Two major reason why people choose to invest in real estate is either for immediate development for cash flow or for investment purpose. These 2 major reasons have been a point of debates between real estate investors as to which ones should opt for.
To be candid, out of the 2 major reasons, the investment model you choose to go depends mostly on your reasons to invest in property and for how long you plan to keep your property. This is where the first commandment of real estate investment comes into play. When your investment goals are predefined, its helps you to know where to put your money and also to recognized and take advantage of opportunities that suit your short or long term financial goal.
If your goal of property purchase is for some extra monthly income then you should focus on the cash flow, i.e. rental income from the rent charges on your property and if on the other hand, your goal of investing in property is for investment, then you your area of concentration should be on buying property close to fringe of development, watch their value increase significantly before cashing out on them.
There are many factors which determine real estate appreciation, some of which are more obvious, while others are rather obscure.
INVEST ON BARE LAND
If your choice of real estate is for capital appreciation, then its best to invest on bare land than finished houses. Investment on landed properties is the best form of investment if you are looking for a good returns on your investment.
As the population is constantly increasing and the center starts getting filled up, more people would start looking for homes, more and more properties are getting built and land becomes more and more expensive. So, if you have the option of buying a larger and nicer house on a smaller piece of land or a smaller and less luxurious building on a larger piece of land for the same amount of money, go for the latter. This will bring you more real estate appreciation in the long run.
Another pointer to look out for when buying land for capital appreciation is to buy land in location close to fringe of development where there are enough economic indicators and government present as these are vital to land getting appreciated. Example of such location is the Ajah – Ibeju Lekki axis where we have a lots of government and private companies present most especially now that its at the developing stage and prices of land are relatively affordable.
Location is key factor in property appreciation! When the location of your real estate investment is good, the value of your investment would keep appreciating. Property located in close proximity to major infrastructures, in a nice neighborhood with moderate population growths, better economies, more developed infrastructures, and off main roads are in higher demand and are also more likely to provoke real estate appreciation in the future than properties located in locations that lacks all the aforementioned.
For instance, the price of a nicely finished 3 bedroom bungalow in Ikorodu can’t be compare to the price of a plot of land in Lekki Phase 1. Real estate property value or appreciation at any point is a function of supply and demand, while the appearance and the actual physical structure is only of secondary importance.
FUTURE PROSPECT & ECONOMIC INDICATORS
Another very key things to watch out for aside location when you have a long term investment goal is future development plan of your location of interest, government policies and economic indicators in respect of your choice location because they are determinant factors that contributes to land appreciation all over the world.
Make sure you study the governmental and commercial plans for the future development of the area in which you are investing. Also, locations within more vibrant local economies will appreciate more over time. Like we said earlier one of such location in Nigeria is the Ajah – Ibeju Lekki axis where we have a lots of government and private companies present most especially now that its at the developing stage and prices of land are relatively affordable.
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