Investing in real estate is so important that there is no room left for exaggeration but as Nigerians we rarely obsess or put much thought into investing our money somewhere.
We prefer to ‘chop life’. To eat today’s resources, hoping that tomorrow will bring its own resources which will of course, be eaten again.
Thus continues the cycle till one day, the cycle is abruptly broken. Maybe by sudden dismissal from work or an unexpected challenge in business.
From ‘chopping life’ we see ourselves struggling with ‘sapa’. Out of nowhere we can no longer afford the fancy things and lifestyle we used to spend all our money on.
But it doesn’t have to be like that. Even ants that as far as science is concerned have no brain whatsoever, even they store foods for the future.
They provide for their tomorrow using today’s resources. If tomorrow brings its own resource, good. If it doesn’t, no problem, there is preserved resources to fall back on.
This is what investing your money does for you. The fact that you are reading this article tells me one thing. You know the power of investing. You are open to their idea that you should invest your somewhere, but the million dollar question is, “Where?”
In a scheme that promises you unrealistic returns to entice you into putting your money with them so they can fatten their bank accounts and disappear?
Or shiny fads like Cryptocurrency, NFTs, even stocks?
Where a single news headline can send your investment crashing to the floor. Dropping so fast and suddenly that if the candle stick was an oil rig, it would find oil.
Is that the kind of vehicle you should put your money in? Of course not.
Historically and by this I mean going back since Biblical times, real estate remains the tried and tested best investment. Particularly land.
Real estate properties can either be land or houses. For long term investment purposes, land is king. For Cash flow investment purposes, houses or apartments are king.
By long term investments I mean buying a real estate property with the sole purpose of selling it in the future for a higher amount.
While Cash flow investment is strictly buying a property with the purpose of making money from it either on an annual, monthly or daily basis. For example, buying a house and renting it out.
Real estate investments: Land vs Houses, which one should you buy?
You can convert these two types of real estate investment into one by buying a land, building a house on it and then renting out the house. Understandably, this requires more capital.
The easiest way to start with real estate investment is to buy land, buy more than one plot. Later in the future, divide your land into 2. Sell one half, then use the money you got from that to build on the other half, then rent out the house.
But why buy land or house at all? Why is real estate investments better than all other forms of investment?
There are many reasons, but I will condense them into 4.
📌1. For future security.
In 2008 Femi Otedola, one of the richest men in Nigeria nearly went bankrupt. This happened due to the value of oil per barrel crashing from $146 to $34. The devaluation of the Naira and the 2008 market crash which sent stocks values into the mud.
Femi Otedola went from being the biggest player in the oil industry to being $1.2 Billion dollars in debt. Today Femi Otedola remains one of the richest men in Nigeria and there is a tendency that you reading this didn’t even know he was ever nearly bankrupt.
Why is this? The answer is simple, he liquidated his assets and paid off the debt then started building his empire again. Afresh.
Guess the major assets he sold to bounce back. He said and I quote him, “So we got a reputable firm to value my assets. I had about 184 flats, which I gave up…”
He sold his real estate assets. 184 apartments.
This is one of the reasons you should invest in real estate. It provides a security for you against future challenges. In fact, real estate is the best financial security you can have because it is the only investment that not only protects your money but actually grows it.
You can spend N5 Million today on a plot of land. 5 years later that same plot of land is selling for 75M because the value of the land has appreciated.
That is why real estate is the best financial security for your and your family against an unknown future.
This on its own is a big enough reason for you to invest in real estate. But maybe you are hard to convince, maybe your finances are more solid than that of Otedola who went from a multi-billionaire in dollars to near bankruptcy and had to be bailed out by his real estate assets.
Which I doubt unless you are Dangote himself (in which case I have to say, am honoured Mr Aliko that you are reading my article).
So you have all the security you need, then why again should you invest in real estate?
📌2. To grow and expand your business or company.
Apart from the fact that real estate is the only asset that doesn’t just preserve your wealth, but at the same time grows it. Guess what else real estate does for you.
It is the only type of investment that banks take as collateral for loans. When you walk into a bank to collect a loan, they don’t ask the number of Bitcoins you have. Or NFTs or stocks.
Forgive my language but they don’t give a shit about that.
They can’t use any of that as collateral. All they care about is the solid, tangible assets you have A. K. A real estate properties.
You can have $20 million dollar worth of Bitcoin but they don’t care. Why? It is because they know that tomorrow that Bitcoin could be worth just $1 million.
But they know that a house you have will never lose value, instead, it gains value. If you have a land. That’s even better, in fact you have to be very careful with your loan repayment because nothing will excite them more than to seize your land. Maybe at the time you took the loan, the land was valued at N100 million.
Later when the land is worth N300 Million and you default? The banks will do thanksgiving after they have seize your land. 😂😂
Real estate is a gift that keeps giving. It preserves your money and prevents it from loosing value. It grows your money by appreciating in value without you doing anything further and it enables you to take loans and grow your business or company.
