7 PRINCIPLES OF INVESTING IN REAL ESTATE

day 2 - CopyIt’s no secret that Real Estate investment has become the “weapon of choice” for many investors. If you have aspirations of building a sustainable Real Estate business, nothing should stop you because there is literally something for everyone.

Here are some principles you must consider:

 

1. There is never a bad time to invest in Real Estate: It has proven, time and again to be a very lucrative venture, as long as you are willing to work hard and mind due diligence. In fact, Investment professionals have advised that the best time to invest in Real Estate is now. This is because, no matter what happens in the economy, housing will still be a basic necessity and the value of Real Estate always appreciates with time.

2. Buy the ROI, NOT The Real Estate: You should do a proper analysis on the Return on Investment of the property you are investing in. Some properties offer more than others. For instance the LorenzoBySujimoto project offers off-takers a whopping 112% ROI. This is because we are building what has never been built before in Nigeria. We are building the Burj Khalifa of Africa. You should be able to forecast the income benefits in three alternative scenarios: worst case, most likely and better than expected, in order to obtain a range of possible outcomes.

3. Begin your Real Estate investment career with residential properties: While it is entirely possible to start investing in commercial properties or large apartment buildings from the onset of your investment career, it is widely believed that residential properties offer the smallest learning curve. Residential properties are easier to understand, purchase, and manage than most other types of property. The average investor doesn’t typically approach the commercial side of the business until they have a good grasp on residential properties.

4. Location, Location, Value: The location of a particular home cannot be underestimated. After all, most buyers will place a priority on the neighborhood over the home itself. However, we need to consider the value of the property too. Owning Real Estate in highbrow areas with new development springing forth or renovated properties increases the chances of finding a buyer, while an exceptional value will certainly increase returns.

5. Invest in progressive, forward-moving areas: While location is important, it is necessary to look beyond the present location and think of future benefits. A good example is the LorenzoBySujimoto project which is set to be the N0. 1 address in Nigeria in the coming years. This project is the future of Luxury Real Estate. An avid Investor who can see the future and read the signs can tell that The LorenzoBySujimoto will be the Burj Khalifa of Africa. The idea here is to look for properties in the neighbourhood that are leveraging exceptional designs with world –class features and facilities to create value for the future. These properties would most likely have higher ROI in the coming years.

6. Learn as much as you can about theeconomy you intend to invest in: Beyond the physical location, there is one factor that absolutely needs to be accounted for: the area’s local economy. For instance, there’s a huge difference between buying a property in Ikoyi and buying a similar property in Lekki. Ikoyi is the gem and hub of Luxury Real Estate in Lagos and properties in that vicinity are usual in high demand. Any decision to invest in an area should start with an evaluation of its economic standing. In other words; Is the area economically sound? The likelihood of a successful Real Estate transaction is highly dependent on the state of the economy. The more promising the economy is, the better chances you have of completing a successful deal.

6. Make rational decisions (not emotional): Never get emotionally attached to a property. Emotions can cloud your judgment causing you to make unwise decisions. It’s almost a certainty that if you stick with real estate investment long enough you will come across a deal that seems irresistible. Do not get overly excited and sell yourself on the deal before due diligence is done. This mindset can cause you to overlook some warning signs that otherwise might be deal breakers.

 

Sources:

7 Key Principles of  Investing in Real Estate. Ronald A. Boatright, Ph.D)

The Key Principles Of Real Estate Investing by Than Merril for www.fortunebuilders.com

 

 

 

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