We shall be looking at Real estate as a good choice of investment amongst other types of investments.

What is an investment?

In simple parlance, investment means setting aside an amount of money (capital) in other to get a series or future income or a lump sum. That is to say, laying down of funds in anticipation for profit or series of income is called investment.

Why is real estate a good choice of investment?

  1. Appreciation

In real estate refers to the increase in the value of a real estate investment portfolio over a period of time. One of the goals of investing in real estate is to get a positive return on the investment when the investor decides to sell the property in the future.

The price appreciation of a property depends on a variety of factors, such as the location, future development plans, available infrastructure, the physical structure, or the demand and supply of property in a given location. Property owners can also enhance appreciation of their properties by carrying out repairs and renovations on the property.

  2. Hedge against Inflation

Real estate is a great investment at any time, and it is even better during times of rising inflation. Limited availability of land and rising population growth will increase housing demand and hence real estate in general has the potential to beat inflation easily.

Real estate holds intrinsic value because it is scarce. Particularly in dense, urban neighborhoods, there may be a limited supply of properties, and a lack of available land to build new structures on. This is good news for current property owners, as demand for real estate does not generally decrease, even when inflation rises. In fact, the value of an existing property might increase, given the rising cost of materials and labor to build a comparable structure.

3.Real Estate has a predictable cash flow

In real estate terms, cash flow is the byproduct of owning a rental property and leasing it to tenants for a rental income. The rental income which represents series of income on the property can be determined over the life of the property if there are no serious macro factors. This predictability enables the investor to know how much and at what time inflows from the investor will be received.

Written by

Olabisi Ojekunle RSV, ESV

Oluwafemi Olowoyeye