In football terms, it can defend, it can score and it can keep.
But once again let’s say that you are a hard person to convince. “You get coconut head, you no dey gree” and you are not interested in taking loans to grow your business.
Why then should you buy real estate?
📌3. To create generational wealth.
Mind you, I didn’t say riches. I said wealth. There is a big difference between being rich and being wealthy. Being rich is like having a well of water. Being wealthy is like having an ocean of water.
Have you heard about House on the Rock church? How about Paul Adefarasin, who is the founder, have you heard of him?
Paul Adefarasin is the founder and senior pastor of House on the Rock church. In the 2000s he bought 60 acres of land at Lekki Peninsula. An acre is 6 plots so that’s 60 plots of land that he bought for just ₦25 Million Naira.
This was way back when Lekki was still pretty much a bush, undeveloped and largely a far cry from what it is today. He bought the 60 plots for just ₦25 million Naira. Today that land he bought for ₦25 million is worth over ₦5 Billion Naira.
₦5 Billion. Go and verify!
That’s why I said that investing in real estate won’t make you rich. It will make you wealthy!
Look at the story above. The lady bought one plot of land for just ₦1.5 Million. 15 years later, she sold it for ₦90 Million.
Imagine if she had bought 10 plots or 20. Multiply it by ₦1.5 Million then again by ₦90 Million so you will see the amount she would have invested and the amount she would have made.
What kind of investment can give you such returns?
Tell me, just tell me.
But.
Let’s say that you are already wealthy. That you are already a multi-billionaire. So wealthy that making a few hundred millions or billions from a real estate investment doesn’t interest you anymore. You are sick of money. Tired of it.
So why, since you already got enough money and does need more should you invest in real estate?
📌4. To preserve your wealth and pass it down to your generation.
What is the failure proof way to pass down wealth to your children? To provide for them and their kids so that even while you are dead, they will be kissing your pictures and saying, ‘thank you papa’. ‘thank you mama’.
How can you do this successfully? Permit me to tell you the story of Joseph Adefarasin.
Couple paragraphs ago, I told you the story of Paul Adefarasin. How he bought land for ₦25 million and now that is worth over ₦5 Billion.
Who taught him that? Who inculcated in him the virtue of investing in real estate?
His father, Joseph Adefarasin. Joseph Adefarasin used his retirement savings which at that time was just £2,000. He used this £2,000 to buy land at Akin Adesola, which is now V. I.
He didn’t have the money to develop and build on the land so one real estate company made an agreement with him. He has a land and they have the money to build on the land so they agreed that the company will build houses on the land, rent it out and after 10 years. Those houses would become the property of Mr Joseph. They signed.
10 years later, those houses the company built on his land became his and he started collecting the rent which before then the company hafd been collecting.
The money he made from renting out those houses was what he used to send Paul Adefarasin and his siblings to the best schools abroad.
But that’s not all, 50 years later (Mr Joseph already died) Paul Adefarasin and his siblings decided to sell the land.
Guess how much they sold the land that their father bought for just £2,000 and left for them.
$5 Million dollars.
Their father bought land for £2,000. Left it to them and Died. They sold it for $5 Million.
Go and Verify!
If you want to pass down your enormous wealth to your children and even their children. Putting the money in the bank for them is not wise because over the years inflation will almost wipe out the bulk of the money.
N1, 000 in 2001 has the value of N100 today in 2023. Why? Inflation. Which in a nutshell is the rising price of goods and services. ₦100 million you keep in the bank now in 10 years will only be able to buy goods of say, ₦5 Million. What do you think will happen to your ₦100 Million in 20 years?
Whereas if you use the ₦100 Million to acquire lands in a good location, in 10 years the value of the lands will be nothing less than ₦1 Billion. How about in 20 years or 30?
If Joseph Adefarasin could turn £2,000 into $5 Million by buying land and leaving to his kids. Why can’t you turn your own millions to something truly life changing by buying land and leaving it to your kids?
So do you see now?
Do you see why I said that you should invest in real estate?
In fact, investing in real estate is not really a choice if we really think about it. It is an obligation. An obligation to yourself, your future, your family and your kids.
Investing in real estate gives you security against the future. An insurance that no matter what happens, you can withstand it. Worse case scenario you liquidate your real estate assets and use it to bounce back.
Investing in real estate gives you a line of credit to grow and expand your business that you otherwise wouldn’t have. You can use it as collateral to collect loans.
Investing in real estate will make you wealthy. It is the best way to build wealth. Paul Adefarasin bought 60 plots of land for just ₦25 Million. Today the land is worth over ₦5 Billion Naira.
Most importantly investing in real estate will preserve your wealth and help you pass it down to your children and grandchildren. The story of Joseph Adefarasin clearly illustrates that.
Investing in real estate, is not just the best kind of investment you can possibly make. It is the best decision you can possibly make today, that will benefit not only your future, your business, but also your family and your entire generation.
I am Ugochukwu.
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