Real estate includes land and anything fixed, immovable, or permanently attached to it such as buildings, fences, appurtenances, fixtures, improvements, roads, shrubs and trees, sewers, structures, utility systems, and walls. It is generally just referred to as any property in landform or buildings.
Types of Real Estate
There are four main types of real estate that can be invested in, viz:
- Residential real estate: Includes all kinds of homes (family homes, resale homes, condominiums, high value homes, et al).
- Commercial real estate: Involves malls, shopping complexes, schools, hospitals, hotels, et al.
- Industrial real estate: Comprises of warehouses and manufacturing buildings for research, storage and goods distribution.
- Land: Includes farms, ranches, vacant lands, et al.
Participation in Real Estate Investment
Real estate, over the years, has become a fall back for a lot of people, especially the elderly. It has become common knowledge that most people work all their lives without owning any real estate ventures, ending up using their retirement benefits to set up ventures. This plan, though seeming the safe and less stressful option, is definitely far from the best, and is not solid. Most times, it has been observed that the actual owners of these ventures turn out to not enjoy their own hard work, either being too old to truly benefit from their real estate proceedings, or dying before any real profits start coming in.
Young individuals might complain that by the virtue of being young, they are blessed with the curse of being persistently broke, and hence, unable to afford profitable real estate ventures. But this in itself is only a well believed lie. Real estate has been set up by varying companies and organizations to be as affordable as possible, in whatever quantity or quality is desired. Also, as this article is going to show, there are far too many advantages that can be garnered from real estate investments, for the younger generation to not fight to be part of this boom.
Reasons to Invest in Real Estate
Most youths, especially those in their early and mid-twenties, having only just been done with university education, are still not sure of what to focus on in life. In developing societies, most in that age range, after being done with schooling, are unemployed, underemployed, unguided and/or not guaranteed of what to expect from life. Their counterparts in the developed societies will at that age only have gotten employed, or just started an entrepreneurship venture that is not high earning yet. Hence, most young individuals end up confused or irresolute on what real estate ventures they can afford, or how to go about it at all.
The following are some important reasons to invest in real estate, especially from a young age:
- Fixed and stable source of income: Seeing as most young people are constantly in need of cash, it absolutely makes sense that investing in real estate, which provides a steady stream of financial aid, would be the best way to go. Real estate, even though not in heavy bulk, provides a constant assured almost risk-free source of income in the form of rental income. Owning real estate ventures in areas such as highbrow communities, urban setups and cities, tends to offer a bigger advantage in the sense of higher return and income due to the greater demand for rental services in these areas. It is hence evident that real estate, if managed rightly and set up correctly, can provide an extra source of funding, asides career money, to serve as retirement benefits, especially in the background of sensible saving by the youth. Real estate has the added advantage of being able to increase in value over time, while producing cash flows from mortgage interests and rental income. In all these, the most important bit to keep grounded in mind is that location plays a major role in determining the returns made in real estate.
- Stability for the future: Real estate, being relatively risk free, serves as a cushion for young people in cases of financial emergency situations. If in very dire need of money, real estate ventures can be liquidated for immediate cash, can be mortgaged for loans, a segment can be traded off, and so on, depending on the wishes of the owner. In a society where job security is at an all-time low, and youths are usually bottom tier and the most laid off, owners of real estate investments can breathe a sigh of relief in any eventualities, and can be calm enough to make other plans without fear of going broke. Real estate also builds experience, and can be an advantage in the eyes of employers, when seeking to select job applicants.
- Impact on community: Despite this not being of immediate interest to the owner, real estate generally serves to improve the community by providing more available housing, maintaining property and increasing tax revenues, directly impacting in the lives of the residents of the community, while also serving to improve the local economy.
- Inflation hedging: An important advantage of real estate over other investments is its hedge against inflation. With a rise in inflation, rental charges and value of property significantly increase as well. With an expansion of economies, real estate demand increases, leading to a rise in rent charges and values of properties, all furthering the capital values. It hence maintains purchasing power of capital, bypassing the landlord and owner of the real estate venture, by transferring most of the effects of inflation to the tenants.
In summary, “the best time to buy a home is always five years ago” – Ray Brown. Real estate presents with too many opportunities and benefits to be ignored by the younger generation. That is why it is most advisable to begin investments as early as possible. Platforms like Fundall come to mind here, which allow members to save for future projects while still rewarding them with bonuses and interests.
Despite the limitation of the youths with being financially constrained, cheaper real estate ventures can be invested into. For instance, Pella Homes offers landed property in 300sqm and 450sqm, unlike other real estate companies that only sell 600sqm plots.
Rise (formerly My Cash Estate) is another great platform that has digitised real estate investments. Subscribers have their investments dollarised in American real estate. With as little as ₦3600 ($10) they are sure to earn as much as 12-36% return on investment monthly or annually, depending on the nature of their investment. With a dollar-denominated portfolio as such, investors are protected from the value destroying effects of the local currency. Another is AQRE, a real estate investment platform using blockchain technology with the help of Chelle Coin. Subscribers of AQRE have the opportunity to allocate tokens towards the properties of their choosing. It could be commercial or residential properties. Once tokens are allocated, residual income received from those properties are distributed to the respective subscribers based on their allocation amount. With this platform, you could be anywhere in the world and still be an investor in the North American real estate market, with a minimum of $100 (about ₦36,500). They promise a 30% return on investment (ROI) monthly.
In addition, individuals can buy property in groups to ease the burden on one another. That is where Fundall’s cooperative funds (a joint savings arrangement for two or more persons) comes to the rescue.
Most youths might also not be knowledgeable on the right paths to take, or the correct property to buy, but self-education is an easy solution to that. Educate yourself through looking up to the experts and those who have achieved in the same specialty, and come up with an achievable long term goal. It is impossible to own “too much” property. It is always best to invest in property than to save aimlessly, especially as a youth. Real estate is now, and it is the future.
Kator Tarkaa is a budding investment writer. He enjoys writing about real estate, businesses and finances, especially as it concerns youths. He loves marketing products and services via social media.