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9 Ways To Invest In Real Estate Without Buying Property In 2019

Last year’s housing market was one for the record books, with the gains partly driven by tightening inventories and exceedingly low mortgage rates. In some pockets of the country, housing prices rose well over 10 percent on average.

But, it’s not only the big coastal cities that are seeing huge growth. A survey from GoBankingRates revealed that many cities with the most growth were inland, including: Buffalo, New York (34.6%), Atlanta, Georgia (24.54%), and Cincinnati, Ohio (20.6%).

With this in mind, you may be wondering if you should throw your hat in the ring and invest in real estate — or, if you’re too late. You may also be wondering if you should invest in real estate in a traditional sense — as in, becoming a landlord.

Now, here’s the good news. Not only is now still a good time to invest in real estate since more growth is likely on its way, but there are also more ways than ever to invest in housing without dealing with tenants or the other minutiae of landlord work.


Here are some of the best options right now:

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#1: Invest in real estate ETFs
An exchange-traded fund, also known as an ETF, is a collection of stocks or bonds in a single fund. ETFs are similar to index funds and mutual funds in the fact they come with the same broad diversification and low costs over all.

If you’re angling to invest in real estate but also want to diversify, investing in a real-estate themed ETF can be a smart move. Vanguard’s VNQ, for example, is a real estate ETF that invests in stocks issued by real estate investment trusts (REITs) that purchase office buildings, hotels, and other types of property. IYR is another real estate ETF that works similarly since it offers targeted access to domestic real estate stocks and REITs.

There are plenty of other ETFs that offer exposure to real estate, too, so make sure to do your research and consider the possibilities.

#2: Invest in real estate mutual funds
Just like you can invest in real estate ETFs, you can also invest in real estate mutual funds. A colleague of mine, Taylor Schulte of Define Financial in San Diego, says he swears by a real estate mutual fund known as DFREX. Why? Because its low costs and track record help him feel confident about future returns. In addition to low costs, Schulte says the strategy of DFREX is backed by decades of academic research from Nobel Prize winning economists.

TIREX is another real estate mutual fund to consider with $1.9 billion in assets, broad diversification among real estate holdings, and low fees.

#3: Invest in REITs
Consumers invest in REITs for the same reason they invest in real estate ETFs and mutual funds; they want to invest in real estate without holding physical property. REITs let you do exactly that while also diversifying your holdings based on the type of real estate class each REIT invests in.

Financial advisor Chris Ball of BuildFinancialMuscle.com told me he personally invests in REITs for the diversification and for the “non-correlation” with other types of equities. He says he likes the long-term data despite the typical mood swings and ups and downs of the real estate market.

“It also gives me exposure to real estate without having to be a landlord,” he says. Ball also says a lot of his clients agree with that position and invest in REITs as part of their portfolio as a result.

With that being said, I typically suggest clients stay away from non-traded REITs and buy only publicly-traded REITs instead. The U.S. Securities and Exchange Commission (SEC) recently came out to warn against non-traded REITs, noting their lack of liquidity, high fees, and lack of value transparency create undue risk.

#4: Invest in a real estate focused company
There are many companies that own and manage real estate without operating as a REIT. The difference is, you’ll have to dig to find them and they may pay a lower dividend than a REIT.

Companies that are real estate-focused can include hotels, resort operators, timeshare companies, and commercial real estate developers, for example. Make sure to conduct due diligence before you buy stock in individual companies, but this option can be a good one if you want exposure to a specific type of real estate investment and have time to research historical data, company history, and other details.

#5: Invest in home construction
If you look at real estate market growth over the last decade or longer, it’s easy to see that much of it is the result of limited housing inventory. For this reason, many predict that construction of new homes will continue to boom over the next few decades or more.

In that sense, it’s easy to see why investing in the construction side of the industry could also be smart. An entire industry of homebuilders will need to develop new neighborhoods and rehabilitate old ones, after all, so now may be a good time to buy in.

Large homebuilders to watch include LGI Homes (LGIH), Lennar (LEN), D.R. Horton (DHI), and Pulte Homes (PHM), but there are plenty of others to discover on your own.

#6: Hire a property manager
While you don’t have to buy physical property to invest in real estate, there’s at least one strategy that can help you have your cake and eat it, too. Many investors who want exposure to rental real estate they can see and touch go ahead and buy rentals but then hire a property manager to do all the heavy lifting.

Lee Huffman, a travel and lifestyle writer for BaldThoughts.com, once told me he owns rental property in North Carolina but actually lives in California. While he tried to manage his properties from a distance at first, he ultimately chose to work with a property manager to save his sanity and his profits.

While he forks over 8-10% of gross rent to his manager, it was still “one of the best decisions he’s ever made” as a real estate investor, he says. “They take care of the rental property basics – minor repairs, vetting prospective tenants, collecting rents – so that I can focus on my career, family, and locating the next profitable rental property investment,” notes Huffman.

In that sense, he gets the benefits of being a landlord without all the hard work. “One of the most important roles that a property manager plays is that they act as a buffer between the tenant and me,” says Huffman. “I don’t receive random calls, texts, or emails from tenants at all hours of the day or night.”

The key to making sure this strategy works is ensuring you only invest in properties with enough cash flow to pay for a property manager and still score a sizable rate of return.

#7: Invest in real estate notes
Real estate notes are a type of investment you can buy if you’re interested in investing in real estate but don’t necessarily want to deal with a brick-and-mortar building. When you’re investing in real estate notes through a bank, you’re typically buying debt at prices that are well below what a retail investor would pay.

