A real estate business is a business entity that deals with the buying, selling, management, or investment of real estate properties. Real estate is defined as “the property, land, buildings, air rights above the land and underground rights below the land.” Real estate is the land along with any permanent improvements attached to the land, whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and bridges. Real estate is a form of real property.
Categories of Real Estate
There are five main categories of real estate:
There are lots of reasons why you might want to invest in real estate. It might seem like a pipe dream and out of reach for “normal people.” Many think that they have to be a savvy investor with tons of money — but, with some common sense and research, it’s pretty accessible, even for beginners. There are all kinds of reasons why you might want to invest in real estate — probably some you’ve never considered.
Real Estate Has High Asset Value
Tangible assets are physical things like property, computers, and equipment that are worth money. Real estate, especially, will always have some kind of monetary value. Compare this to investing in stocks where, if the market crashes, it is possible that something you paid #500 for could suddenly be worth #20, With real estate land and real property your investment will always worth what it was and more it was in years to come.
Appreciates in value
Real Estate appreciates in value unlike other market that may rise today and fall drastically tomorrow.Real estate tends to appreciate in value over time.
Not only will the building or home itself likely grow in value, but the actual land that it’s built on will also usually be worth more over the years. In some markets, it’s not uncommon for the land to be worth more than the house that stands on it — or for the land value to continue to rise even without a house on it.
A couple living in Bannana Island in Lagos Nigeria bought 5 plots of land some years ago when it was selling for just #200,000 to #500,000. Some investors overlooked the Island at that time because it was very great Swam and water filled environment. Some who actually understood real estate investing took the risk and invested in it by buying the land then.
in 20 years time, the couples who bought 5 plots of land in Bannana Island decided to resell their property (Land) so to have Return On their Investment (ROI), They listed the property for sale and later sold it for #30,000,000 per plot. The land appreciated in value over the years because investors from different part of the world came in to develop the area for commercial purposes.
One great option with real estate investments is that you can take out a home equity loan. This can be set up either as a line of credit or as a traditional loan.
People use home equity loans to pay for college for their kids, home renovations, to buy rental property, or, even, sometimes, to pay off other high-interest debt.
You can take advantage of inflation hedging.
Although inflation affects every investment, real estate is an investment that is almost always in demand, so it typically maintains its monetary power. Normal inflation often makes it more expensive for companies to create products and services. They either have to raise their prices or accept lower profits. Real estate doesn’t have a strong correlation with stocks or corporate profitability, so it is a natural inflation hedge.
You can also often pass any inflation costs along to tenants.
If you own your own house, you can deduct mortgage interest. State and local property taxes are also usually deductible.
For investment properties, you can often deduct operating expenses and costs, insurance, property taxes, and maintenance.
Capital gain taxes (the taxes you pay if you sell investment properties, or your own home within certain limitations) are 15% to 20%, typically lower than your personal tax bracket, which can be a huge advantage over other types of investments.
If you use the money from a sale of one property to buy another property, you can defer your capital gains. This means you aren’t taxed at all on that money because it went directly toward the purchase of another property. Make sure you report to the IRS that this is what you’ve done, or they’ll send you a letter asking why you haven’t paid taxes on a property sale
Diversify Your Portfolio
This is another way to lower some of your risk, especially if you’re investing lots of dollars in other opportunities. Most experts recommend diversifying your portfolio so you won’t lose everything in one fell swoop if the market where you’ve most heavily invested happens to go south. Real estate is an excellent place to park some of your money — a place much safer than many other investments.
Cash Flow Of Real Estate Can be Predicted
It is very difficult to predict your return of investment and cash flow in many businesses. With real estate, on the other hand, if you know what a property is renting for and that you have a tenant, you’ll know what your cash flow will be. As long as you keep the property occupied, you can count on that money every month. Remember, though, to budget for routine maintenance and repairs, and factor that into your yearly expenses.
You can earn passive income as a way to invest in Real Estate.
Because you can predict cash flow, you can also figure out ways to maximize revenue or cut expenses in order to establish a passive income source that will last as long as you own the property.
Set the rent for your property at an appropriate price and raise it responsibly to cover inflation. Try and always perform preventative maintenance so catastrophes and emergencies don’t sneak up on you. Also, make sure you have the right property maintenance or you can contact a property maintenance company.
Real Estate Gives advantage over Inflation Rate
Although inflation affects every investment, real estate is an investment that is almost always in demand, so it typically maintains its monetary power. Normal inflation often makes it more expensive for companies to create products and services. They either have to raise their prices or accept lower profits. Real estate doesn’t have a strong correlation with stocks or corporate profitability, so your investment is even better when it comes to inflation
The interesting part of inflation when it come to real estate is that you can also often pass any inflation costs along to tenants.
Top Trending Real Estate Company in Lagos Nigeria
- 1. OVERPLUS PROPERTIES LTD
- Website: www.overhplusproperties.com
- Email: [email protected]
- Office Address: No. 25 Alh, Abdur Raufu Obitayo st, Idado Estate, Lekki Penninsula II, Lagos Nigeria
- Phone: +2349053588569
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