The real estate sector is a very lucrative sector to invest in as there are huge profits to be made from investments in property. However, contrary to popular perception, real estate investing is not an exclusive preserve of the rich.
You can invest in real estate even if you are not in the rich class. Below are a few tips that can help you invest in real estate, even if you don’t have a fat bank account:
Start Small
The real estate billionaires all have one common trait: they started small. You may want to make millions of naira in real estate investments, but that million naira portfolio starts with a single purchase. You might have a goal to buy ten duplexes over the next five years. You do not need to buy all ten this year, or next. Perhaps you can buy just one this year, while learning how the process works. The year after, you might buy two, then three and so on till you get to your target. Each year, you become more and more familiar with the process and can buy more and more properties. Starting small is not only necessary, but it’s also a good thing.
Leverage
You can fund a property purchase using mortgage loans from PMI’s. Some real estate investors started this way, wait for the property value to appreciate, then sell the property, pay off the mortgage and use the profit realised to invest in other properties. Mortgage institutions might require you to pay a charge for paying before the mortgage period runs out but you will still make a profit which might be sizeable depending on the property invested in.
Buy To Renovate
You can buy reasonably priced properties, add value to them by renovating and sell off for a profit. You can upgrade dilapidated properties to luxury apartments and sell them for sizeable gains.
Form Co-operatives
Co-operatives are professionally managed collective investment schemes that pools money from many investors. You can start a real estate investment co-operative by joining your capital with that of your co-investors in order to make a substantial investment. Let’s take a simple scenario: you have N2 million but you want to invest in a property worth N8 million, you can pool resources with 3 co-investors who will contribute N2 million each. This makes a total of N8 million thus enabling you to invest in the property. However you should ensure your co-operative is registered and there is an agreement stipulating the terms of business and the profit sharing formula.
Borrow From Family
Family members are a good source of interest-free loans that you can use to invest in real estate properties. However, you should be realistic about what a practical repayment plan would be and not try to borrow more than you can repay. You have to treat it the same as any kind of loan and be realistic
Make Dedicated Savings
Saving money, or the saving habit is the foundation of all financial success, including investing. Set aside a dedicated amount as savings every month so you can build up your savings. When you have a sizeable savings, you can decide to make an investment in real estate. If you earn N250,000 monthly, you can set aside N100,000 every month and build a sizeable savings portfolio to enable you make profitable investments.
Buy Properties in Estate Developments
Properties located in estate developments are fairly priced and most times, mortgage financing options are given by the financing partner of the development in order to encourage buyers to purchase property. Cash in on this opportunity, purchase property and sell them later for a profit
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