I’ve invested in real estate notes in the past via an individual investor I know who purchases and renovates property. So far, my experiences have only been positive. However, I would conduct due diligence to ensure you know what you’re getting into whether you invest into real estate notes with a bank or a real estate investor who is actively pursuing new properties.

#8: Hard money loans
If you don’t like any of the other ideas on this list but have cash to lend, you can also consider giving a hard money loan. My friend Jim Wang of WalletHacks.com says he is currently investing in real estate with this strategy since he wants exposure but doesn’t want to deal with being a landlord. He also says the ROI (return on investment) for his time wouldn’t be as great as other opportunities since his time is valuable.

Hard money loans are basically a direct loan to a real estate investor, he says. Wang offers real estate loans to an investor he knows in person, and he receives a 12% return on his money as a result. Wang says he feels comfortable with the set-up since the investor is someone he knows, but he isn’t sure he would be comfortable with a stranger.

Either way, hard money loans directly to real estate investors are another strategy to consider if you want to invest in real estate but don’t want to deal with a property and the headaches that come with it.

#9: Invest in real estate online
Last but not least, don’t forget about all the new companies that have cropped up to help investors get involved in real estate without getting their hands dirty. Websites like Fundrise and Realty Mogul let you invest into commercial or residential real estate investments and receive cash flow distributions in return.

Investing with either company is similar to investing in REITs in that your money is pooled with cash from other investors who take advantage of the platform. The cash you invest may be used to purchase residential property, commercial real estate, apartment buildings, and more. Ultimately, you get the benefit of dividends and distributions and long-term appreciation of the properties you “own.”

While neither company has been around for too long, they are both performing well so far. Fundrise returned an average of 11.4% on invested dollars in 2017 net of fees and 9.11% in 2018 after all, and you don’t have to be an accredited investor to open an account.

sing market was one for the record books, with the gains partly driven by tightening inventories and exceedingly low mortgage rates. In some pockets of the country, housing prices rose well over 10 percent on average.

But, it’s not only the big coastal cities that are seeing huge growth. A survey from GoBankingRates revealed that many cities with the most growth were inland, including: Buffalo, New York (34.6%), Atlanta, Georgia (24.54%), and Cincinnati, Ohio (20.6%).

With this in mind, you may be wondering if you should throw your hat in the ring and invest in real estate — or, if you’re too late. You may also be wondering if you should invest in real estate in a traditional sense — as in, becoming a landlord.

Now, here’s the good news. Not only is now still a good time to invest in real estate since more growth is likely on its way, but there are also more ways than ever to invest in housing without dealing with tenants or the other minutiae of landlord work.

Here are some of the best options right now:

#1: Invest in real estate ETFs

An exchange-traded fund, also known as an ETF, is a collection of stocks or bonds in a single fund. ETFs are similar to index funds and mutual funds in the fact they come with the same broad diversification and low costs over all.

If you’re angling to invest in real estate but also want to diversify, investing in a real-estate themed ETF can be a smart move. Vanguard’s VNQ, for example, is a real estate ETF that invests in stocks issued by real estate investment trusts (REITs) that purchase office buildings, hotels, and other types of property. IYR is another real estate ETF that works similarly since it offers targeted access to domestic real estate stocks and REITs.

There are plenty of other ETFs that offer exposure to real estate, too, so make sure to do your research and consider the possibilities.

#2: Invest in real estate mutual funds

Just like you can invest in real estate ETFs, you can also invest in real estate mutual funds. A colleague of mine, Taylor Schulte of Define Financial in San Diego, says he swears by a real estate mutual fund known as DFREX. Why? Because its low costs and track record help him feel confident about future returns. In addition to low costs, Schulte says the strategy of DFREX is backed by decades of academic research from Nobel Prize winning economists.

TIREX is another real estate mutual fund to consider with $1.9 billion in assets, broad diversification among real estate holdings, and low fees.

#3: Invest in REITs

Consumers invest in REITs for the same reason they invest in real estate ETFs and mutual funds; they want to invest in real estate without holding physical property. REITs let you do exactly that while also diversifying your holdings based on the type of real estate class each REIT invests in.

Financial advisor Chris Ball of BuildFinancialMuscle.com told me he personally invests in REITs for the diversification and for the “non-correlation” with other types of equities. He says he likes the long-term data despite the typical mood swings and ups and downs of the real estate market.

“It also gives me exposure to real estate without having to be a landlord,” he says. Ball also says a lot of his clients agree with that position and invest in REITs as part of their portfolio as a result.

With that being said, I typically suggest clients stay away from non-traded REITs and buy only publicly-traded REITs instead. The U.S. Securities and Exchange Commission (SEC) recently came out to warn against non-traded REITs, noting their lack of liquidity, high fees, and lack of value transparency create undue risk.

#4: Invest in a real estate focused company

There are many companies that own and manage real estate without operating as a REIT. The difference is, you’ll have to dig to find them and they may pay a lower dividend than a REIT.

Companies that are real estate-focused can include hotels, resort operators, timeshare companies, and commercial real estate developers, for example. Make sure to conduct due diligence before you buy stock in individual companies, but this option can be a good one if you want exposure to a specific type of real estate investment and have time to research historical data, company history, and other details.

