Real estate offers tremendous investment opportunities. But for most individuals, real estate investment is not the get-rich-quick panacea that the multitude of seminar promoters would have us believe. There are people selling property everywhere and people bought in the past through them, who have never been to the site of the property and only to regret their wrong investment decision into real estate in the future because the property never was.
Nevertheless, many great fortunes have been started in real estate by individuals with only modest resources. Such success, however, has usually been the result of good investment decisions. Life is all about risk and somethings, your good decision could also be frustrated by fraudsters. Real estate has lot of advantages but not immune from disadvantages over other investment options. To profit maximally from real estate investment, the focus must be on the positive aspect of real estate, have enough cash to invest and do your homework diligently.
Why Should You Invest In Real Estate?
-Real estate has a high tendency of appreciating over time. Land is a fixed asset that has the capacity to continue to grow no matter its location or size. You can trade with property. (Buying and selling of property). This will not give you PASSIVE INCOME but cash-flow. Trading with your property gives you liquidity from time to time.
-Rental. This is where the passive income comes from if you are not the one collecting the rent. The house you built and live in, does not generate money for you. So it is a liability not an asset. Asset is anything that put money into your bank account and liability is anything that takes money away from you pocket. I was privileged to be in a meeting some years back, where a billionaire was interviewed. He built houses and got rents while he lives in a rented house. The question was, while do that sir? His answer was, you must increase, build your assets before you increase your liabilities. The rents he got from the houses he built, pays for his own accommodation then and still have some extra cash-flow. Today, he lives in his own house. Please, it is good to have a roof over you that you call your own. But increase your assets first.
I also met a family in Abuja many years back that on the street where they live in Abuja, they have five houses and live in one. An estate management company, get the rents for them and all they receive is alerts from the bank. That is Passive Income. Passive income can only come from the proper usage of today active income and cash-flow that comes our ways.
What gives us financial freedom? It is when our passive income exceed or surpass our daily, living expenses. You are financially free when the money you make passively, residual, from leverage income surpasses your living expenses. Meaning for example; you spend N1million today and you make N3million today without effort or any direct involvement from you to generate the N3millon. So if you subtract N1milion from N3million, you have N2million left. That is financial freedom.
The next question is, what is financial freedom to you?
What financial freedom means to Mr. A, is not what it means to Mr. B. Extra N300,000, N500,000, N1,000,000, N2,000,000, N5,000,000, N10,000,000, N20,000,000, N50,000,000, N500,000,000, N1,000,000,000 and so on. The next thing you want to do, is to calculate how much it will cost you to own a property or properties so you could get rent in today’s economy?
I am sure you will agree with me that, real estate investment is capital intensive and involving. To get the right property with the right certificate of occupancy, the choice of location to attract the rent you want people to pay, the structure of the building to maximize profit, the cost of construction, the years you have to wait to get your initial capital investment back before you now break even to make profit, the years it will take to reach the financial freedom goal you have set for yourself and so on.
Real estate investment is a risk we must take to generate passive income/residual income. I am yet to see a rich/wealthy man who does not have real estate investment. The wealthy either make their money from real estate or keep their money in real estate.
It is not possible for everybody to make their money from real estate because not everybody can start generating passive income from real estate investment. The focus is; FIVE (5) WAYS TO GENERATE PASSIVE INCOME not five (5) ways to make money.
Are there other legitimate ways to generate passive income? Yes! Watch out for the next ways to generate passive income. This is just one out of five.
Matthew Abolurin is the Principal Consultant/CEO of Pep Access Ltd, a consulting outfit responsible for Business conception, actualization and growth, Sales and Marketing Training and HR Management. Matthew Abolurin is the President of Transformation Network International, a multifaceted Network where wisdom is given to create a life of Purpose, Passion, Peace and Prosperity.