I know that this is not the first time you are being told that real estate is the best way to not only secure your financial future but that of your family too. If you are a Nigerian living abroad or in Nigeria, this is important. Please note, this is not the only investment opportunity that you will be advised to look into, but it’s the best that you should go into.
According to financial planners, you need 50,000 dollars a year to live on when you retire, then using the 25 times rule, you should have 1,250.000 in stocks, bonds, and mutual funds to retire. Then at retirement, financial planners begin liquidating these assets using the 4 percent rule, this simply means that they will liquidate four percent of the portfolio every year until it’s down to zero after 25 years. It also means that if you retire at 65, you better die at 90 or you will be broke.
Compared to investors that depend on the stock market to accumulate assets for their retirement, real estate doesn’t take the same approach. In real estate, if you accumulate 2,800,000 in income in producing real estate, it will pay you 50,000 a year in income and continue and continue to appreciate over the years. This appreciation will not only cover you but will leave something for your unborn children.
Most financial planners will not tell you this, but the truth is, the kind of investment that you put your money in is dependent on your environment. If you are a Nigerian, real estate is where your money should go into. To further drive this point home, here are five reasons why you should invest in real estate as a Nigerian.
1 It’s cash flow is predictable
After your salary that is never enough, a predictable cash flow is what you need to not only thrive but also take care of other responsibilities. Cash flow in this context can be defined as the net spendable income derived from the investment after all operating expenses and mortgage payments have been made. According to research, a good real estate investment should provide you with 6% or greater cash flow.
2 It’s never drops, always appreciating.
According to the national association of realtors, real estate has been 6% per year irrespective of the season. This data should get your attention as a Nigerian because of the unique financial returns this can bring. According to the same publication by the national association of realtors, this percentage was constant even during the downturn of 2007.
3 It can be leveraged on
LEVERAGE has been considered as the most important advantage of real estate investment. This refers to the use of borrowed capital to increase the potential return of an investment. In real estate transactions, leverage occurs when a mortgage is used to reduce the amount of investor capital required to purchase a property.
Once you have built up an equity position in an investment property, you can leverage that investment for cash in one or two ways, secure a second loan against the increased equity, or refinance the original loan amount plus the increased equity. This will automatically free up money to buy another investment property.
4 Real estate coincides with retirement.
When real estate is purchased, the cash flow is lower and the principal reduction on the mortgage is less. Over time, the mortgage is paid down or paid off, and the cash flow increases. Most of the time, it’s a forced savings program, yielding a greater amount as time goes by which makes it the perfect investment for retirement in Nigeria.
5 It has a lower tax rate
With real estate, you don’t have to worry about over taxation. In a country like Nigeria where businesses are heavily taxed, real estate investment bridges the gap. This means that if your investment property is sold after a year, the gain is subject to capital gains tax rates which are depending upon your tax bracket is generally 15% or 20% which is usually less than one’s tax bracket.
This is courtesy of PERFECFEECTION REAL ESTATE GROUP. For more information, kindly visit www.perfectionrealestategroup.com or call us on 08091111384, 08090229899 or 0817789876.
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