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Did you know you can Make Money In Nigeria by generating massive rental income from real estate investment?
I have helped many Nigerians, both at home and abroad, create wealth through real estate investing by teaching and leading them through lucrative and rewarding, well-calculated real estate investments.
You too can achieve that.
There are several risks involved in real estate investment, but that does not necessarily mean that real estate investment is a high-risk or dangerous investment.
There are ways to deal with the risks, and even if you ignore the risks, there are still many attractive elements.
For example, one of the attractions of real estate investment is the ease of predicting future developments.
Because future profits are easy to calculate, it is suitable for planned asset formation, unlike investments that tend to be volatile, such as stock investments or virtual currency investments.
Furthermore, real estate rents are said to be less likely to fluctuate even during economic downturns and are considered to be more resistant to economic fluctuations than other investments.
It can be said that real estate investment is not riskier than other financial assets; it just has its pros and cons.
Why do people say “Don’t invest in real estate”?
People tell me not to invest in real estate
Some people who are considering investing in real estate may have had the experience of being told, “Don’t invest in real estate.”
Reasons, why friends, acquaintances, and family may be opposed, include:
Because the risk is considered high
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Real estate investment requires high initial investment costs and does not guarantee a return.
In addition, once operations begin, there are various risks involved, such as vacancies, non-payment of rent, and disasters.
However, there is no investment method that guarantees a return, and certain risks can be addressed by preparing in advance.
Also, depending on the type, real estate investment requires purchasing a property, which means a large initial investment.
When purchasing an apartment, it is often not possible to pay for it with one’s own assets, so many people tend to take out a loan.
Many people probably don’t recommend it because they will be busy paying off their loans every month.
Real estate investment is a way to generate long-term real estate income by attracting many tenants.
This means that rent collected from tenants can be used to repay the loan.
Make Money In Nigeria
The Ministry of Internal Affairs and Communications has clearly stipulated that large-scale repairs must be carried out for rental apartments.
Large-scale repairs will be carried out in the following areas:
Roof, exterior wall, common corridor
Drainage pipes, water supply pipes
Entrance, car park, bicycle parking area
As an apartment building ages, it will deteriorate and its appearance and functionality will decline.
If tenants are no longer able to live comfortably, they will leave, making your income unstable.
Therefore, when investing in real estate, be sure to consider your cash flow and income/expense schedule, taking into account major repairs.
Benefits of starting real estate investment
Investing in real estate carries many risks, but it also has many benefits.
When considering the risks and benefits overall, many people will find that real estate is an attractive investment option.
Below we will take a closer look at the specific benefits of investing in real estate.
Can cover the income from your main job
Real estate investment brings in a steady income every year as long as you have tenants.
Another feature of real estate investment is that many tasks can be outsourced to management companies, making it easy to balance with other work.
There are many owners who are also salaried workers.
The advantage of investing in real estate is that it provides a stable income over the long term.
It can also serve as a supplement to your main income.
Proceeds can be used to replace pensions
These days, there is a lot of concern about pension payments in old age, but one of the benefits of real estate investment is that it can generate income for decades, helping to supplement the pension payments that many are worried about.
Managing real estate does not require much physical strength, and it is possible to outsource many of the management tasks to a management company.
Real estate income, which provides a continuous monthly income like a pension, can feel like a reliable ally in your retirement years.
Can replace life insurance
Group credit life insurance, which is often taken out when taking out a loan for real estate investment, is a system that will pay off the remaining debt if the owner of the loan is unable to repay due to a sudden accident or illness.
With group life insurance, you won’t have to pay your loan if you become seriously ill and are unable to work.
In addition, if the owner passes away, the property will be passed on to the family without any loan, providing a security of living for the surviving family members.
This is why it is said that “real estate investment can also serve as a substitute for life insurance.” There are also types that can cover cancer and the three major diseases.
Can combat inflation
The phenomenon in which the value of money decreases and the value of things increases in relative value is called inflation.
By investing in real estate to prepare for inflation, you can avoid the risk of your cash value eroding.
In addition, during times of inflation, real estate prices and rental income rise, making it an advantageous time to build up assets.