#5: Invest in home construction

If you look at real estate market growth over the last decade or longer, it’s easy to see that much of it is the result of limited housing inventory. For this reason, many predict that construction of new homes will continue to boom over the next few decades or more.

In that sense, it’s easy to see why investing in the construction side of the industry could also be smart. An entire industry of homebuilders will need to develop new neighborhoods and rehabilitate old ones, after all, so now may be a good time to buy in.

Large homebuilders to watch include LGI Homes (LGIH), Lennar (LEN), D.R. Horton (DHI), and Pulte Homes (PHM), but there are plenty of others to discover on your own.

#6: Hire a property manager

While you don’t have to buy physical property to invest in real estate, there’s at least one strategy that can help you have your cake and eat it, too. Many investors who want exposure to rental real estate they can see and touch go ahead and buy rentals but then hire a property manager to do all the heavy lifting.

Lee Huffman, a travel and lifestyle writer for BaldThoughts.com, once told me he owns rental property in North Carolina but actually lives in California. While he tried to manage his properties from a distance at first, he ultimately chose to work with a property manager to save his sanity and his profits.

While he forks over 8-10% of gross rent to his manager, it was still “one of the best decisions he’s ever made” as a real estate investor, he says. “They take care of the rental property basics – minor repairs, vetting prospective tenants, collecting rents – so that I can focus on my career, family, and locating the next profitable rental property investment,” notes Huffman.

In that sense, he gets the benefits of being a landlord without all the hard work. “One of the most important roles that a property manager plays is that they act as a buffer between the tenant and me,” says Huffman. “I don’t receive random calls, texts, or emails from tenants at all hours of the day or night.”

The key to making sure this strategy works is ensuring you only invest in properties with enough cash flow to pay for a property manager and still score a sizeable rate of return.

#7: Invest in real estate notes

Real estate notes are a type of investment you can buy if you’re interested in investing in real estate but don’t necessarily want to deal with a brick-and-mortar building. When you’re investing in real estate notes through a bank, you’re typically buying debt at prices that are well below what a retail investor would pay.

I’ve invested in real estate notes in the past via an individual investor I know who purchases and renovates property. So far, my experiences have only been positive. However, I would conduct due diligence to ensure you know what you’re getting into whether you invest into real estate notes with a bank or a real estate investor who is actively pursuing new properties.

#8: Hard money loans

If you don’t like any of the other ideas on this list but have cash to lend, you can also consider giving a hard money loan. My friend Jim Wang of WalletHacks.com says he is currently investing in real estate with this strategy since he wants exposure but doesn’t want to deal with being a landlord. He also says the ROI (return on investment) for his time wouldn’t be as great as other opportunities since his time is valuable.

Hard money loans are basically a direct loan to a real estate investor, he says. Wang offers real estate loans to an investor he knows in person, and he receives a 12% return on his money as a result. Wang says he feels comfortable with the set-up since the investor is someone he knows, but he isn’t sure he would be comfortable with a stranger.

Either way, hard money loans directly to real estate investors are another strategy to consider if you want to invest in real estate but don’t want to deal with a property and the headaches that come with it.

#9: Invest in real estate online

Last but not least, don’t forget about all the new companies that have cropped up to help investors get involved in real estate without getting their hands dirty. Websites like Fundrise and Realty Mogul let you invest into commercial or residential real estate investments and receive cash flow distributions in return.

Investing with either company is similar to investing in REITs in that your money is pooled with cash from other investors who take advantage of the platform. The cash you invest may be used to purchase residential property, commercial real estate, apartment buildings, and more. Ultimately, you get the benefit of dividends and distributions and long-term appreciation of the properties you “own.”

While neither company has been around for too long, they are both performing well so far. Fundrise returned an average of 11.4% on invested dollars in 2017 net of fees and 9.11% in 2018 after all, and you don’t have to be an accredited investor to open an account.

Source: Forbes Media LLC

What Makes People Successful in Real Estate?

One of the components of building a successful career is called modeling. Modeling is patterning your behavior after someone who perhaps you admire and has built a career you would like to emulate. This is particularly valuable in real estate, where newer agents can seek out the advice and wisdom of those with more experience.

Modeling, in essence, is learning what a person has done to become successful and taking similar steps. Are there traits that these successful agents share? What do they have in common? How do they approach life and their careers? What separates them from the crowd? Just what makes these individuals, apart from others, successful in real estate? When you put together all of the best traits and mindsets that make up the brokers and agents you admire the most, the path toward success becomes a little bit more clear.

Successful Agents Know What They Want

Since everybody defines success somewhat differently, “success” is what you deem it to be. For many, it is a financial standing or stability. For others, it is the satisfaction of helping people. Others may define success as the perfect balance between professional and personal achievement.

Initially, success may be closing on that first property. It eventually may reach a home or multiple properties per month. Success may be having your own brokerage or having others work for you. It may involve owning several investment properties. The point is that you need to take the time to decide how you will define success. Most successful agents know what the success level is for them and where they currently stand in relation to those goals. A combination of short-term and long-term goals can keep people motivated while still looking to the horizon.

Successful Agents are Always Learning

Those who achieve a certain level of success in real estate understand the importance of continual learning. It is not just learning from experience, it is also proactive and intentional research. Successful real estate professionals read books, watch videos, attend seminars, listen to podcasts, read blogs, and more. They are expanding not only their knowledge but their horizons.

