Real-Estate Investing: Keep Or Sell.

Real-Estate Investing: Keep Or Sell.

KEEP OR SELL

One of the greatest ongoing debates in real estate investing has been whether you should invest for cash flow(sell) or for appreciation(keep). Which investment model is better for you depends mostly on your reasons to invest in real estate and for how long you plan to keep your property. If you are in real estate investing for quick turnaround of money, then you should focus on the cash flow, i.e., the system of buying, repair and sell back with good profits.

If, on the other hand, you are in real estate with the goal of selling your property in the long run after the price has risen significantly, and earning rental income also in the process then you must concentrate on real estate appreciation. There are many factors which determine real estate appreciation, some of which are more obvious, while others are rather obscure. We have highlighted some of these factors below:

1. Land:


If you are looking for an investment property and to a lesser extent if you are looking to buy a home, don’t allow yourself to overstress the appearance and the structure of the property. Of course, the actual physical property is important especially if you plan to live there yourself in the long term, but that’s actually what depreciates in value year after year.

Regardless of how beautiful your property is; the physical structure will lose its worth over time. Thus, you must focus on the land. Land does not only increase in value as it ages; it is also what drives real estate appreciation. As the population is constantly increasing, more people are looking for homes, more and more properties are getting built, 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.


2. Location:


Real estate property value at any point is a function of supply and demand, while the appearance, the functionality, and the maintenance of the physical structure have a lesser impact. Location is the key! Location refers to many aspects – the state, the city, the neighborhood, the exact place within the neighborhood. Locations within markets with higher 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.


3. Future Development Plans:


The currently existing infrastructure will significantly impact the market value of your real estate property at the moment. In addition, you should also study the governmental and commercial plans for the further development of the area in the future. If you buy a decent house in a not very lively suburb which is scheduled to undergo major infrastructural and commercial developments (connection with the city, schools, hospitals, banks, restaurants, etc.) in the next 5-10 years, you are guaranteed to benefit from massive real estate appreciation.


4. The Economy:


While you can control the location of your real estate property, there are other determinants of real estate appreciation that are well beyond your control. One of them is the economy, which entails – the local economy, the national economy, and the global economy. As we mentioned above, locations within more vibrant local economies will appreciate more over time. Moreover, if the economy is doing well and people are employed, the demand for housing will increase, which means that prices of both land and properties will go up.


5. Interest Rates and Lending Guidelines:


Another important factor which will influence not only your property’s real estate appreciation but the whole housing market is the interest rate and the related lending guidelines. If the interest rate goes up, people will be less able to afford loans, which means that real estate prices will go down. In reverse, lower interest rates will push prices up as more people will look for homes. Similarly, tighter lending guidelines will disqualify any potential buyers. Loosening guidelines, on the other hand, will make it easier for more people to afford buying a home, which will bring prices up.

Finally, there are many other factors which influence the real estate market and could lead to real estate appreciation or depreciation. These include demographics (how fast the population is growing), the availability of building materials, and foreclosures, to list a few.

One of the best places to buy land in the whole world, in fact, the best place to buy land in the whole world, in terms of value is right here in Lagos Nigeria. The most expensive land in the world is right here in Ikoyi and Banana Island… That’s not conjecture, that’s the fact, an economic fact. Lagos is growing by 6000 people daily, that is nearly 2 million people every year. It means Land is becoming scarce, that is, if you buy land today, tomorrow your land will be worth very much money. You may not be able to afford Banana Island or Ikoyi right now, but please go and buy land somewhere quickly.
When you get a land, it means God is securing your future because real estate doesn’t just secure today, it secures tomorrow. Go and buy land and go and buy it quickly because without Land you are not really in the wealth game.

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