Investment in land vs Rental Income

Rental income! Rental income!! Rental income!
The recent, incessant chant about this stream of income and investment option has become so loud, it’s almost deafening. As thunderous and defiant as Kanye chanting Jesus Walks!!! during his performance of this highly acclaimed song, or the chant of church goers reciting “Oluwa Gbami” (God save me) endlessly, that you’d think the very walls and roof of the church is about to come undone.

So much is being said for rental income, which has its due place and rewards, but when placed in the context of being a better and more viable option that land investment, brings to the fore a lack of grasp on key issues and where value truly lies.

 

So, for the sake of hypothesis, here are the facts of the case:
With the same amount of funds, and positioned in the same prime location, which makes the most business sense: investing in a bare piece of land, or investing in an apartment or flat for the sake of acquiring rental income?

For starters, it’s very necessary to re-iterate that an investment into an apartment for rental income will take a rough estimate of 10 or more years to make back your total capital invested into purchase of said apartment or property. So, you get a monthly or annual trickle of income as rental income, and this carries on in bits for nothing less than 10 years or even more. This is not to factor in costs that will be expended on fix-up, time-to-time refurbishing, and maintenance of the apartment, or worse still for a property that was invested in. This would mean huge out-of-pocket expenses to maintain the entire property if that was the investment of choice for rental income. Additionally also is the fact that there will be vacant downtimes within the time period it will take to get your initial capital investment back, when there are no takers for the apartment and property, and so that’s zero income for those period of times, and there’s bound to be times like that, the duration of which isn’t cast in stone.

 

Conversely, an investment into a bare piece of land sets you up with a commodity that will always be and highly sought after, that stands to pull in tremendous appreciation as time passes, without the attendant stresses of vacancies, maintenance, and pumping in money to invest in a bare piece of land. There is no downtime, you’re not out-of-pocket from extraneous expenses from owning a piece of land, it sits pretty while appreciation sets in as time goes by. It’s even more interesting to note that a new building that comes up at any given time automatically shoots up in value than any other existing property within the same axis, and so value for your property and apartment depreciates as new projects emerge. But for a bare land, appreciation continually runs its full course, with nothing to stand in its way, if the location and topography is right.

 

Keep in mind also that even if you were to invest in a building property with the same amount of funds that would be required to invest in bare land, the land size upon which the property sits would not be the same as the one gotten for just land alone. The land size of the bare land for the given amount would be larger than that of the property.

 

It is no wonder then that smart, savvy people who invested in huge land mass in Lekki, VI, and Ikoyi areas in the late 80’s and 90’s are cashing out massively and heavily than their counterparts who invested in buildings. Have you seen the numbers of hugely vacant properties around the Ikoyi and Lekki axis? But even if your bare land investment sits empty for years on that same axis, it makes up for it monumentally by over a thousand percent when it comes time to sell.

 

This is not to discredit the place and sense of rental income, especially for pool of investors who come together and set up huge shopping malls, with shop spaces rented out for monthly income returns. Those monthly returns are humongous enough, and at the termination of the 10 or more years it takes to recoup the initial set up investment funds, everyone has long been smiling to the bank. But for a first-time investor or an investor who already has a home and is looking to set up real estate investments that can marginally scale up their finances with the passage of short time and churn out huge, lump sums, a bare land investment trumps and wins, any day of time. And that’s a fact.

So, let’s help you get started on a profitable, truly rewarding path of real estate investment today. Urban Prime One estate off Ogombo road, Abraham Adesanya, and Frontier Estate in Bogije provide you optimal, secure locations for your land investment. Call us on 0818 756 6666 to go site seeing/inspecting today. Even with the heavy downpour of rains, these estates furnish you dry land investment in an appreciation driven, ROI-magnet location.

Leave a Comment