“The most important quality for an investor is temperament, not intellect… You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” – Warren Buffett
As explained by Wikipedia, “Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.”
What is Real Estate Investing?
“But land is land, and it’s safer than the stocks and bonds of Wall Street swindlers.” – Eugene O’neil
Wikipedia also explained further that real estate investing involves the purchase, management and sale or rental of real estate for profit. The Investors Book defined real estate investing as “the purchase of property as an investment to generate income rather than using it as a primary residence”.
The definition of real estate investing expressed in the Investors Book omits purchasers who purchase properties to use for both residence and investment. Here, these classes of real estate investors, as they say in a Grecian idiom, “kill two birds with one stone”. They live in their investment, save and invest their rent and can capture the value appreciation of the investment, when they no longer need to live in it.
Who is a Real Estate Investor?
“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security”. – Russell Sage
A real estate investor is actually anyone has the requisite skill set and information needed to, and who puts, based on the skill and information, time and money into increasing the value, over a period of time, of real estate assets which he purchased, developed, managed, rented or sold. To be a successful real estate investor, one needs information, strategy, time and money, almost in that order.
Information is needed on a variety of foundational aspects of real estate investment such as appropriate location, suitable design, approximate market size, current market trend, viable market strategy, effective and efficient team building skills, resource management and allocation skills, etc.
Without a time and experience tested market entry and exit strategies, a real estate investor is at sea and may drown.
Time is needed to identify, conceive and execute a real estate investment strategy from conception to delivery. Real estate investment is serious business and needs lots of time.
The last, but not the least of the essentials of real estate investment is money. The importance of money or money’s worth cannot be overestimated in real estate investment. A real estate investor needs money or an effective fund raising strategy to be able to navigate the long and sometimes complex route of a real estate investment project or venture or strategy from the beginning to the end.
The Nature of Real Estate Investing in Lagos
“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.” – Theodore Roosevelt
It is the general consensus that of all places to invest in real estate in Africa, Nigeria ranks the highest and of all the places to invest in Nigeria, Lagos tops the list.
Lagos has a population that exceeds 20 million persons and it is rising. While the Federal Capital Territory, Abuja is the political capital of Nigeria, Lagos is the economic capital of Nigeria. Lagos has the highest internally generated revenue of all the States in Nigeria. This is a direct corollary of the volume of businesses that is transacted in Lagos daily, weekly, monthly, quarterly and annually.
The explosive population in Lagos State, while being at the root of its economic strength is not without its drawback when correlated with the infrastructural challenges of sustaining its vibrant and bourgeoning population. While the Lagos State Government is supposedly trying its best to tackle the consequential challenges of infrastructural inadequacy in almost every aspect of the infrastructural needs of Lagos State, suitable housing shortages in Lagos ranks the highest in Nigeria. Of the estimated 18 million housing shortages in Nigeria, Lagos has over 5 million representing over 27% of the entire housing deficit of a 36 States country. Suitable housing problem is massive in Lagos.
As is the case with every major problem, creating a strategic and sustainable solution is always a great business opportunity. The acute shortage of suitable housing in Lagos is not an exception. There is a huge investment opportunity in real estate in Lagos State, especially in the creation of suitable and affordable real estate solutions to the behemoth problem of housing shortages in Lagos State.
To profitably invest in Lagos as a location of choice for real estate investment, an investor must understand and appreciate the nuances of various parts of Lagos and their different market entry and exit strategies. All locations in Lagos do not have the same potentials and are not susceptible to a uniform strategy.
What is the Best Approach to Real Estate Investment in Lagos?
“Risk comes from not knowing what you’re doing.” – Warren Buffett
This question has more than one correct answer depending on the vantage from which it is asked. Some real estate investors prefer to earn rental income and thus center their real estate investment strategy on the systemization of the earning of rental income from their investment properties. They prefer to own and manage properties generating rental income. This requires that the investor would have to collect and maintain, or employ people who can collect rent as due and when due and keep the property in good tenantable condition from time to time. Rent collection and property maintenance have their own major challenges as rent collection is bedeviled with late rents and vacancies, where there is no one renting the place. There is also the problem of quitting a troublesome tenant or bad tenant and carrying out repairs and maintenance on the property. Real estate investors who prefer this mode of investment must hone their skills in such a way that they can effectively and efficiently manage the challenges associated with owning and managing rental properties. The annual rental returns on investment is 5% or more per annum.
Another section of real estate investors prefer to invest in real estate investment trust (REIT), which is “a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.” The major advantage here is that a real estate investor who invests in REITs does not have to deal with the challenges associated with owning and managing rental properties. The investor is paid a share of the profit generated by the REIT from owning and managing rental properties. The disadvantage is that the returns on investment may be lower, compared to when rental properties are managed by the investors directly. However the poorer return is sometimes more than enough tradeoff for the stress associated with attempting to directly manage rental property.
