At the beginning of this week, I met with a young businessman and during the course of discussion I introduced one of our properties which is situated at Ibeju-Lekki to him. The man said his home and business are at the extreme end of Lagos towards Ogun state and the place is too far to Ibeju-Lekki. He also said he cannot build any house at Ibeju-lekki because there is a lot of traffic at the area.
After his statement, I told him that he should not make this same mistake which many people have made. I advised him that the location of a property should not deter him from investing in real estate business. I made him understand that real estate investment doesn’t mean he should build a house on the land acquired. I said he can just take it as a business by buying as many properties as you can afford and obtain every necessary legal document. After 3-5years, he will realize that the values of the properties have increased to millions of naira if he wants to sell them. Meanwhile, he can still do his other businesses.
REASONS FOR REAL ESTATE INVESTMENT
1. Gain more leverage
Real estate is one of the few investment vehicles where using the bank’s money couldn’t be easier.
The ability to make a down payment, leverage your capital, and thus increase your overall return on investment is incredible.
2. Grow, tax-free
Although buying rental property based on speculation of its value is a dangerous tactic since cash flow is the, appreciation over the long-run is certainly realistic and at least you should be considering a tax-deferred strategy.
3. Tax free cash flow
It’s no secret that because of depreciation and mortgage interest deductions (if you leverage your capital), your cash flow should be tax-free. That’s right! The far majority of the time an investor will never pay taxes on their cash flow and can wait for capital gains on the sale of the property in the future.
4. The tax write-offs against your other income
Depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance your rental property will not only give you tax-free cash flow, but an overage of tax deductions you can use against your other income.
5. Increased tax deduction strategies
Rental property affords investors with another incredible opportunity to convert personal expenses to potentially valid business deductions. Don’t forget that real estate is a business. This means that travel expenses to check on your properties and payments to family members who manage your properties – such as students away at college – can be deductible and increase the tax benefits when it comes to cash flow and the future sale of the property.
6. Real estate is a forced retirement plan
Buying a property is a significant commitment that you are required to commit to and maintain. You will always be grateful in the long-run when you don’t give up on it because it will build future cash flow and wealth.
I have met many successful entrepreneurs, and almost everyone of them has invested in property.
Based on this fact and the list above, I have consistently urged my clients/prospects to buy one rental property in every year, and I already have clients who are earning from their rental properties. They have earned the amount of money they never imagined.
The far majority of us will never get rich overnight. It takes long-term investing and a diverse portfolio to build true wealth. Don’t forget real estate as an important part of the equation.
For Enquiries/Info on any of our estates and properties,
Call Olusegun 08171864671