A recession is a general downturn in any economy, and is associated with high unemployment, slowing gross domestic product, and high inflation. Economic recession is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market.
The Nigerian real estate market was hard hit by the general economic downturn, with most real estate investors now struggling with unsold inventory. The aggregate demand for real estate properties plunged and real estate development and investment activities suffered a major setback. The rate of inflation skyrocketed and several people who were previously excited about the prospect of investing in real estate are not so keen.
Real estate investment is advantageous because it has the ability to absorb inflation. This sector is relatively stable and has the capacity to withstand the dynamics of economic recessions and downturns which is not the case with other investments. Truth is; it is much more profitable to invest in the real estate sector at a time when the value of land assets is low, as this would give great returns for money once the market eventually picks up.
The best advice for investors right now is not to let this opportunity pass. One must learn, as some say, to see the opportunity in every difficulty rather than the difficulty in every opportunity. Highlighted below are crucial facts that support the idea of investing in real estate during recession.
- There are many great deals in the market. The number of properties for sale is far more than those with the willingness and the ability to buy. It is now a buyer’s market. Many highbrow areas and commercial properties have lost significant value and it will take a while for things to bounce back to where they were few months or years ago.
- Another positive development that an investor can leverage this season is that sellers are willing to consider offers that they would not normally consider and agree to terms that they do not generally agree to before. This is a period when significant discounts are permitted. Many sellers are willing to accept reasonable deposits and payment in instalments.
- Nigerians in Diaspora can equally take advantage to invest in Nigeria since they now get more value for their money. It makes good sense for those with some funds to buy properties in Nigeria now
Experts View on How to Safely Invest
When you have no credit, bad credit or no funds, a lease option offers a great bailout. Through this route, one can assume control over a property without taking legal ownership. A lease would be signed, with the option to buy at a specific price in the future. Typically, investors will turn the property into a rental. With the profits, investors will pay the leasing fee to the owner and pocket the rest. In just a few months, you could have enough capital to get a loan and purchase the property.
This is a situation where two or more people combine to do real estate business. For instance, if you bring a fair amount of knowledge and experience to the real estate game, but little or no capital, a partnership might be in your best interests. Many investors want to make their fortune from real estate investments but they don’t have the experience or the knowledge necessary to be successful. This provides them with veritable opportunity to get into business proper.
You can also try to raise the capital for a real estate investment through crowd funding, networking or friends and family. Often, people who seek private funding will opt for “hard money,” which involves getting a loan from a wealthy individual rather than from a bank. The loans are very short term, sometimes as short as six months and rarely longer than two years.
Combination of two or more options
This method is most applicable when the operator is not capable of meeting the financial demands of the business through one of the various methods above. You can combine any of the above options until you have found the perfect investment strategy for your real estate career. Any of them are great for launching a career that could make you successful in your investment.
Find out more on how to properly make intelligent investments at Real Estate Unite 2017 scheduled to hold on the 17th and 18th of October 2017 at Landmark Event centre, Victoria Island Lagos.
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