The Central Bank of Nigeria is currently implementing policies to achieve gradual inflation, so this benefit is in line with current trends.
Tax savings are expected
A feature of real estate investment is that the depreciation expenses for the property tend to be high. High depreciation expenses mean that you can claim a large amount as an expense when filing your tax return.
This can result in tax savings, especially during the depreciation period.
Another thing to keep in mind is that converting cash into real estate can also help you avoid inheritance tax.
When calculating inheritance tax, real estate is calculated on a lower basis than cash, which results in less inheritance tax being paid.
There is a leverage effect
One of the major features of real estate investment is the leverage effect, that is, the ability to move amounts of money much larger than the amount of cash you have on hand.
By taking out a real estate investment loan, you can receive a loan that is several times your current income at the time of taking out the loan.
It’s just like the “leverage principle,” which means that you can start with a small amount of money and withdraw a larger amount, thereby increasing your investment amount.
By taking advantage of the leverage effect, it will become easier to increase your assets at a rapid and efficient pace.
Things to keep in mind when starting real estate investment
While real estate investment has many benefits, there are some things you should be aware of.
When starting a real estate investment, be sure to take the precautions into consideration and create a solid, realistic plan to maximize the benefits of real estate investment.
I will focus on five points you should know if you want to make money in Nigeria through real estate and explain them.
High initial investment
For example, stock investment can be started with just a few thousand naira, whereas real estate investment requires a large sum of money.
The high initial investment amount can be a hurdle when starting real estate investment.
However, by using a real estate investment loan, it is easier to resolve the lack of funds when purchasing an investment property.
There is a chance of failure
Real estate investment has the characteristics of being “easy to predict the future and resistant to inflation,” but since it is an investment, the success rate is not 100% and there is a possibility of failure.
In order to avoid failure as much as possible and get as close to success as possible, it is important to acquire knowledge and know-how in advance and to be conscious of carefully selecting a property from a variety of perspectives.
It is also important to keep in mind that after you start, it is important to continue studying real estate investment and prepare yourself so that you can take the appropriate measures at the appropriate time.
Not necessarily a high tax saving
While real estate investment offers attractive tax savings, depending on the conditions, you may not be able to get the tax savings you want.
This is because income tax and local taxes are taxed using the excess progressive taxation method, and are linked to the amount of income from one’s main job.
Therefore, depending on your income situation, even if you invest in real estate for tax purposes, you may not be able to expect much benefit.
It is best to avoid investing in real estate solely for the tax benefits.
The process is time-consuming
Real estate investment involves various laws and a wide range of stakeholders.
Therefore, there are a large number of documents that need to be prepared and contracts that need to be signed.
In addition, various procedures such as sales procedures and rental contract procedures can be time-consuming and may seem complicated.
A declaration is required
If you work for a company, you may not be familiar with filing tax returns.
Even if you are a salaried employee, you must file a tax return every year on any profits you make from real estate investments.
This is because the company pays the tax on your salary through withholding tax, whereas you must pay the tax on real estate income earned from real estate yourself.
However, you can also ask a tax accountant to do the actual calculations and prepare the tax return documents.
You will have to pay a fee for the request, but if you don’t have the time or are worried about creating the document accurately, you can reduce the burden by leaving it to the professionals.
How to think about the property you are buying when investing in real estate
Properties to purchase for real estate investment
Property is one of the elements that anyone thinking about investing in real estate should consider carefully.
Even for apartments built in the same location, profits can vary greatly depending on the type of property, such as whether it is for families or single people.
When choosing a property, factors to consider are population, turnover rate, and number of households.
Highly populated areas have higher demand than less populated areas, reducing the risk of vacancies.
Turnover in real estate investment refers to the shortness of vacancy periods.
In general, one-room properties where there is a single person making decisions tend to have a higher turnover rate.
For this reason, some people who invest in real estate specialize in managing properties for single-person occupancy.
When managing a property aimed at families, it is important to consider how to keep tenants living there for a long time.
Before purchasing a property, find out whether the area is home to many single people or families.