There’s an almost endless appetite to learn about this industry, the latest trends, tactics, and strategies. Successful real estate professionals seem to have a thirst for learning that has become second nature. Even the most seasoned veteran knows that no one knows everything and those who regularly seek knowledge put themselves in the best position to succeed.

Successful Agents Sweat the Small Stuff (but not too much)

Successful agents seem to know when even small details can make a big difference. It may be a part of a previous conversation, a seller’s goal they only mentioned once, or a birth date or anniversary. It could be extensive knowledge of current and upcoming businesses and developments in a specific neighborhood. Clients and colleagues alike will notice.

Of course, stressing out about every single detail is seldom productive. On the other hand, paying close attention, using good listening and superior note-taking skills are powerful tools in real estate. Successful pros know when, where and how to use them.

Successful Agents Are Honest With Themselves

Those who are successful in real estate know there is no real place to hide. They understand the buck often stops with them and no excuses will suffice. Did you give your best effort this month? Did you do as much as you could for every lead, prospect or customer? Is there room for improvement and where? What can you do differently? What is keeping you from moving up to the next gear?

When agents can identify where there is room for improvement, they can take prompt action to grow or resolve any issues that arise.

Successful Agents Fail

Successful agents fail because they are constantly trying. Stumbling is part of growing and pushing yourself to the next level. If there is a successful real estate professional out there who has never missed the mark on even one occasion, a statue needs to be built in their honor.

Obviously, you don’t want to fail 100% of the time, but if you’re too afraid of failure, you may never find just how far you can go. Do not fear success and do not fear failure. When failure happens, make sure to learn from it and move forward accordingly.

Successful Agents Are Goal-Oriented

Successful real estate professionals know the power of goals. They also understand that goals should be set for each of the steps it takes in reaching a sale, not just sales themselves.

Setting goals along the way allows you to achieve success by creating a stepping stone. As they are reached, your ultimate sales goals can be reached. The goals you have will be influenced by where you are in your career. These smaller goals may include:

  • Number of new contacts made each week
  • Emails or phone calls made each day
  • Community-related events attended each month
  • How many times you ask for a referral each month

Set these goals to your own comfort/challenge level and track them. Keep records of your “personal best” for each category you track. This is particularly useful in real estate where closing is a relatively infrequent occurrence. It’s certainly fine to have a goal of “X closings by the end of the year,” but setting these smaller, achievable goals that can be monitored help breed future success. At some point, these goals might include “recruit X stellar agents this quarter.”

Becoming a Successful Agent

It can be simple to look at someone with 20 years of experience and see their longevity as a cause of their success. It is more likely their habits were the cause of their success and longevity in the industry. When you pay attention and see how these successful agents think, conduct themselves and take care of business, you can get a clearer understanding of what it takes.

Successful agents know what they want, are detail-oriented and are always learning. They are honest with themselves, are not afraid to fail, and they set and monitor realistic yet challenging goals. There’s a lot to be learned and it starts by simply paying attention.

SA REITs Eager to Seize Opportunities in other African Countries

South African Real Estate Investment Trusts (REITs) have renewed their appetite for African property assets following a challenging economic environment negatively impacted the local listed property sector in 2018.

There is renewed appetite to expand into other African nations as investors look to gain first mover advantage in the continent  — Africa Property News has learned.

South Africa’s commercial real estate sector leads the African continent, with a maturity and sophistication that compares favourably with any developed market.

But, with scores of opportunities for property investment and development arising in Africa, the next decade could see other African countries developing comparable commercial property sectors.

Investment in Africa took centre stage at the second series of South African Property Owners’ Association (Sapoa)’s annual conference. The event, held in Cape Town last week, provided specialist insight to empower investment decisions.

A panel of experts moderated by Craig Smith, Head of Research & Property at Anchor Stockbrokers with Listed Property experts like Stephen Brookes CEO at Balwin Properties; Estienne de Klerk, CEO at Growthpoint Properties SA; Anton de Goede, Fund Manager at Coronation Fund Managers; Sandile Nomvete, CEO at Delta Property Fund; Bandile Zondo, Head of Financial Sector Equity Research, Standard Bank; and Evan Robins, Portfolio Manager, Old Mutual Investments, aired their views on how to lay ground for growth in turbulent times in the sector.

 

It is becoming harder to make the case to invest in SA’s listed property stocks while economic growth is weak and funds are raising little capital at home, the panel said at the conference.

2018 was the worst year for the SA listed-property sector, which is worth R590bn. It suffered a loss of 25.26%, which includes dividends and capital growth. Moreover, share prices of some companies slipped to well below the net asset value (NAV).

Landlords struggled to sign leases at higher rentals than before because tenants were under pressure because of the weak economy. The scandal around the Resilient group of companies — Resilient, Fortress, Nepi Rockcastle and Lighthouse Capital — also cost the sector dearly after a sell-off in these four stocks saw them lose more than R120bn of their value.

The panelist agree that listed property groups should turn their attention to the rest of the continent. Africa is a fast-growing continent with a large middle class.

During the discussion, Standard Bank’s Zondo said that the sector was actually fairly priced, which made it challenging for property stocks to attract new investors.

“There are property stocks which are at attractive yields but I wouldn’t say the sector is over or underpriced. It’s fairly priced, in my team’s view, and I think much of the bad news has been priced in,” he said.

Zondo said property stocks with South African exposure needed the economy to grow at more than 2% to start getting momentum into their share prices and dividend growth, otherwise they would remain fairly bland investments.

