THE REAL INVESTMENT
What is INVESTMENTAn asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. –investopedia.com
Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last fifty years and has become a common investment vehicle. Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more easier than investing in stocks and bonds. In this article, I'll unmask the basic reasons why you should invest in real estate.
WHY YOU SHOULD INVEST IN REAL ESTATE
1. TO BE A LANDLORD
Becoming a Landlord is the dream of every reasonable and wise person. That’s why it is important that the first investment property one should acquire should be your own home. Being a Landlord doesn’t stop at just making you a business man but becoming your own boss. As a boss of your own you have right to determine the kind of people you wish to live with, and how much to charge a rent, how you will manage and maintain the property as a whole. Infact, the fulfillment, returns and the pride associated with being a Landlord remains everyone’s wish.
2. AS A COLLATERAL
Real estate investment is the only investment banks are willing to lend more than 50% of the purchase value. Due to the long term value of properties it becomes easier to get housing loans to acquire a home. Banks or other relevant financial organizations do recognize this. This leverage in turn boosts the returns of both rental and Capital appreciation on the Capital invested.
3. THE VALUE OF PRODUCT APPRECIATE WITH ECONOMIC DOWNTURN
The difference between Property investment and other businesses is that property can never be zero in value. Because it is a permanent asset, there will always be a value to it. Economy wise, property is seen as hedge agent inflation. The population increase as its evident in our present era, there will always be a corresponding rise in scarcity of land, and construction costs and this will in turn magnify the prices of properties. Unfortunately, since inflation accelerates at an average of 3 - 4% annually, the prices of properties will also increase at the same proportion, and of course to the advantage of the investor.
4. IT SERVES AS SECURITY
Investing in real estate is one of the most lucrative and long lasting investments. Besides providing shelter and base, it is a source of lasting financial security.
5. IT MOVES ONE UP THE SOCIAL CLASS
Over a long term, as real estate tend to rise more, it has the effect of securing and augmenting one’s social economic standing. As the universe expands, it therefore pays to be positioned in. the landed housing categories. In my own adage, “show me your property and I will tell you how wise you are.”
FORTUNES OF REAL ESTATE BUSINESS IN THE LONG RUN
1. RENTAL INCOME
Investing in income property is one of the commonest lucrative property investments.
Here, one is involved in passive income generation. The tenants will now work for you as they are paying you rentals to make you richer. In the case of a loan you must have taken, the tenants will pay your installment for you. And if you should increase your rental rate, possibly above your installments, then you always smile to the bank from your property investment.
2. TAX WRITE-OFF
One of the benefits that a rental property investor enjoys is tax deductions. As a rental investor your interest on a running mortgage and even your property taxes could be written off. Besides, the Government of the day accords you the privilege to depreciate the purchase price of your property based on depreciation arrangement even when your property is appreciating in value.
3. AS A FORCED-RETIREMENT PLAN
Real estate investment is seen as a forced retirement plan for the following reasons.
1) It is a permanent asset.
2) It doesn’t depreciate in value.
3) It has no respect for economic down turn.
4) It appreciates even when other ventures may be depreciating.
Little wonder why lot of entrepreneurs that were smart enough to invest in properties are having high returns and getting wealthier by the day, even at their retirement periods.
4. APPRECIATION OF A HIGHLY LEVERAGED ASSET
If you purchase a property using significantly more debt than equity, the investment is said to be ‘high leveraged’. For example, if you need to invest in a property worth N50 million and you have just N10 million, you can use leverage and borrow N40 million from a bank, by combining your money and the bank loaned money, you will now able to buy the assets. Assuming for ten years your investment property appreciate by 5%, the appreciation will be on the entire N50 million assets and not only on the N10 million of your own money. This is where the ability to leverage benefits you.
PLANNING YOUR RETIREMENT FROM RENTAL ESTATE BUSINESS
1. Retiring from real Estate can be very interesting if strategically planned and executed. Retiring as a real estate investor could mean you own some properties that produce income more than your job. It could also mean owning those properties for some years while working in your career and selling those properties for a profit that greatly exceeds your normal retirement income. These are realistic examples which many people should capitalize on.
2. The beauty of real estate is that you can continue to work in your career and still earn a really good living in real estate. Real estate will enhance your lifestyle and ease the discomfort of being vulnerable while working for someone else. Your job is not promised forever. Real Estate gives you comfort and peace of mind as well as heck of living.
3. You can purchase properties for long term purposes and benefit for not only making money on monthly basis but constantly building equity (property value minus what you owe) to eventually pay your rising bills. You will have few choices when your bills pill up, refinance, hold the property and sell the property. This is probably the most overlooked strategy in real estate. On average, real estate values increased by 5% per year for the last 100 years.
4. The best time to buy real estate is now. Theoretically, if you buy real estate today, you will see returns well over 100% within the next 5 - 7 years. Can you imagine what the return will be in 20 years? Think about it.
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