A popular quote goes, ‘Never invest in something you don’t understand,’ and I totally agree, as investing in something you don’t have a solid understanding of is very risky.
The lack of knowledge of where you want to invest your money can present you with the difficulty of making informed decisions and lead you to losing lots of money.
To avoid this, I have put together the basic steps you need to follow as a beginner, and these will properly guide you into your investment journey.
In this article, I’d start by sharing with you what real estate and its investment is and why you should consider investing in real estate.
Real estate is simply any land or structure designed on a land and the act of buying or renting out this estate either in its raw form (land) or its processed form (buildings) to generate income/higher returns is called a real estate investment
Why you should consider real estate investment is simple. There are many factors that I as a real estate investor consider before investing.
They are, but are not limited to, the high rate of return investment, property appreciation, ability to bank land and build wealth, adequate cash flow, and many more.
Buying a property to resell or rent out is a very lucrative, timeless, and secure real estate investment you can have anytime.
I would suggest that the first thing to do when making the decision to invest in real estate is to do thorough market research.
Do a Thorough Market Research
To know which of the real estate investments suit you best as a beginner, you have to do a thorough check on each of the real estate investment types, assess their risks and rate of return, know their unique advantages, and know the current market value.
This analysis will help you understand each investment type and give you insights on the investment to help you make informed decisions. This analysis should be carried out whether you decide to buy and rent properties or buy and sell properties.
One important research I do when choosing an investment type is to research the areas with potential for appreciation. Look for areas with high or potential population growth, infrastructure developments, and proximity to amenities.
Aside from search engines, I also leverage real estate platforms and local agents to assess these market conditions and property values.
After this, you should then decide the category of real estate you prefer.
Determine Your Real Estate Category
Real estate investment allows you to diversify your funds in different categories. A diversified real estate portfolio has several investment types, like having short-term or long-term rental properties, investing in land banking, property development, real estate investment trusts, and many more.
This diversification helps you reduce risk and increase your return on investment. However, I will strongly suggest as a beginner that you pick not more than two real estate investments at the start of your investment journey.
This is because it is necessary to have a proper understanding of how real estate investments work before spreading funds across multiple real estates.
So the best way is to start small by choosing one or two and build towards your diversified investment portfolio.
What to do next is to decide where you want your property and what type of property you want.
Decide On A Location and Nature of the Property
There are several types of properties to invest in. You can choose to invest in land banking, which is simply buying real estate in its raw form of land and holding on to it for future use.
You can invest in residential or commercial properties and use their rental income to build your wealth. This can be either short-term rentals, e.g. a shortlet, or long-term rentals, e.g. a tenancy lease.
You should also check your finances, determine what investment type will align perfectly with your investment goals, and create a budget for it.
Create a Budget
Having a financial plan prior to investing in anything reduces the risk of failed investments or mismanagement of funds.
It also helps you to plan towards purchasing your property by means of savings, cutting avoidable expenses, and sticking to a proper financial goal.
What you should do is consider how much you intend to invest in the properties you want and how much you will need to fund each investment type, should you decide to diversify and have multiple investments in real estate.
To achieve this, you can draw up a budget based on your income, savings, and potential financing from family or friends or bank mortgages.
You should also include in this budget whether you intend to pay at once or in installments and how you want to go about it.
To ease your journey, you can link up with real estate professionals.
Build a Support Network
No man is an island, and to gain more knowledge about real estate, it’s very wise and essential to go beyond personal research.
Work with trusted real estate providers, reputable agents, and lawyers that can further guide you through your real estate investment journey.
I recommend that you also attend property exhibitions, join real estate investment groups, and professional associations. A strong network will offer you numerous benefits, such as access to insider knowledge, potential business collaborations, and leads on profitable deals.
You will need to be consistent in maintaining these connections through regular communication. Building a support network not only enhances investment prospects but also provides a safety net during challenging times like economic meltdown.
Delving into your investment journey isn’t complete without knowing the laws and regulations that guide real estate
Know the Rules
Prior to investing in real estate, ensure that the properties you are interested in have proper documentation like the Certificate of Occupancy, registered survey plan, and other documents that will be tendered to you upon purchase.
Find out what the laws and local regulations are and ensure to comply with them, as this will steer you away from legal issues and financial penalties.
Owning a real estate world may seem out of reach as a beginner, but the truth is that with the right knowledge, proper planning, and guidance, you can join countless others who are successful in the world of real estate and start building your wealth.
It doesn’t matter if you’re starting with a modest budget or a substantial one; there are options available for every level on Mixta Africa.
Be sure to contact Mixta Africa today and be a real estate pro in no time.
Author’s Note: Hi, I’m Joy – a seasoned finance professional based in Lekki, Lagos. I balance a fulfilling career with successful real estate investments in Nigeria. Join me as I share insights on navigating the world of real estate investments in Nigeria. Let’s find your dream home and unlock financial success together!