De Klerk, SA CEO of Growthpoint Properties, the largest real estate group in the country, said the current economic environment was the hardest he had faced in his 25-year commercial property career.

He confirmed Growthpoint and Investec Asset Management announced their pan-African real estate investment joint venture backed by the World Bank’s International Finance Corporation investment arm more than three-and-a-half years ago. Its first deals have now been secured and are about to be revealed.

De Klerk cited Growthpoint’s funds management business (Giap) as a “counter-cyclical” move in Africa, adding that “it’s a better time to buy [properties] in the rest of Africa than to sell”.

Delta CEO Sandile Nomvete meanwhile said that the 2019 financial year had been the worst and toughest for the fund since it listed in 2012.

Nomvete said the company intended to “reduce its concentration risk within SA by responsibly exploring feasible and accretive opportunities in the Southern African Development Community”.

Evan Robins, a portfolio manager at Old Mutual Investment Group, said ultimately JSE-listed property was a function of the economy and even though about 45% of it was offshore, returns looked set to be modest for 2019 and 2020 overall.

“Companies will try to beat inflation with their total returns, but dividend growth is subdued with few funds having achieved more than 3% in dividend growth in the past year,” he said

Source: africapropertynews

Real Estate Projects Changing Nigeria’s Landscape

When it comes to real estate projects in Nigeria, pundits within the property space are optimistic that 2019 will experience a major boost in africa’s largest populous nation.

Nigeria’s economic growth slowed in the first quarter after the oil sector, the country’s biggest foreign-exchange earner, contracted.

Gross domestic product in Africa’s largest oil producer expanded by 2.01% in the three months through March from a year earlier, the Abuja-based National Bureau of Statistics said in a report published on its website last month.

The position of most experts is that with a visibly improved economy, the Nigerian property market will be on the path of witnessing a rebound from the uncertainties that plagued the sector in 2018.

Here are some of the real estate projects changing Nigeria’s landscape.

Eko Atlantic City

Pitched as Africa’s answer to Dubai, Eko Atlantic is a multibillion dollar residential and business development that is located as an appendage to Victoria Island, and along the renowned Bar Beach shoreline in Lagos.

When completed, it is projected to accommodate nothing less than 250,000 residents. It stands on 10 million square miles of land and is expected to have a daily flow of 150,000 commuters.

Some of the major players in this massive construction project are the Lagos State, South Energyx Nigeria Limited, city planners, developers, 17 expatriates firms and over 500 Nigerians firms.

The Eko Atlantic City Project was conceived as a planned city, which is being constructed on reclaimed land from the Atlantic Ocean.

One of the biggest problems the ongoing construction has helped resolved is the ocean surge and flooding at the Ahmadu Bello axis of the island in Lagos, which had the potential to wipe out hundreds of homes and businesses within the location.

The vast number of commercial and residential properties in Eko Atlantic City will help in easing the problem of overloaded infrastructure that the island is known for.

Oworonshoki Lagoon Reclamation Project

The Oworonshoki Lagoon Reclamation Project is designed to transform this decaying part of Lagos into a focal point of major tourism, transportation and entertainment hubs within Lagos State.

It’s one of the popular real estate projects in Lagos and it is not a housing scheme. Rather, it constitutes part of the bigger picture to position Lagos as one of Africa’s entertainment hubs.

To ensure the success of this project, 30 hectares of land space has been reclaimed out of the 50 planned for the scheme.

Upon completion, the Oworonshoki Lagoon Reclamation Project is expected to bring an end to the perennial flooding in the area. It would also accommodate hotels, event centres, cinemas, clubs, bars, a bus/ferry terminal, parking space with capacity for about 1,000 vehicles and other top-notch attractions.

Mass Housing Project by the Federal Government

To tackle the housing deficit in Nigeria, the Federal Government of Nigeria has wrapped up plans to increase housing supply by initiating mass real estate projects across 33 states of the country.

The project, under its National Housing Programme (NHP), is expected to engage over 650 contractors to deliver 2,736 units while employing 54,680 people in the process.

Collaboration Between Lagos State and NMRC

The Lagos State government Lagos State has partnered with the Nigerian Mortgage Refinancing Company (NMRC) and private developers to deliver 20,000 housing units.

Lagos State Partners Echostone Development

The Lagos State government entered into a strategic alliance with Echostone Development, a building construction firm, to deliver 2,000 housing units in three locations across the state.

According to the agreement, Echostone is expected to deploy a new technology that will facilitate the construction of the houses while the state government will provide equity in terms of land and others.

The 2,000 housing units will consist of 2-bedroom terrace bungalows in 3 locations; starting with 250 units at Idale in Badagry. The construction train would then move to Ayobo in Alimosho and eventually cruise into Imota in Ikorodu for the development of the housing units.

The bigger picture here for the Lagos State Government is to deliver 20,000 housing units within a 4-year period through the Lagos affordable Public Housing Initiative (LAPH).

Royal Residence Estate

This real estate development project is powered by Obika Realtors in Eluju town within the Ibeju Lekki axis of Lagos. Some of the facilities already set up in the estate are the inner roads into the well mapped out plots, perimeter fencing of the 10-acre land, central gates and grading of the main link road to the estate from the Lekki-Epe expressway.

The first phase of the development covers 54 plots and over 80 percent of them have already been subscribed to.

The company is currently on the verge of embarking on the second phase of the scheme.

