In today’s economy, investing has gone way beyond traditional assets. While paper investments like stocks, bonds and mutual funds are still common portfolio inclusions, there are many other avenues that can also be financially rewarding in the long run, if you are willing to put in the time and of course the investment.
One such avenue is real estate investment. It has been acknowledged as a lucrative way to build money for your retirement.
It would be good to note here that investing in real estate is not for everyone as it takes dedication, research and planning.
2021 is still in the first quarter, so if you wrote on your goal list to secure your retirement by investing in real estate, you have come to the right place. Keep scrolling for these tips that can serve as a guide.
- Know the costs involved:
To be straightforward, real estate investment is not cheap. Properties cost quite a bit to purchase outright, but if you have the funds or are willing to take out a mortgage, buy off plan, it can be worth it. Here’s something you should note – it’s not as simple as purchasing a property and watching it make money immediately. There are additional costs to keep in mind: basic maintenance, yearly upkeep, upgrades, and expenses like utilities and taxes. Everything has a cost, so be sure to factor everything. Know what you are getting into before jumping in.
- Select the property type:
So, you have counted the cost and have enough set aside for investment. Now, you must decide which type of property to invest in. You can purchase rentals, which could be either commercial or residential. You can become a landlord and rent out a home or apartment. You can use your property as an Airbnb or a vacation rental. If keeping a residential property isn’t something you’re interested in, you can opt for the commercial option. Or you can avoid renters and purchase property to flip for a quicker return. Before selecting a property, ensure you decide what your plans are for it and what goals you have in mind.
- Location matters:
When it comes to real estate investment, location is a key factor. You don’t want to buy property in an area just because the price is right. Perform your due diligence by checking the market value, the neighbourhood and what the location offers. You can go further by doing a research on the competition, and determine whether the property you’ve chosen is in a prime spot for its purpose. For residential or vacation rentals, consider the community, proximity to popular attractions and way-of-life factors. For business rentals, check out the area’s population, parking and demographics.
- Decide terms:
After selecting your property type and location, you can come up with the terms regarding your investment. Calculate rent, fees, yearly costs and emergency funds to keep a running budget. Are utilities going to be included? Keep in mind any fees and how much funding you’ll need to maintain the quality of your investment. You should also consider hiring a property manager, especially if you plan on having properties in different locations. The key is to decide this ahead of time, so you aren’t blindsided when the bills start to roll in.
- Buy property with growth in mind:
When you invest in real estate, you may eventually want to sell it. Whether you intend to flip it immediately or hold on to it for a while, you’ll want to make profit. The goal is to sell your property for more than you paid for it. Build your property value by making simple upgrades or additions. When you increase property value, you can sell it for more, and your hard work will pay off in a big way. So, invest wisely.
- Keep important contacts really close:
Real estate investment takes a village. No matter how rich or well-known you are, you are limited in what you can do to the property yourself. Have a go-to list of people who you will need to assist you with your investment. Property managers, an attorney, real estate agents and even bank account officers are all important resources. Also, keep in mind anyone you will need to keep your property in good condition: an inspector, plumbers/electricians, a handyman, pest control experts and contractors. While these people might not be needed upfront, it’s good to have a few reliable numbers to call, you can run some ideas by them later.
These tips are not exhaustive.
You can take a good read of Ibiene’s previous in the links below.
The first series touched on ABC Tips On Investing In The Real Estate Sector In Nigeria.
In the second series, a real estate expert, Niclette Mundabi dived deeper into the conversation in Investing in Real Estate: Lessons from an expert.
These write-ups are an eye opener.
Real estate investment can be tasking; however, when done properly, you can build a successful profit from it. Be sure you have the time and resources to dedicate to this investment strategy and start building your retirement fund today.
Do you have any question, comment or suggestion? Do share with us in the comment section.