REAL ESTATE ADVICE

Advantages and Disadvantages of Investing in Real Estate

Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water. It involves buying, selling, or renting land, buildings or housing.

In Nigeria, people often refer to the “real estate market” from the perspective of residential living, however, real estate can be grouped into three broad categories based on its use: residential, commercial and industrial. Examples of the residential real estate include undeveloped land. Examples of commercial real estate are office buildings, warehouses, and retail store buildings; and examples of an industrial real estate are factories, mines, and farms. The size of an apartment in Nigeria is measured in square meters. This may include the total area of the walls enclosing the home.

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Real estate business is not for everyone. It has its own advantages and disadvantages. In making a commitment to the business, there are crucial questions one should ask oneself. For instance, do you want to solely invest in it or you want to have a partner? Especially in residential properties, a partnership can often be appealing because of the inherent benefits, like mitigation of risk and shared responsibilities. However, one must be careful in choosing who to have a business venture with. It is also advisable to have the partnership business formalised to avoid unnecessary troubles in the future.

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Real estate investment is currently one of the most popular ways to make extra money. Some have found success and have made it a full-time profession. This is why it is important to talk to a financial advisor before taking the step.  There are major questions one needs to ask and the answers will help shape one’s decision. Investing in real estate is great, however, one must be familiar with the pros and cons:

Advantages of Real Estate Investment

Security

Real estate investment comes with a sense of assurance because the price does not tend to fluctuate. The investment is tangible. Usually, the value appreciates over time. Although this is not always certain, the probability that the value of a property will decrease on a long term is low. That is why proper researching of a location is important before proceeding with the investment.

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Income Stream

This serves as a source, or even better, one of the sources of income for an individual. Nigeria economy requires that one should have more than one source of income in order to meet the financial pressure. Real estate provides a steady flow of income for the owner. Have it in mind that income is mostly dependent on the geographical location of the property. Learning how to spot up-and-coming locations can be of great help in making a sound decision regarding property purchase.

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Decision-making

In real estate investment, you’re in charge of all the significant decisions and the processes involved in the purchase and sale, and/or the rental of the property. Another advantage is you can own real estate without having to bear the hassles associated with real estate investment.

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Disadvantages of Real Estate Investment

Maintenance

Maintaining a property can cost a huge sum. Besides the monetary cost, the physical and mental effort it requires may be quite high. If the units are being offered for rent, maintaining it so it remains fit to be inhabited may cost a chunk of money. The owner may have to spend a lot on repairs, electricity bill and so on.

CHECK: 7 THINGS YOU NEED TO KNOW BEFORE INVESTING IN REAL ESTATE

Time-consuming

Investing in real estate could be time-consuming if you plan to rent or sell properties. One may need to employ an agent or a manager to help oversee things. Doing that will lead to additional cost.

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Increased loss and liability

Real estate investors should be able to take risks. They should also be prepared to shoulder the losses and liabilities that arise. Real estate is dramatically affected by the condition of the immediate area where the property is located.

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Legal Difficulties

Having legal troubles can cost a lot of money and bring strain to the person involved. There have been instances where someone builds on a piece of land thinking they own it, only to find out when they need a loan that the land is not theirs after all.

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Kemi Falodun

Kemi Falodun is a lover of words and fine sentences. She writes short stories and essays that explore themes of loss, memory, and relationships. She lives in Nigeria

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