Conclusion

The country has an estimated $360 billion required to solve the national housing deficit. In Lagos State alone, the housing deficit is put in excess of 3 million units and will require approximately N8 trillion to resolve at $10,000 per unit.

Source: africapropertynews

Real Estate: Harsh Operating Environment Threatening Business- Developer

Against the backdrop of the severe and harsh economic climate the real estate sector of the nation’s economy has found itself at least in the last three years in which business continuity is now being threatened, operators in the sector have no option than to engage in innovative thinking and actions, just as they have to diversify their revenue if they must remain in business.

Reviewing the performance of real estate sector at the just concluded 10th Annual General Meeting of Propertygate Development and Investment Plc in the year ended December 2018 in Lagos, at the weekend, the Managing Director and Chief Executive Officer of the Lagos-based real estate development company, Mr. Adetokunbo Ajayi, said “The last few years have been very challenging for the sector.

It recorded negative real GDP growth for the last three consecutive years (-6.86 percent in 2016, -4.27 percent in 2017 and -4.74 percent in 2018) respectively.

“Unfortunately, many of the factors accounting for the struggle of the sector are still much with us. Many operators in real estate development and services space have been hard hit by the lingering slowdown in the sector. They have suffered from acute revenue shortage to severe liquidity crunch.

“These have had devastating impact on many operators, even threatening their business continuity. Going forward is not an easy task, as some of the challenges are systemic in nature. However, innovative thinking and actions are required on the part of operators.

The need for diversification of revenue should be taken very seriously in view of the experience of the last three years. “Having a mono income source can put an operator in a severe strain when the business climate of the income source begins to falter.

Operators may also have to rethink their business structure and other operational strategy issues, products and services offering, funding mechanics and other fundamental issues critical to corporate success. “It is high time for vibrant industry groups to emerge, to seriously engage and collaborate with governmental authorities and other stakeholders on burning issues affecting the sector”, Ajayi noted.

According to him, Propertygate intends to focus its attention mainly on real estate development, pointing out that the company has over a decade operated more as a development trading company, adding that going forward, it intends to do more in development for investment for strategic reasons.

“Propertygage is exiting property advisory services. With exit from advisory offering, the company is currently holding a significant stake in PG Readzon Services, a real estate and allied services firm. This will help the revenue diversification goal of the company.

It intends to push the diversification goal forward by deliberately pursuing investments in other carefully selected areas and ventures. “The company continues to recognize that people are central to its drive in building a sustainable business institution. It will strive to recruit, develop, motivate and reward needed personnel, who will help its vision, mission and corporate goals.

The Board which has been a major pillar of the company gave needed support in critical areas including driving corporate governance during the year 2018, and has pledged its commitment to do more in future.

“The customers, who are our other major stakeholders, will continue to occupy a supreme position in our considerations and actions. We will also not fail to give due attention and regards to all our other stakeholders”, Propertygate boss assured.

On operating environment during the period under review, he said the year 2018, was dominated   by flurry of political activities, as the country prepared for general elections that were scheduled for early 2019. He revealed that investments, local and foreign, slowed down as the year drew to an end.

“Some investors (corporate and individuals) held back, and would not commit until after the elections. On the economic front, the country recorded a GDP growth of 1.93 percent by the end of 2018. That was an improvement compared to 0.82 percent  growth recorded in 2017. The year also ended on a positive note with a GDP growth of 2.38 percent in the last quarter of 2018.

“Looking at the performance of the real estate sector during the period, the results disclosed a sector in troubled waters. It recorded a negative annual  real GDP   growth  of -4.74  percent  for  the year; a   further   decline compared to   -4.27  percent recorded in 2017. Quarter 4 result was equally negative, with a real GDP growth of -3.85  percent.

Source: vanguardngr

Why you Need to Add Real Estate to Your Investment Portfolio

We all, to some extent, recognize the potential financial benefits we could get from real estate investing. It goes without saying that there are many benefits of investing in real estate that outweigh the costs, and you as an investor stand to enjoy a steady flow of income to secure financial freedom for the long haul.

Real estate has proven to be one of two major investment spikes to wealth growth, the other being financial market. The key to investment success is spreading your investment over a range of assets and this is what smart investors do. Creating a balanced portfolio means you are spreading your money across various asset classes: stocks, bonds, and real estate.

This year holds prospects for investors given the fact that the property market registered a positive growth of 0.93 percent in the first quarter of the current year, after 12-quarter contraction and the momentum is expected to be sustained as the broader economy continues to pick up.

Here are some benefits associated with real estate investing when you add the asset class to your portfolio.

Portfolio Diversification

Have you spoken to a financial planner about investing? If yes, then you must have been told about the importance of diversification.

When you diversify your portfolio, you are spreading out the risk. Real estate serves as safe tangible assets to minimize risk in your portfolio. This holds true because real estate reacts differently to economic conditions compared with equities and bonds.

Risk never disappears in the capital market and there are numerous factors beyond your control that can negatively impact on your investment but real estate gives you more control of your investment because your property is a tangible asset.

Value Appreciation

The secret to success in real estate is investing at the right time in the right location. If you’re aiming for both short and long-term gains in your investment portfolio, then real estate should be thrown in. One major benefit of real estate investing is the appreciation of capital assets (land) overtime. In other words, your property’s value will worth way more than 30 years now.

