet your criteria.
You can sell your investment at any time.
During recessions and deep economic downturns, businesses and organizations fail or stop making payments on their debt. This might potentially wipe out all of your investment if your portfolio does not include real estate. On the other hand, you will always be able to sell a property, even in the worst economic conditions. Investing in real estate is the best way to lessen the risks of financial markets.
Businesses and organizations regularly file for bankruptcy or cease paying their debts during recessions and severe economic downturns. If the only investments in your portfolio are stocks and bonds, this might effectively wipe out your whole investment.
Real Estate Investment is Stress-Free.
Real estate investment typically involves less stress than other types of investment, although this isn’t always the case. This is true because the real estate market is steadier and more predictable than other markets. A real estate-based portfolio is relatively unaffected by economic unpredictability, and trends take time to emerge. Another choice for managing the investment property is to take a hands-off attitude. By selecting a trustworthy property management company to look after your rental property on your behalf, you may save time and effort.
Real Estate Business provides a tax benefit.
Due to the numerous tax deductions and incentives, investing in real estate may be quite profitable. After subtracting all costs associated with keeping the property in operation, the business submits tax. Not the total revenue from the real estate, but the net income is what you pay tax on. First, property management fees, insurance, taxes, mortgage interest, and maintenance expenditures are subtracted. Taxes are levied on the net income, not the total revenue from real estate.
As time goes on, assets are vulnerable to depreciation, which lowers the income they produce. The property’s net value is lowered by wear and tear. A similar idea is used in real estate, which counts depreciation as an expense. As a result, as depreciation costs are included in real estate income. The proportion of tax deductions decreases year after year. As a result, the property’s obligation is reduced.
Real estate investing is quite popular due to the numerous tax advantages. For instance, you may be able to write off a variety of costs, including appreciation, mortgage interest, maintenance fees, and more. When selling your property, there are additional advantages such as lower capital gains taxes, depreciation, refinancing, and 1031 exchanges. To ensure you are eligible for specific tax benefits, consult with a tax expert or financial counselor before submitting your taxes.
Profits can still be made from Flipping.
It is a fundamental principle of real estate business that even new investors are aware of. Flipping houses is one of the easiest ways to make money in real estate. The real estate investment strategy of flipping involves buying a home with the intent of selling it for a profit.
A well-executed home renovation could be a great investment and extremely profitable. You can sell the house for a lot more than you paid for it after making prudent improvements. Flipping a house can rapidly go wrong if done incorrectly.
Real Estate Data Analysis
If you want to become wealthy in real estate, you must first conduct in-depth market research. The worth and earning potential of an investment property were assessed in this research using a number of different variables. Any real estate investment strategy nowadays must incorporate data.
An extensive market analysis is essential to real estate success. In this study, a range of factors is used to reflect the value and earning potential of an investment property.
Real estate investing has historically been one of the best ways to increase your return on investment. By employing the correct investing strategies, seasoned real estate investors can achieve great financial success in the housing industry.
If you do your research and approach buying real estate correctly, it may be a profitable investment. If you want to use real estate to build a reliable source of retirement income, be patient and methodical as you build a portfolio of properties that generate income.
Before you start looking for a home to invest in, make sure you understand these important real estate facts.
Learn more about real estate investing by reading our blog posts.