Five Essential Features that Make Real Estate Investment Profitable

People who are trying to decide where to invest their money often ask me whether real estate ventures are more profitable than other business opportunities.

I always respond that investing in real property can yield significant profits but it also often provides long-term benefits.

Below are five benefits I will discuss:

1. You can refurbish (to increase the value of) real estate
You can hold a stock for a time before you sell it. The company management and corporate success are key factors in the success of the stock.

Contrary to other traditional investment instruments like stocks, which depend on third parties (e.g., stock management), real estate investments are directly under your control. Real estate investments can be managed directly by you, unlike other conventional investment instruments like stocks, whose rates of return depend on third parties (e.g.

You cannot control the changes in demographics and economic aspects or the impact of natural induced changes. However, you can control many other aspects to increase your return on your investment.

Examples include aspects relating to adding repairs, or improvements/enhancements to the physical property and tenants you allow to live in it.

You will see a rise in your wealth if you do it correctly.

2. Real estate investing, when done right, can be profitable even during a recession (like the one that we are currently in)
It has been used on multiple occasions to bail out financial problems such as the ones that many people have suffered during the current economic downturn in Nigeria.

Many of my clients confide in me that they don’t know where to invest their money because of the current economic climate. Many clients are tired of investing in bonds and treasury bill but need a new investment.

After extensive discussions, I suggested that landed property investments be considered as an alternative investment channel.

Because even though all businesses fail, land will always appreciate. To prove my point, I shared the following quote from a former American president.

“Real property cannot be lost or taken away. It can only be managed with reasonable care. It’s about the best investment in the world.” – Franklin Roosevelt.

It was no surprise that the client took my advice and signed up. It was common sense, obvious, and logical!

3. Real Estate Investments are immune to inflation
In other words, if you invest your money in real estate that is viable, it can help protect you against the negative effects of inflation on other investments.

Because inflationary pressures tend to cause a positive correlation between real estate’s value and their price, this is why it is so common for property values to increase in tandem with rising prices. Inflation is a major factor in the rise of rental rates and property values.

Real estate owners have the unique advantage of being in a position to adjust their rates to keep up with inflation.

For example, monthly rents can be increased to offset inflation. This provides a cushion effect that protects against other monetary investments from inflation-induced losses.

4. Real estate is unique because it can be used as collateral to secure funding from banks.
Real estate can be in the form of land or buildings, and with proper titles (i.e. The most widely accepted and recognized form of collateral in Nigeria, and other parts of the globe, is the Certificate of Occupancy (aka “Cof O”)

It is unique in that it can protect both the interest of the borrower as well as the bank (that’s lending the money), so funds can be released. After due verification, terms and conditions have been agreed.

A private C of O is able to offer a greater advantage than the global C of O. The former (i.e. In the event of future financial transactions with banks in Nigeria, private C of O is what the intended borrower will need.

5. Real Estate Investing allows you to use the money of other people
Also, even if you don’t have enough money, you can still do it. All you need is the ability to do it.

Real estate can be described as a physical asset or hard asset. This is a characteristic that makes real estate attractive to financiers, i.e. People with the capital to invest.

This is why real estate products are often bought with debt, unlike other investment products such as stocks which are not tangible and are therefore more risky to buy in.

Real estate investments can be made with cash or mortgage financing. You or a third party can arrange payments to enable payment of low initial amounts.

These payments will be made on landed property, which will continue to increase in value for the entire term of the payments. This gives the financiers of the acquisition confidence that their investment is secure.

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