How investing in Real Estate will make you rich
Hoard land and thank me later. If you want to keep anything of real value and be guaranteed a huge return in the future, then that thing is land. It was produced once and they are no longer manufacturing it. With the ever-increasing human population, land has become scarcer than water. War after war has been waged across the world, neighbor has turned machete against neighbor, just because of land.
Across the world, it remains the most widely known and loved investment. It refers to purchasing land and the related developments on it. Buying a home or a plot is an example of a real estate investment.
Donald Trump is a real-world example of how quickly real estate can flip a person’s financial fortune from average to very high.
You also know that on the dating scene, owning some kind of property is a sure quick way to endear your crushes heart.
Here are six proven ways to make millions in the real estate world and they are also the main reasons why you must purchase real estate now;
1.To earn rental income an investor buys his property either by paying for it from his own resources
or by borrowing and then prospecting for quality tenants, who pay him rent on a predetermined regular basis.
For the property to continue attracting clients, it must be actively maintained, else it will lose its luster and ability to attract customers. Hiring a maintenance company is a requirement, if you cannot do it by yourself.
In determining rent, an investor has to factor in all the costs, starting from the mortgage repayments to the maintenance costs, insurance, taxes and inflation.
While tenants are the source of income in real estate, they are also the downside where low occupancy rates, destructive tendencies and outright refusal to pay due to politico ideological reasons is a problem. Low occupancy rates is particularly acute for holiday homes where we experience low and high seasons.
2.Flipping Real Estate, is a mode of investing where serious Investors buy and sell the property in a short period of time purely on speculative instincts. The traders don’t have to renovate or put any money in the improvement of the house as it is expected to be sold as is in the shortest time possible. This is equivalent to normal merchandise trading, the only difference being that the commodity being traded are houses and plots.
3.Buying run down real estate assets, renovating them and then selling is another way of investing in land.
Our own Kenyan billionaire Chris Kirubi bought these kinds of assets around Nairobi and Mombasa and sold them after renovations or rented them out eventually building an empire. As a true Real estate mogul, Chris also bought pieces of land around the major cities and later build on them.
Auctions are one place where to identify low priced or rundown assets that are being sold in distress, hence the ability to make money.
4.Real estate stocks also referred to as REITs (Real Estate Investment Trusts) is a pulling together of funds from many investors under the umbrella o the stock market and using the money to purchase real estate.
It comes in two types, the income (rental REITs) and the development REITs.
Income REIT refer to investors pulling their money together under a manager and buying properties that are then rented out to earn income, which is then distributed to the investors.
Under the developers REITs, investors funds are used to develop properties that are then sold out and dividends distributed to investors of the funds. In Kenya, we recently saw the listing of the Stanlib Fahari REIT on the Nairobi stock exchange which is an income REIT
5.Agribusiness only happens on land. Be it greenhouses to produce blue capsicums, be it ponds to produce catfish, or be animal husbandry to rear chickens and milk goats, you need some land to build the structures and to till to grow beans and maize.
Ranches and conservancies where wild animals are conserved serves to create a stream of tourists and sport hunters who pay for these services.
6.Real estate services, this is a huge area in the real estate world. This is where you go to school to be able to provide some of these services.
This is where all service providers such as architects, lawyers, surveyors, quantity surveyors, brokers, engineers, bankers, financiers, masons, electricians, landscapers and contractors come together to make a killing in the real estate world, by proving their valuable skills. They provide various services and are paid handsomely for it.
It is also here that quacks and con men swindle and siphon money from unsuspecting customers. Click here to read How a Famous Sacco was conned their hard-earned savings Land. Here is where rogue brokers and con men sell non-existing property, hence you must do your homework to establish the existence and ownership of the property.
Fake contractors build houses that collapse even before they are completed, hence you must ask for their testimonials and see their previous work. Here Improvement
7.Palatial homes with manicured lawns, edges and hedges, huge living rooms, gigantic kitchens and large bedrooms fitted with king size beds. Double garages and gyms, outdoor swimming pools, sprawling gardens and gazebos are a dream come true and a statement of power, status and achievement for most individuals. Pop stars, politicians and significant human beings are always lining up to buy these kinds of property.
They are priced for sentimental value. They often are called by name such as the Playboys mansion, the
Lion’s Den etc. They are the kind that movie producers will hire for a few months as the stage for their blockbusters and soap operas. Developing or owning one of these properties is a sure way to get you into the billionaires’ club.
One huge drawback on Real estate is in its liquidity. It takes months to sell a property and if you need the money in a hurry, then your pricey house will not be able to assist you. Sometimes to sell quickly you are forced to offer huge discounts.
REITs come in to solve the issue because they are listed on the stock exchange, and they can be sold just like a share or an ETF.
Investing in real estate gives an investor the ability to leverage, called mortgage, where you may require a down payment as little as 5%, yet gain full control of the property once the papers are signed, giving you exclusive rights to the asset.
Any serious investor must have real estate in his or her investment basket. It enhances the risk and return profile of his portfolio, offering competitive risk-adjusted returns. The real estate market has low volatility especially compared to equities and bonds that’s why I recommend you to buy that plot now and hold it.