From time to time, people who are trying to decide where to put their money ask me if real estate businesses are more or less profitable, compared to other business opportunities.
My answer is always that in addition to its potential to generate significant profits, investing in real estate often has long-term benefits.
I discuss five of these benefits below:
1. You can renovate (increase the value of) real estate
After you buy a stock, you hold it for a while and hopefully sell it back at a profit. The success of the action depends on the management of the company and its commercial success, which is beyond its control.
Unlike other traditional investment instruments, such as stocks for example, whose rate of return depends on third parties (eg company management), real estate investments are directly under your control.
Although you cannot control the changes that may occur in demographics and the economy, or the impact of nature-induced changes, there are many other aspects you can control to increase the return on your investment in the nature.
Examples include items related to adding repairs or improvements to the physical property and the tenants you allow to live there.
If you do it right, the value of your investment will increase, which will translate into greater wealth for you.
2. Investing in real estate, when done right, has proven profitable even in times of recession (like the one we are currently experiencing)
On several occasions, it has been used to effect a bailout, after financial setbacks, such as those experienced by many in the economic downturn taking place in Nigeria today.
A considerable number of clients have confided to me that due to the current economic situation, they are unsure of profitable channels to invest their money. Some of them are made up of bonds and treasury bills, but they are in dire need of new investment.
We had long discussions and, based on my experience as a real estate consultant, I recommended real estate investment as the most suitable and safest alternative investment channel.
Indeed, even if all businesses collapse, the earth will still appreciate a lot. Then, to emphasize my point, I ended by sharing the following apt quote from a former US President:
“Real estate cannot be lost or taken, managed with reasonable care, it is the safest investment in the world” – Franklin Roosevelt.
As expected, the client chose to take my advice and signed up – it was the obvious and common sense thing to do!
3. Real estate investments are inflation-proof
In other words, investing your money in viable real estate can protect you from the damaging effects that inflation often has on other conventional investments.
Indeed, the value of real estate generally tends to increase in positive correlation with inflationary pressures. This is why real estate values and rental rates rise with rising inflation.
Therefore, the nature of real estate gives owners the unique advantage of being able to adjust the rates they offer to match inflation.
Monthly rents, for example, can be increased to compensate for inflation, thus providing protection against inflation-induced losses suffered by other monetary investments.
4. Real estate is only because it is universally acceptable as collateral, to secure bank funding
Today, real estate in the form of buildings or land, with appropriate titles (i.e. .
It has the unique characteristic of being able to protect the interests of both the borrower and the bank (which grants the loan), so that the funds can be released, that is, after verification and agreed conditions.
This is one of the main advantages of a private C of O over the global C of O, because the former (i.e. the private C of O) is what the borrower potential will need, in the event of any future financing transaction. with the bank. in Niger.
5. Real Estate Investing Uses Other People’s Money
In other words, you can do it even if you don’t have enough money. Just know how.
This is possible because real estate is physical property or what is called a durable good.