Since households vary by area, it is possible to reduce the risk of vacancy by investing in properties with a large number of renters.
Tips for choosing a property to avoid real estate investment risks
When starting a real estate investment, rather than trying to achieve huge success, we recommend that your primary goal be “not to fail.”
Choosing the right property is one of the major factors that determines the success or failure of real estate investment.
Here I will explain some points to consider when choosing a property that will help minimize the risks of real estate investment.
Identify the characteristics of properties that are prone to vacancies
Properties that are prone to vacancy have certain common characteristics.
For example, the following tendencies are often seen in properties with a high risk of vacancy:
- Old facilities
- Location is poor
- Poor management
In addition, the risk of vacancy is also likely to be higher if the management company has poor ability to attract customers.
Properties like those listed above require caution when purchasing, even if the conditions such as return on investment are favorable.
Choose your area carefully
The vacancy rate of a property depends not only on the quality and characteristics of the building itself but also heavily on the area in which the property is located.
For example, if the area is convenient, such as close to a terminal station or university, you can expect high demand for rental properties.
On the other hand, you should be careful of properties in areas with poor accessibility or poor security.
Additionally, some tenants avoid properties where there is a high risk of disaster, such as areas prone to liquefaction during floods or areas with underground fault lines.
It can be said that the key to avoiding risks is to obtain as much information as possible about the land on which the property is located.
Scrutinize the property price and conditions
Make sure the price and conditions of the potential properties are reasonable.
It is important to do extensive research on surrounding properties and get an idea of market prices.
For example, the structure of the building, such as whether it is made of reinforced concrete or wood, has a significant impact on the quality of the property.
Another point that is popular among tenants is the facilities that meet the needs of the times.
In addition, be sure to check the track record and reputation of the developer and real estate company you are considering purchasing from to see if it is trustworthy.
Check the actual condition of the property
Going to the location in person is an effective way to increase the amount of information you have to make a decision about the property.
You will also be able to get a sense of the atmosphere of the property and the surrounding environment, which you might not be able to get from the conditions listed in the documents.
In addition to checking the state of preservation of the building, one idea is to ascertain the demographic of the residents from the demeanor of the people you pass by.
Properties with a bad atmosphere, such as those littered with trash by residents, will not only have problems with vacancies but will also be at higher risk of not paying rent.
In order to make an objective judgment, we recommend that you conduct as much on-site research as possible.
Simulate your income and expenses
Simulating income and expenses is an important factor in ensuring successful real estate investment.
Choose a property after simulating your income and expenses based on the expected rent, repair reserve funds, management fees, and other conditions.
One point that is often overlooked is the figures related to repair reserve funds, etc.
If the estimate is too high, the return on investment will be poor, but if the estimate is too optimistic, there is a concern that if major repairs are actually required, large expenses will be required, which will result in a decline in profitability.
For sound management, run simulations using realistic figures while taking into account anticipated risks.
Prepare your own funds
Real estate investment does not always generate income; there are various expenses such as real estate agency fees, tenement rate, advertising costs for recruiting tenants, equipment costs, and loan repayments.
In the unlikely event that your rental income is not enough to cover your monthly expenses, it is a good idea to have some personal funds ready.
Especially in the early stages when you are not familiar with real estate investment, keeping a certain amount of funds on hand will give you a sense of security.
Your own funds can also be useful when your investments are on track and you want to take the next step.
The key to real estate investment is risk hedging! Gather information with NAIJA WEALTH NEWS.
In order to avoid risks in real estate investment, it is ideal to gather information from every angle.
However, it may be difficult for a beginner to gather and examine a large amount of information on their own.
Gaining the knowledge of real estate professionals is also important for making investment decisions that lead to risk hedging.
NAIJA WEALTH NEWS provides high-quality information on choosing real estate.
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Conclusion
While real estate investment offers many benefits, such as stable and continuous income and serving as a substitute for life insurance and pensions, it also carries some risks.
However, by taking proactive measures, it is possible to minimize the likelihood of risks materializing.
It is important to continue studying and acquire as much appropriate knowledge as possible about real estate investment in order to avoid risks.
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