Steady Income

This is no brainer. Smart investors diversify to real estate for the steady flow of cash they earn in the form of rental income. Depending on the location, you could be earning significant income to cover your expenses, with extra income in your pocket. Urban centers tend to reap higher income because demand is high in those areas.

If chosen wisely, you can secure a steady income flow for a long time, and even save for retirement. And you do not have to stop investing in one property a time; you can increase the pace and invest in multiple properties, to increase your positive cash flows.

Long-term financial security

One of the big rewards of diversifying your portfolio to real estate is financial security in the long haul. Owning a property gives investors a sense of security because of the property’s appreciation in value overtime. This means your property’s value will most likely increase because land and building are appreciating asset.

With this, you have peace of mind that you have enough money saved to meet emergencies and future financial goals.

Hedge against inflation

An inflation hedge means you are investing in an asset expected to maintain or increase its value over a specified period of time. This is why inflation is considered a hedge against inflation since property value tends to increase in times of inflation.

Real estate investors embrace inflation because as the cost of living increases, so also their cash flows. It is an appreciative long-term investment with inflation-adjusted rental income.

By investing across different asset classes over long periods of time, you increase the likelihood of achieving your long-term investment targets. While having other asset classes in your portfolio is a smart move, but real estate has proven again and again that it is superior to other investment classes, and it is advisable you include it in your portfolio.

Source: BusinessdayNg

CAP to Leverage Reforms in Real Estate Sector to Boost Returns

CHEMICAL and Allied Products, CAP Plc, has said it is poised to take advantage of the structural reforms that will be undertaken by the federal government in the housing and real estate sector this year to boost revenue and returns to its shareholders.

The company also declared N2.03 billion dividend, representing 29 kobo per share for the year ended December 31, 2018, which was approved by the shareholders.

Speaking at the 54th Annual General Meeting, AGM, in Lagos, Solomon Aigbavboa, Acting Chairman, CAP Plc, said: “We expect that the economic environment in 2019 will continue to be fluid and uncertain and businesses must be proactive and make clear cut choices about how to compete in the market place.

Businesses also need to make clear definition of strategy, business model and core operations in order to increase revenue and profitability. “Your company is closely following developments at all levels and is prepaid to key into opportunities that will be created.

We will respond appropriately to the emerging paint market trends and different economic scenarios by introducing new products and value added services, increasing volumes, entrenching presence in the standard market, completing Dulux Colour Centers, DCC, upgrade and implementing impactful marketing initiatives to ensure effective customer engagement among others.”

He alluded to the effect of difficult business environment in 2018, saying that CAP navigated the business terrain by recovering its costs through various cost reduction initiatives and improved efficiency, which resulted in nine percent increase in revenue to N7.76 billion and 15 percent growth in the operating profit to N2.28 billion.

He said that the company expanded its distribution channels and improved on field presence by opening two Dulux Colour Centres in Lagos and Abuja during the year.

“We also increased marketing initiatives and value-adding services. We extended in-plant paint production to silk line and commenced DCC upgrades. We will work harmoniously with DCC distributors to achieve topline growth in 2019,” he added.

Source: vanguardngr

Expert Urges Professionals to Explore ADR in Real Estate Disputes

Olumide-Fusika, a Senior Advocate of Nigeria, said ADR remained a better alternative as courts had not been set up to understand that business litigations should not be delayed.

He said, “It should not be for real estate practitioners alone, it should be commercial disputes, where people don’t want delays and where people want disputes resolved as soon as possible.

“If you don’t want to spend time and money, it is better to sit down and resolve the issue since the normal court process has proved inadequate in resolving commercial litigations due to the time it takes.”

According to him, it is always better for people who are pursuing genuine cases to sit down and find solutions to their conflicts, considering the concerns and how to resolve them without resorting to litigation.

Speaking with members of the International Real Estate Federation, FIABCI Nigeria, on ‘Alternative Dispute Resolution: Panacea for growth in real estate sector’, Olumide-Fusika said conflicts were unavoidable but could be resolved within limited time.

He stated that beyond negotiation, which is the first stage in ADR, the parties involved could bring in a third party free from the emotions attached to the conflict for mediation.

“The third party will try to make you see reasons with each other but if mediation doesn’t work, then the last stage in ADR, which is arbitration and involves a lawyer should be explored. It is adversarial but it saves more time and yields a faster outcome than the traditional court case,” he said.

According to Olumide-Fusika, it is not true that people are taking away the job of lawyers through ADR as they are still involved in the process.

He, however, stated that the current cost of ADR remained one of its biggest disadvantages as people still considered it too high.

He said, “People say the number of years that litigation takes costs so much but anyone who has been through arbitration knows that it costs so much. I think the charges are too much and some people are milking the process, which makes it unattractive.

“So it should be made cheap for the people, so that they are made to see the advantages of it.  The price has to be reviewed; right now people don’t see the advantage because it is too expensive. But you need to look at all the cost elements and choose the one that will serve your best interest.”

The President, FIABCI Nigeria, Mr Adeniji Adele, said the association had found that there were so many litigations over the years, involving clients, and had been looking at ways to get out of the situation.

He said, “This gathering is part of knowledge sharing section for members, where some topical issues that relate to the profession are discussed to improve business competence of members. We are in the built industry; we don’t take it for a ride. For example, we have find out that there are so many litigations over the years involving some clients and we have been looking at ways to get out of the situation.

“We realised that there are so many ways to get out of it and one of the methods is perhaps the process of arbitration, mediation because litigation has not really solved the problem.

