The real estate investment field is wide. From construction finance, JVs, buy-back schemes to land banking, shortlets, shops and residential housing schemes. I will like to discuss four (4) of these options, which i consider simple: land (land banking), buy-back schemes, shops and houses.
Land? It appreciates. One securely acquired at a good location often guarantees impressive returns on investment. At Aito Properties Ltd, we have seen land produce up to 80% returns in one year. Good title, perfect documentation, land does not require much improvements or maintenance cost. No payments to any property manager. While waiting for it to appreciate, the empty or undeveloped land can be rented.
Buy-back schemes are simple investments where an investor indirectly lends money to a property developer by “acquiring” some pieces of their property for a defined tenure after which the property is ‘bought back” from the investor for a improved amount. This funding enables the developer settle urgent needs while the investor makes some profit at the same time. Buy-back schemes, once perfectly documented with a verified developer, is the smartest way of making your money work for you in real estate.
Purchasing shops in a big market or buying a plaza at a strategic location guarantees steady stream of income. Tenant turnover is usually low, especially when the rent is moderate and the shops are at a good commercial area. Maintenance cost may also not be high. In most cases, tenants seek to ensure their business place looks good. Resale value of the property could be impressive.
Houses- commercial residential houses- are beautiful investments for generations. When managed by a sincere and meticulous property manager, this can become a stable source of income. But ability to ensure steady payment of rent by tenants, reduce maintenance cost and tenant turnover is key to achieving good returns here. Depreciation by ageing and design outlook may affect income and resale value. Interestingly, commercial houses do not only serve the investor’s interest, they also help the city’s need for affordable homes.
Investing in any of these key areas of real estate is determined by the investor’s risk appetite, income expectations, amount of money available (capital), passion and experience, skill and availability to supervise, future needs or ambition.
I will deal with these in details in subsequent articles.
So, where should you put your money? I will recommend land banking and buy-back schemes. If your risk appetite is low to moderate, perhaps your capital isn’t huge, possibly you aren’t readily available to supervise or manage projects( you live abroad), land or land banking and buy-back schemes could offer you peace of mind.
Interested in profitable land buy-back scheme or genuine land in well-profiled locations that guarantee quick returns? Our team at Aito Properties Ltd are here for you.
Real estate investment guide by Okey Ibeabuchi.