One other way to invest in real estate in Lagos State is through property purchase and sale. An investor who wants to buy and sell properties can do so in at least three or more ways. Buy old buildings, renovate and sell and making a healthy return on investment. If all the factors such as location, purchase price, cost of renovation, duration and eventual sales price are right, the investor could make as much as 15% or more per annum on the invested sum. However, the investor needs to have the right skill sets and knack for finding a great deal that can be done up and sold or flipped for a higher price than the cost expended. He also needs to be able to set aside a great deal of time to do this. It is however a higher return has than both rental and REIT.
Another way to buy and sell as a real estate investment strategy is to buy bare land or a land with an old or dilapidated house and wait for it to appreciate and sell. The waiting game could be as long as 10 or more years and could also be as short as 6 months. Depending on the location, the market dynamics and duration, the appreciation could be as high as 10% or way more depending on the duration. An investor who wants to invest this way needs to be able to find the right deal, a genuine land, in the right location and have the patience to wait and gauge the market for the right exit period and be able to also find a buyer to sell to.
The 5th and perhaps the best way to do highly profitable real estate investment is through property development and sale. Developing and selling properties directly to buyers can be quite profitable, returning as much as 15% or more per annum. However, property development and sale requires a combination of skills and definitely a lot of time to find the right deal in the right location to develop and sell. Because of the constant movement between and within the variables required to do an effective and efficient property development project, especially given the time, skills and resources needed to put a good development together, it is not an investment strategy suitable for everybody, despite having the highest rate of return.
Development and Sales: Investing or Partnering With Real Estate Developers: Still Your Best Bet!
“Real estate practice is not about selling or buying a home. It’s about representing your client’s greatest asset to your clients greatest benefit.” – Alex Delgado
How do you take the advantage of high rate of returns on investment in real estate development and sales without going through the rigors and pains? It is possible in one key word: Partnership!
Partnering with real estate developers is the Holy Grail or secret sauce to getting the highest return possible without putting in the time and effort necessary to generate the returns in real estate investment. It is the best form of passive income which real estate is capable of generating.
Partnering with real estate developers here can be formal or informal. It is formal when an intending investor approaches a real estate developer and offers investment financing for a project with clearly defined and written terms covering the rate of returns expected, the duration of the investment and other factors which are important to both parties. This may or may not be tied to units in the project.
It is informal when a real estate investor strikes a deal with a developer to purchase development units at prices very close to the cost price of the developer. This usually happens at the earliest stages of a development project when the developer is flexible the most and is trying to raise financing at the lowest cost possible. At this stage of a property development project, there is almost always a deal to be struck. This deal is never made public and can only be discovered by dealing directly with the developer and getting the best possible terms.
Either way, whether formal or informal, partnering with a developer remains the best approach to getting the highest returns on passive real estate investment. In addition to generating the highest returns on invested capital, partnering with real estate developers, also frees up investors to pursue their passion or line of business or profession while earning the best returns on their real estate investment.
Guaranteed Returns: How to Partner with Digital Nanos Limited
“Price is what you pay. Value is what you get.” – Warren Buffett
At Digital Nanos Limited (DNL), we are open to partnering with property investors who are interested in earning high passive returns on their real estate investment. When investors partner with us, whether formally or informally, they can be assured of a high rate of return on their investment and can physically see how their investment is being cultivated in the development of premium real estate assets.
The benefits associated with partnering with DNL can be summarized as follow:
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Convenience:
An investor does not need to worry about not having needed information on appropriate location, suitable design, approximate market size, current market trend, viable market strategy, effective and efficient team building skills, resource management and allocation skills, etc, or even the time necessary to identify, conceive and execute a profitable real estate investment strategy from conception to delivery. All of these are taken care of by, and fall within the core business of DNL.
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High Returns:
Partnering or investing with DNL in real estate development projects guarantees a high rate of return on investment for investors.
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Automated Exit:
When investors invest or partner with DNL, they need not worry about exits as our strategy at DNL includes automated and timed exits for investors.
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Re-Investment Opportunities:
An investor who partners or invests with DNL has the option to re-invest exits in new projects thus rapidly increasing the initial sum invested.
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Goal Targeting:
An investor who partners or invests with DNL can, together with DNL, set a specific investment goal and timeline for achieving the goal. DNL then puts in the work and implement the strategy to achieve the goal over a period of mutually agreed timeline.
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Opportunity to Invest Minimal Sums:
An investor may not have the total amount needed to get an investment unit in a project. The investor may however have sums sitting as “trash” in their bank or credit account. These sums may be invested with DNL for the exact same returns on investment as a person with a larger sum for investment.
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Freedom to Pursue your Passion, Profession or Business
When you invest with DNL, you still have the freedom to pursue your passion, profession or business, while we grow your investment by doing what we do best. Developing and selling premium real estate.
Are you looking for guaranteed returns on real estate investments or looking for a fantastic project to invest in? Let us talk about it. Call, send a mail or chat with us immediately. Our contact details are also here. We look forward to having you as one of our exciting partners or satisfied investors.
Call or Chat Now: +2348160110533
Email: info@digitalnanos.com