Real estate investment has been considered one of the most major and passive ways of building wealth. This is one of the major tangible sources of assets that have been proven to have the potential to provide significant sources of return on investment in decades, both in rentals, and other property appreciations.

But the main question remains: “What is real estate investment? how to invest in real estate?  is real estate a business?

 

In this simple step-by-step, we will break down the meaning of what real estate investment is, the types of real estate investment you might want to choose in case you’ve been thinking so hard, what the feature benefits and risks involved in them, and finally how you can begin your journey into the world of the real estate industry.

 

 

What Is Real Estate Investment?

 

Real Estate investment is the buying or purchasing, owning, managing, or selling property for future profits. Like every other investment like “stocks or Bonds”, real estate is a physical asset that you can see and touch without being in the digital space.

 

As an investor you can make a lot of money through rental incomes, the appreciation of your property value, or a combination of both the rental or property appreciation.

 

Types Of Real Investment

 

In the real estate industry, there are different types of real estate investment, but today we’ll be discussing the major or most common real estate investment, with each its advantages and risks involved. Here are the most common types:

1.   Residential Real Estate

 

This is the most common well-known form of real estate investment that involves the buying or purchase of house homes, apartments, or even condominiums to rent out or to sell.

 

The thing is that the demand for this kind of investment is usually consistent, as it involves people or individuals always in need of a place to live, which makes it the most common safe investment in the real estate investment industry.

 

2.   Commercial Real Estate

Commercial real estate as this implies involves the use of properties for business purposes, such as office space, shopping malls, hotels, industrial warehouses, etc.

 

Commercial investment only offers higher returns but this may vary because of higher risks due to market fluctuations and the specific kind of needs of the business tenants.

 

3.   Real Estate Investment Trusts (REITs)

The Real Estate Investment Trusts (REITs), allow you to invest in real estate without physically owning a property in any location. Some companies operate, own, or even finance the income generation of real estate, and they allow investors like you or individuals to purchase their shares or investment plans just like in the mutual funds of other financial institutions.

 

REITs are a great option for someone who thinks of investing but looking for a passive source of income as this is the best way to invest in real estate with a lower capital to start as a form of requirement for any real estate company.

 

4.   Real Estate Crowdfunding

Real estate crowdfunding is a platform that allows individuals to invest their small amounts of dollars of money into larger real estate projects, this is often with the benefits of pooled resources from multiple investors like bank shares or stock markets.

 

This kind of investment is similar to the new but has the gain of popularity due to its accessibility and its potential for return for investors.

 

5.   Vacation Rental

With the rate of modern technology for rentals like Airbnb, investing in vacation rentals of properties like MLS properties and Naija houses in Nigeria and other parts of the world has become increasingly popular in this new generation of technology.

 

This can make investors able to purchase properties in tourist-heavy like Lagos, Nigeria, Dubai, Paris, Italy, Johan burg, South Africa, etc areas tend to give out for rentals for a short stay or term. This can yield a higher return on investment than traditional rentals, although this may require more than just hands-on management it is far beyond that and that’s why this kind of investment is low risk and high return.

When to invest in real estate?

It is crucial in real estate to ask yourself, but it is also important to remember that there are opportunities in every market cycle especially in the real estate industry. The question of “when to invest in real estate?” depends largely on your financial situation, market trends, and finally your long-term goals for the real estate business. In order for you to start investing the real estate, here are some key points times when it comes to making a better decision as it can make more sense to you:

1.   During Market Correction:

This is a very important aspect of the real estate industry and why you should always make a note when you experience or hear news of a downturn or correction, property prices often drop.

 

This can create an opportunity for you as an investor to purchase properties at a low cost because this will allow you to grow your portfolio in the real estate industry.  But the thing is that if you‘re able to hold onto the property until the market bounces back, this way you can see the potential significant appreciation like in rental or purchases of properties in any city or country.

 

2.   When Interest Rates Are Low:

 

It interests low rates in the real estate industry can make borrowing money from banks more affordable, which leads to lower monthly mortgage payments.

 

This can improve your cash flow on rental properties and make real estate a more attractive and lucrative investment for anyone.

 

3.  In Growth Markets

The best way to invest in the real estate industry is to invest in areas that are experiencing population growth like in Nigerian, places like Abuja e.g Wuse, Katampe, and Jabi, etc, then we go to Lagos state, places like Lekki, Ikoyi, Victoria Island, Banana Island, etc, and finally Port-Harcourt.

The Top Tire Countries Like the United States of America (USA) Places like California, New York, Los Angeles, etc Canada (Places like Toronto, etc), United Kingdom (Places Like London, Manchester, etc). UAE (places like Dubia)

 

Job expansion or infrastructure development can be very lucrative for investment of return. One thing is that property values in these places or areas tend to rise over time, this can provide a very good and excellent appreciation potential to your investment portfolios in real estate.

