Invest in Real Estate: It offers one great benefits. Excellent Return On Investment (ROI) is the main gain when one invests in Real Estate. Real Estate is an ever-increasing-in-value investment. Real Estate offers an alternative that can be lower risk, yield better returns, and offer greater diversification. Investors invests more in the stock market than real estate. Although investing in Real Estate or Stocks is a choice one decides to make, but both Real Estate and Stocks have different risks and opportunities. Real Estate provides a passive income stream and with the potential for substantial appreciation, while Stocks can be easily be bought and sold because it is subject to market, economic, and inflationary risks. Investing in the real estate sector in Nigeria has become increasingly popular over the last couple of years and has become a common investment thread. Onyi Obiamalu Consults a Real Estate firm in Abuja, Nigeria tells you more on why you need to invest in real estate. The benefits are numerous and here’s a few of them: VALUE APPRECIATION: Real Estate values tend to increase over time, and with a good investment, you can turn a profit when it’s time to sell. Even though Covid-19 affected Nigerian Real Estate sector and has affected economic activities but not withstanding; If you look at the Stakeholders’ situation in the Real Estate value chain from acquisition, construction, and all the areas connected, there must be a way for the government to intervene, especially taxes and levis, without necessarily having to put money in someone’s hands, but the things that add into the cost of building must be looked into. And we know that with this Covid-19, prices of materials for construction of real estate have drastically increased especially when one purchases land and wants to build. Real Estate has always overcome every problem that has come across it which are Inflation, Recession and Depression, and the Covid-19 pandemic would not be an exception. What this Covid-19 pandemic situation presents to investors is that value of assets will drop and this means it’s the time for investors to invest in the real estate sector, because it may come out rapidly and prices will increase and effectively return the value it may have lost then. No matter what, investing in Real Estate is much better than to hold cash at bank, this is because Real Estate values will always increase over time, and history continues to prove that the longer you hold your Real Estate, the more money you will make. DIVERSIFICATION: It’s an old age advice in the investment scene: Do not put all your eggs in one basket. In a much more contextual and technical lingo, it means: Diversify your investment portfolio. Investment in Real Estate can also diversify your portfolio; this is because when you diversify your portfolio, you spread out the risk. Real Estate is a safe tangible asset to mitigate the risk in your portfolio. Other Investments may present you with little to no tangible asset value, such as a stock which can dip to zero, or a new car which decreases in value over time. Real Estate Portfolio Diversification;
- REIT– Real Estate Investment Trusts. Where groups of investors pool their money together and issue shares of the trust to the individual shareholders. REITs generate a steady income stream for investors but offer little in the way of capital appreciation. REITs are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments). REITs invest in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses. REIT is typically a passive way to invest in real estate.
- Buying houses or apartments and renting them out can provide a great income stream.
- Purchasing commercial property where businesses can lease space can be a great way to invest in real estate. Commercial leases can drive high competition if in the right area and many times high cash flow.
- Purchasing multiple types of investment within the same asset class can provide even more diversification.
- Purchasing real estate in different geographic areas can help reduce your economic risk in a single location.
- Risk Minimization is achieved when investors diversify across different asset classes, regions, and property types. As an investor builds a portfolio of uncorrelated assets, the overall risk of the portfolio decreases.
- Preservation of capital is one of the benefits of diversification of real estate investments. Over a long period of time diversifying your portfolio can preserve your investment, by limiting both volatility and the overall risk of the portfolio. The odds of loss and capital erosion due to poor investments is reduced.
- When an investor holds multiple assets within a portfolio, the investor enjoys consistent returns, and there is less likelihood of one investment skewing the return of the entire portfolio. This way, overall portfolio returns have the potential to stay more consistent over the long term.