A lot has been written about investing in real estate. A lot continues to be written, but today I want to talk about something else entirely. I want to talk about exiting real estate investments.
I want to answer your questions, questions like, all the lands you are buying, when and how you should sell your real estate properties? How do you know that the time is right for you to sell them?
No doubt you have come across many realtors saying, buy Epe, buy Ibeju-Lekki, buy Chevron. You have bought but when do you sell?
I won’t only be talking about land properties. I will be discussing houses too.
With that said, let’s start with land properties.
How do you know that the lands you have bought at Epe, at Ibeju-Lekki, at Chevron, or wherever it is that you have land is mature to be sold?
Before I answer this question, I want to state categorically that real estate properties, unlike other investments assets, are tangible, solid, fixed assets. This means that you can’t liquidate it on a whim.
By liquidating on a whim, I mean that you can’t wake up one morning and decide to liquidate your 10 acres at Sangotedo, your 4 plots at Lekki Phase 1 or your 5 bedroom duplex at Magodo and by evening of that same day, the property has been liquidated and the money is sitting pretty in your bank account.
You can’t do that with real estate..
Do not, I repeat, do not believe anyone who tells you that you can.
When you buy shares in a company, you could wake up one day and for whatever reason, maybe because the price has gone up or because the price have gone down, even perhaps because you need money urgently, decide to liquidate your shares and by lunch, your assets has been liquidated and the cash is sitting pretty in your bank account.
Same goes for cryptocurrency amongst other asset classes out there but the opposite is the case for real estate.
You see, the thing about life is that you can never have it all. To get something, you must sacrifice something else.
Other assets are relatively easier to liquidate than real estate but this also makes them extremely volatile. Prone to the highest of highs and the button of the ocean low, a cycle some of them can go through within a period of just a month.
Real estate on the other hand is not as easy to liquidate as other assets but its stability is matched only by its ability to grow and compound your money over a period of time.
Remember what I told you?
You can never have it all, to get something, you must sacrifice something else.
In other words, real estate is a long term game. I repeat for emphasis, real estate is a long term game. It is not a game for small children, it is not a get in and cash out scheme. It is a game for people who have patience. People who have foresight.
Many investors don’t like to hear this, they don’t. They prefer to be told that if they buy this land at ₦4 million a plot now, in the next 2 years they can resell at ₦30 million per plot. Guaranteed!
What a load of bullshit.
They prefer to be told that if they buy now at ₦20 million per plot next year they can resell at ₦35 million per plot and walk away with ₦15 million profit per plot. This is what investors like to hear. Am not here to feed you that untruth.
If your realtor won’t be honest with you, I will be. If your real estate consultant is not willing to be frank with you, I Ugochukwu, I will be.
Real estate is a long term game. Don’t come into it with the mindset of, let me just invest ₦200 million and in a year’s time, I will walk away with ₦300 million.
Is this possible? Absolutely yes! But then you have to know the location you are buying and the type of real estate asset you are buying. With that said, I still advise against coming into the real estate market with this mindset. Think long term. Play long term.
If you want a place you can invest ₦4 million and next 2 years your ₦4 million is now ₦30 million and you can liquidate and walk away with ₦26 million profit.
You have a better luck of making that return playing sportsbet than you have of making it investing in buying land at Epe.
If you are looking for an easy to liquidate investment, real estate is not that. Try shares. Try cryptocurrency. If you end up losing all your money in the process, please don’t say that Ugochukwu told you to go invest there, I didn’t.
I took my time saying all these because I know that some realtors like to tell you that once you buy their land in Epe, in the next 2 years your money will be 3X and you can resell. False!
Many people sold properties like Itunu City, Isimi Lagos, Fairmount amongst others on these false investment maturation timelines. Many investors fell for it and bought, now they are stuck and wondering why they can’t sell.
This brings me back to my earlier question,
How do you know that the lands you have bought at Epe, at Ibeju-Lekki, at Chevron, or wherever it is that you have land is mature to be sold?
The answer is quite simple, when the buyers in that location change from land investors and landbankers to developers and homebuyers. That is when and how you know that the location you bought has matured and you can resell.
For example, right now in Ibeju-lekki and Epe, everyone is buying for future value. Everyone is buying for land banking purposes.
Everyone is buying to hold the land and resell it in the future when the value has gone up. This makes up 96% of the demand right now for land in these places.
Everyone in these locations is a landbanker.
Landbankers are always looking for the cheapest of prices, for the longest payment plans and other things. They are not your customers, they are not your ideal customers.
As long as the demand for lands in the locations you have your land at are by this group of buyers, that location has not matured.
It is not yet time for you to sell. It is a buyer’s market, a buyer’s market means that the supply of land by far out-stripts the demand so the price is not competitive. Only landbankers are still buying.