 

4.   As Part of a Long-term Wealth Strategy

 Real estate is a very lucrative investment that is often best viewed as a long-term investment and return. Even though properties in real estate start to decline in a short period of time, holding onto your properties for the long run can typically result in an appreciation and an increase in profit.

 

So if you are patient enough and financially stable to hold onto a property or properties for a longer time or years, honestly the best time might be now to start investing in the real estate industry.

Why invest in real estate?

 

The simple answer to this question is that the real estate offers more than just buying properties but several advantages make it a compelling investment. We’ll discuss a few top reasons why you should invest in real estate, there are as follow:

1.   Steady Cash Flow

The biggest draw in the industry is that real estate investment is the only potential steady flow of income you can ever have because there is a particular in rentals of properties.

 

Another one is the monthly rental income it generates for you which can help you in terms of mortgage payments, property management fees, and finally other forms of expenses while it is still generating profit and income for you.

 

2.   Property Appreciation

It has been shown over the years or decades that the value of real estate has generally been increasing because of the population of the world in general. This has made investor benefit from these appreciations when they sell their properties.

 

While the way at which property values could fluctuate in the shortest term due to economic, and political conditions, the long-term trends are upwards.

 

3.   Tax Benefits

Investors or individuals can take advantage of the various tax breaks and deductions, such as depreciation, property taxes, and finally mortgage interest. These can help reduce the overall cost of owning investment property.

 

4.   Leverage opportunities

Unlike other forms of investment, real estate allows you to leverage your purchase by using borrowed capital (i.e. mortgage loan). This means that you can invest in larger properties with less of your own money upfront.

Why real estate is the best investment?

Now you’ve learned about real estate investment and when to invest in the real estate industry, I would like to say that when you compare any other investment option, you will see that there are many considerations into real estate to be one of the best investments you can make. Here are some reasons you might want to consider why real estate is the best investment decision you will ever make in the future:

1.   Tangible Asset

Real estate is a physical asset that you can touch or see why is that so, because you don’t have to go through various processes technically, like the stock market or bonds, forex, etc, you have control over your property and its management. One of the major reasons that many people like you and I feel more comfortable is because of the ownership and investing in the real estate give back return no matter what.

 

2.   Passive Income Potential

One of the major fun parts about real estate is the rental of properties which can help you generate passive income which can help you supplement your primary income or even become your main source of revenue. As long as the property is well maintained and in a desirable location, it can consistently generate cash flow for you.

 

3.   Hedge Against Inflation

The real estate often acts as a hedge against inflation. As the cost of living rises. So do property values and rental income, which means your investment can keep pace with or even outstrip inflation.

 

4.   Diversification

Real estate provides an excellent way to diversify your investment portfolio. Because it behaves differently from stocks and bonds, adding real estate to your portfolio can help reduce risk and protect against market technicality or jargon.

 

 

Risk of Real Estate Investment

 

 As interesting it is for you to invest in real estate there are many risks involved, but I will discuss some potential downsides in real estate that nobody will discuss or tell you about:

 

1.   Market Volatility

Real estate is like any other investment, the real estate markets can be unpredictable these could be through new government policies, the economic condition of a country, changes in interest rates, and shifts in local housing demand can all impact property values.

 

2.   High Initial Costs

The purchasing of property or properties requires a more significant upfront investment planning, a down payment not to lose the opportunities involved in it, and closing costs because when the value increases you have to pay for the present cost of it, and this is another valuable information which is the property management fees which can add up at any time which can make the real estate less accessible for some investor or you as an individual.

 

3.   Illiquidity

You might be thinking what illiquidity, well like other investments which are forms of liquidity like the stock market or bonds, real estate is not liquidity. If you think of selling your property as quickly as possible to have access to cash like other investments, the real estate may take time to find buyers, especially in a sluggish market. This makes real estate investment a long-term strategy rather than a short-term investment.

 

4.   Property management Hassles

Being an owner of a rental property or property can require your hands-on management, which can be from the handling of maintaining both the property and tenants’ issues. The real estate investment can be seriously time-consuming unless you hire a property management company like MLS Properties, which can eat into your profits so click here to visit their website to book now

 

 

Conclusion

 

The real estate industry is a very powerful way to build long-term wealth because it can offer you a very good potential for steady income, tax benefits, and property appreciation. Whether you’re exploring “when to invest in real estate”, you’re considering “why to invest in real estate”, or maybe you’re debating “why real estate is the best investment”, this asset class offers diverse opportunities for growth and financial security.

 

By following the steps outlined above and staying informed about market trends, you can successfully navigate the world of real estate investment and reap the rewards over time.