Land is believed to be the only asset that doesn’t depreciate over the years. If it is not altered, a plot of land on Ikoyi, Lagos commercial centre, will still be intact after 50 years.
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The land is God’s gift to man, and it does not decline. The best way to invest in real estate is by buying land. People who invest in rural areas can turn into urban areas. Those who buy lands in these areas are likely to receive five times their investment as the area when the area is developed.
Understanding Land Appreciation
Land appreciation is the increase in the value of a piece of land or real estate properties over time. When the investor decides that the property will be sold in the future, one of the goals when investing in real estate is to achieve a positive return.
What is the best place to buy land?
It is important to carefully consider where you will be buying landed property. The value and worth of land is directly affected by its development. There are many factors that can lead to development in an area.
When they are certain that the property will appreciate in value over time, real estate investors are keen to buy it. A good example is Ibeju-Lekki area of Lagos where real estate investors who bought land 10 years ago can make X5 of their investment if they sell today.
Land can provide financial security for the children of the owner or be part of their retirement plans. Appreciation allows you to sell your current property for a higher price than what they paid originally in order to get high Returns on Investment.
Real estate investors make their money through rentage, property-dependent business activities, and appreciation.
The value of real estate tends to rise over time. With a good investment you can make a profit when it comes time to sell. Higher cash flows can also be possible due to rising rents.
Five Factors that Influence Real Estate Value
A variety of factors can influence the price of a property, including its location, future development plans and the physical structure.
Also, there may be a demand or supply for the property at a particular location. You can also make your property more valuable by making repairs or renovations.
Supply and demand
Real estate is also governed by the forces of supply and demand. If the demand for houses is rising in a particular area, then property prices will rise if there are not enough new homes to meet the demand.
Investors who purchase or construct residential homes in order to sell them when there is less of it and the prices rise tend to be attracted by the increased demand.
In order to be able to compete with other buyers, end users will likely pay more to buy a house that suits their needs. Investors will see an increase in the value of the property, which is more than what they paid initially.
Do your research and understand the market before you buy. Common knowledge is that commercial properties in large urban centers tend to be more expensive.
But that doesn’t mean you can’t get strong returns in remote areas. It would be difficult for places like Akure, Osogbo, Ile-Ife to compete effectively against places like Abuja, Lagos, and Port Harcourt.
These properties are more likely than others to earn a higher Return on Investment (ROI).
Pick a location that is promising. Promise does not necessarily mean the best or most expensive. People promise to live in a place they love, and it can be for many reasons.
People tend to invest in properties close to their homes because they know the market better than anyone else. They can also spot the right type of property and location to do well. They are also more likely to keep an eye on the property.
But, it is not enough to have a good return on your investment. It is all about being able to identify and use the opportunities that are available, as well as taking risks and doing your research.
Property investing has proven to be a great way to earn income and capital gains. However, it is important that you look at the possibilities and consider all of your options.
Ask your friends and family members if they have ever invested in buy-to-rent properties or commercial properties.
Property Market Drivers
Any developments that have a positive effect on the appeal and desirability to live in a particular area can also affect real estate investment prices.
Although the current infrastructure may impact property prices, it is important to be aware of any plans by the government or commercial entities for future infrastructure construction in that area.
Potential property drivers include the development of public transport facilities like rail, road or airport; new office buildings; construction of shopping malls or hypermarkets; and proximity to schools and universities.
Property owners will enjoy massive future appreciation if they buy a property located in an area that has such potential development.
A spike in land, property, or real estate prices can be directly caused by the concentration of tech companies within a particular city, province or country.
In some U.S. cities it is considered a luxury to purchase a property or home. San Jose, San Francisco (Silicon Valley), San Diego and Los Angeles are among the most expensive places in America to purchase a home.
These cities are home to high concentrations of tech companies at the top, particularly San Francisco. To buy a house in Silicon Valley, you need to earn at least $249685.02 per annum, which translates into $20,807 monthly salary.
The increase in the value of real estate is called appreciation
Land appreciation in Abuja, Lagos, and Port Harcourt is higher than other locations like Akure and Lokoja.
Price appreciation of land means the buyer is getting Return on Investment