When the real estate developers who want to build apartments, detached duplexes, bungalows and other types of houses, either to resell or rent out enter the market, that is when you know that the location has matured.
How to know when to sell your real estate?
When homebuyers who are looking to buy land and build homes for their families enter that location, that is when you know that the location has matured and you can resell.
This is a seller’s market. The supply for land has thinned down and the demand has gone up, now you can resell your land and walk away with profits.
What I just explained above applies to you whether you have land in developing locations like Epe or whether you have land in developed locations like Lekki.
What you might not know is that there are places in Lekki that are still developing. There are Islands in Lekki 1 with nothing happening there. There are parts of Freedom Way with nothing much happening there, the developers and luxury home seekers have not yet entered there.
Even the famous Eko Atlantic project is still a buyer’s market.
How many developers are building there? Almost zero.
How many people are building their residential homes there? Almost zero.
You can’t buy Eko Atlantic and expect to liquidate your investment tomorrow. Not possible.
But if you are looking to buy land in Eko Atlantic, and hold till the place fully opens up then resell and walk away with billions in profit, I have a 3,360sqm plot of land located in the VIP zone, not far at all from the US embassy.
Originally valued at ₦9 billion but the owner is anxious to liquidate as he needs urgent finance for something, so he is willing to sell at 50% off. You can get this property now for just ₦4.5 billion only.
This represents a 50% equity, immediately upon purchase. If you want to take advantage of this offer and get an enviable tract of land in the Dubai Marina of Lagos, call or WhatsApp me on +2347014832071.
Back to our discussion, how do you know that developers and homebuyers have entered a location?
You will start getting offers on your land. Without you even putting it out there that you want to sell your land, you will start getting offers on the land. That is how you know that the developers and home buyers have entered that location.
Now it will be up to you whether to liquidate immediately or hold out a little longer.
Another thing I want to say here is that, that the company you bought land from says that the price and value of that land has gone up does not mean that it has.
Let me repeat this again for emphasis and clarity.
That the company you bought land from says that the value, and subsequently the price of that land you bought from them has increased does not mean that it has.
For example let’s say that a company is launching a new estate so you bought it when they were selling the estate pre-launch. Let’s say that they sold it pre-launch at ₦20 million and you bought 6 plots, that’s ₦120 million.
After doing some work on site and adding infrastructures, they update their prices and say that they are now selling at ₦40 million/plot. This doesn’t not mean that your land is now worth ₦40 million a plot and that you can resell and walk away with ₦120 million profit for the acre you bought.
NO!
The market is what determines the price and value of those lands. Of course the company has a vital role to play but in the end, it is demand and the market that determines the price of these properties. The price of a property is not determined solely by the company you bought from.
That ₦40 million represents the amount they are willing to sell their own plots at, if you even go to them to sell your plots at that price, they won’t agree till they have sold out their own plots. So in other words, they can sell at that price but you can’t.
As a matter of fact, they might even raise the price and the market will reject it. So demand will drop. People will stop buying. That is when you will then hear them talking about things like Esther discount promo, Ile ya discount promo or whatever discount promo.
In the end, the market determines the price and value of properties.
That is it for land properties.
Houses and apartments are easier, much more easier to liquidate than land. I can even say that apartments are much easier to liquidate than both land and houses.
When you buy a house/apartment and for whatever reason you want to resell, whether you bought off-plan and now the house is completed and you want to cash in on the resale value and walk away or you bought a house, have been using it for whatever purpose and now you want to liquidate that asset, you can liquidate it easier than land.
This is because houses/apartments have more demand. A lot of people are looking for a good house/apartment to buy.
To liquidate your house/apartment faster, price it competitively. Analyze the prices of similar houses/apartments in the location and use the information to set your own price. If you have been living in the house/apartment for some time and it has been worn down.
To sell it, either you touch it up, and repackage it to look as brand new as it possibly can and then put list it in the market or if you don’t have the funds for that, then you have to set its price below the prices of similar houses in the market.
Why should I buy your 2 bed apartment that you have been living in for the past 5 years at Lekki Phase 1 for ₦150 million when I can get a brand apartment with all the modern features and designs that comes with it, in the same location for same ₦150 million or even ₦160 million?
If however your house is a fully detached house, a fully detached house means that the house is sitting alone on its own compound.
When selling you must factor in the price of that land. You must, it is not about the house as a matter of fact. It is irrelevant whether it is 10 or 20 years, the land it is sitting on is what matters.
The longer the better, because the longer it stays, the more the land appreciates. So the value of the land determines the price you sell.
Once you have done all these things, next you get in touch with a good real estate broker and get them to help you sell the house. Bear in mind that they will ask for a commission, usually 5% or thereabouts, but this is worth it because they can and will get you a buyer for that house faster.
This is basically all you need to know about liquidating your real estate properties. If you have any questions about this article, or want to get in touch. You will find how to contact me below.
I am Ugochukwu.
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