This article is a beginner’s guide on how to invest in real estate online. Nowadays in the Nigerian business ecosystem, a notable investment trend is the now popular real estate business. This real estate sector is fully loaded with a variety of lucrative investment options for real estate shareholders, both individuals and organizations alike to focus on.
This diversification of real estate will provide a profitable system for real estate shareholders, allowing for them to achieve specialization within their particular subdivision of real estate management.
Nowadays, through the integration of online activity into the real estate management process, the scope of modern real estate has become easily accessible to prospective shareholders and the whole public in general.
In addition, it’s important to note that the digitization of real estate has also helped to unlock the real estate market to potential real estate investors who seek to deal and acquire landed properties. Any real estate shareholder who seems fascinated by the benefits of passive income generation in the long term that is guaranteed by online real estate investment can explore the online option of navigating real estate.
Despite having a huge number of real estate investors in the country, a larger percentage of which do not want to incur the extra burden of overseeing or managing a landed property. Some don’t even want to play the role of landlords, shying away from the responsibility of having to deal with property tenants.
It is to this end that this article has been developed, to explore the various ways one can make money and navigate the complexities of real estate investment.
Real estate strategies to consider when it comes to How to Invest in Real Estate Online
Any investment strategy can only be considered to be valuable and profitable once it has a huge probability of being successful while generating a high return on investment.
When one first thinks about any real estate investment, the first thing that pops into your mind is owning properties;houses and lands. Understandably so, but the whole idea of real estate investment spans across just property ownership. It includes specialized investments strategies and options, most of which do not usually involve direct property ownership.
A uniqueness of real estate investments however is that, it requires relatively low capital when compared with other modern asset investment options.
Listed below are some of the best strategies that can be implemented for real estate investment. These strategies when properly utilized are sure to generate lots of money for real estate investors.
1. Property rentals
Within the world of real estate, particularly in the Nigerian society, this is the most common investment method that is used to generate money by real estate investors and shareholders.
Renting properties generally involve acquiring a landed property which might be a house, warehouse, shop or any other type of landed property and giving it out for people to use for either residential or commercial functions at an agreed fee for a specified period of time. For estate shareholders who have excellent property management skills, are patient enough to properly handle tenants and also have the capital to invest, this real estate strategy is the obvious choice.
Landlords and property owners in this type of setting generate money by collecting rents and property dues from tenants. However the amounts paid for rent vary due to several factors like location of the property, property size, taxation policies, agent commission etc. Hence the landlord needs to consider all these factors when crafting the right amount for tenants’ rent in order not to operate at a loss.
Though the most obvious way to make money with this investment strategy is via rents, a key watch for the landlord should rather be asset appreciation. This is because when a particular landed property increases in monetary value, it has already generated investment profits that could be realised with the property sale or lease.
While it is common knowledge that real estate properties tend to appreciate in value over time, there is no official testament to this fact hence the need for good property management skills.
For this reason it is a very realistic plan to work in line with property managers, real estate attorneys and other financial investors. This will ensure that a property owner is able to have a clear understanding of how to effectively manage his property, being properly accountable for upfront and long term expenses to be incurred.
In addition, it will also help to streamline investment objectives, understand a landlord’s legal obligations and to maximize the potential return on investment gains.
2. REIG- Real estate investment groups
REIGs are ideal investment solutions for investors and real estate shareholders who desire to own landed properties without any intention of managing such property as a landlord. Such people usually have a lot of capital to invest and are usually profit motivated rather than seeking interest in hands-on property management.
In short, we can just say that REIGs is a mutual association of shareholders that pool money that is invested primarily in property rentals. Such a case is evident in a scenario in which a real estate company manages a building or set of apartments. An interested REIG can decide to buy out such a building or apartments through the said real estate company.
In such a setting, typically a single investor can own one or more apartments/ rooms in the building as the case might be. Even, if a single investor has enough capital, he might decide to go solo and buy out the entire building, owning all rooms or apartments.
However, it is important to note that the company that was previously managing such a building would still be tasked with the same management responsibility as before which might include; handling vacancies and occupancy, property maintenance, vetting prospective tenants and the likes. The REIG then allocates a specified percentage of revenue to the company in exchange for their services on an already agreed periodic basis.
Key takeaways
- 1. A typical REIG property lease is usually undertaken in the investor’s name and interests.
- 2. All units in the REIG usually gather a specified portion of the periodic rent against the contingency of unplanned vacancies. This means that an affected investor will still receive payment despite if his allocated slot(apartment) is empty.
- 3. The quality of any REIG lease is dependent on the managing company it associates with. This means that any REIG investment should be wary of real estate companies that demand high fees that might harm the mutuality of their joint contract.
3. Property flipping
Just as there is a vast difference between normal buying-and-selling trading and proper investing, there also in this case is also a distinct gap between buy-and-rent property owners and real estate flippers.
Another name for property flipping can be said to be buy-and-hold investing. Property flipping is the process of buying landed properties with the aim of temporarily holding on to them and later reselling at a profit. It follows a regular pattern; buy property at a low price, hold for a little while(4-5 months), and resell at a higher price.
Property flipping can only be carried out by real estate experts and professionals who have a deep understanding of property marketing, real estate valuation and renovation. This is because the property flipping process usually involves improving, purchasing and reselling undervalued properties within a timeframe of less than six months.
It is crucial to understand that some types of property flippers don’t concern themselves with rehabbing and improving landed properties at all before they sell them. They operate with the mindset they only buy properties that offer a very unique, intrinsic value that they can market for a profit immediately. They usually operate in a rapidly fast market for their investment to thrive.
In contrast to this, we also have flippers that make their money by buying relatively undervalued properties and renovating them, largely adding more marketable value to these properties and their prices. Though this form of investment takes a longer time, with the flipper being able to only accept only one to three properties at a time.
However despite the huge profitability of property flipping, there are also many risks associated with this real estate investment strategy you might want to know;
- 1. There’s the risk that you might not resell the property at the right price when you are dealing with the wrong market
- 2. You might run at mortgage loss on the proper when you can’t sell off the property within the agreed period.
Bearing these risks in mind, property flipping can still be a very attractive and lucrative investment option if done the right way.
Conclusion
Anyhow one decides to invest in real estate within the Nigerian market, whether it is to buy properties for rent or hold till it is the perfect time to sell it off. A common driving factor for both is the motive of making and securing profits.
From the article, it has been discussed three key strategies that make the real estate market a very profitable option that an investor can venture into nowadays within the Nigerian society. As with any investment however, things can go south at any point in time, so therefore one should conduct proper research before taking up any of these investment strategies and whether it would be viable within the market he’s situated in.
One should comfort himself with the belief that anywhere there are great risks there’s always greater rewards to be earned.
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