When you look at the law of the country, you see that litigation should be a no go area, as the process of the judiciary system is so cumbersome and apart from the cost element of it, it’s time wasting and parties may not get the justice so desired. So the best way is to have a peaceful resolution between the parties.”

Source: Punchng

Investors Are Buying More of the U.S. Housing Market Than Ever Before

The share of investor purchases of U.S. homes have climbed to an all-time high, a sign that rising home prices have done little to dampen demand for flipping homes or turning them into single-family rentals.

Big private-equity firms, real-estate speculators and others that buy properties comprised more than 11% of U.S. home purchasers in 2018, according to data released on Thursday by CoreLogic Inc.

The investor purchases are the highest on record and nearly twice the levels before the 2008 housing crash. The investor interest poses a challenge for millennials and other first-time buyers who are increasingly looking to buy starter homes and are forced to compete with deep-pocketed cash buyers.

Big commercial property owners like Blackstone Group LP and Starwood Capital Group began buying thousands of homes out of foreclosure during the housing bust. Many economists credit investors with helping to stabilize the housing market in 2011 and 2012 by buying with cash when prices were low and mortgage credit froze.

But analysts expected those purchases to slow, as the market rebounded and properties could no longer be had for fire-sale prices.

Instead, demand for properties has intensified. While these purchases dipped slightly when the market started to recover in 2015 and 2016, they have rebounded to surpass the previous peak of six years ago.

Strong rental demand, technology that facilitates buying homes online and low interest rates that make other investments less appealing have fueled investor appetite.

Investors are an especially powerful force at the bottom of the market, where they often pay all cash. Investors purchased one in five homes in the bottom third price range in 2018, according to the CoreLogic analysis, up 5 percentage points from the 20-year average of less than 15%.

“These are the homes that first-time home buyers would logically be buying,” said Ralph McLaughlin, deputy chief economist at CoreLogic.

Shane Parker, a real-estate agent in metropolitan Detroit, said first-time buyers he works with are struggling to win bidding wars against out-of-state buyers. The locals he works with are becoming more aggressive, putting in escalation clauses and agreeing to pay the difference if properties don’t appraise.

One of his clients, Michael Burnett, a tech writer in Detroit, and his wife are looking for their first home so they can have a treehouse for their young girls. They have visited 25 properties and bid on half a dozen but keep losing out to cash buyers.

The couple recently fell in love with a property they thought had great potential. “It’s ugly on the outside, ugly on the inside, but it can be made beautiful,” said Mr. Burnett, 43 years old.

The house ended up getting a dozen offers, more than half of which were cash, and selling for $40,000 over the asking price of $150,000. “We write letters. You think you’ve composed this great heartfelt, ‘I have a family, see my family,’” he said. “Oh, please…Cash is king.”

Real-estate entrepreneur Gregor Watson’s business has helped boost investor participation. Following the housing bust, he and partners bought more than 6,000 homes across the country and turned them into single-family rentals.

Then he founded Roofstock, a company that enables investors to purchase properties online. The internet has made it easier for smaller investors and foreign buyers to purchase properties they may never have visited. Demand is also shifting toward former industrial cities in the Northeast and Midwest where prices remain low.

Mr. Watson said that many people in San Francisco and New York are priced out of buying homes where they live but are able to purchase an investment property in less expensive cities.

Michael Pickens, 31, who works in tech sales in the Bay Area, and his wife kept losing out in bidding wars to all-cash offers. “It was all cash, no contingency, seven-day close,” he said.

He and his wife decided instead to rent a small apartment in Santa Clara County and buy investment homes on Roofstock in less expensive locales.

They now own homes in Georgia and Tennessee despite never having visited either state.

So-called iBuyers, such as Opendoor, Zillow Offers and RedfinNow, which snap up homes in cash for a fee to help sellers avoid the hassle of putting their homes on the market, comprised less than 2% of investor purchases last year, according to CoreLogic.

The biggest markets for investor purchases in 2018 were Detroit, followed by Philadelphia and Memphis, Tenn., where home prices are still low enough for investors to profit by renting them out. Investors bought nearly half the starter homes in Philadelphia last year and about 40% of lower-priced homes in Detroit, according to CoreLogic.

When Tawan Davis launched a business renting out single-family homes three years ago, he focused on Philadelphia because of the city’s slow foreclosure process and history of disinvestment, he said.

Mr. Davis typically purchases homes for about $75,000 to $90,000, puts an additional $50,000 to $80,000 into renovation and rents them out for around $1,300 a month.

He said he is often welcomed in these neighborhoods because his modestly priced rental properties help act as a bulwark against gentrification. Many of his renters are single and work as nurses or adjunct professors, he said.

“They’d much rather see us than a lawyer from New York,” he said.

Source:  By Laura Kusisto

Tasmanian Housing Solution Angers Neighbours in Huntingfield, South of Hobart

A southern Tasmanian community has raised concerns about the State Government’s plans to rapidly rezone land for social and affordable housing.

The Tasmanian Parliament passed legislation last year to “fast track” the rezoning of land for new affordable housing.

A proposal for a 37-hectare site at Huntingfield, near Kingston, would see 450 dwellings, including a mix of social, affordable and private housing.

But local residents say they only had two weeks to respond during the community consultation process, and the State Government has not been transparent about the proposal’s details.

Huntingfield resident Matthew Jones said he received a letter in the mail from the State Government two weeks ago.

“Chatting around the street we quickly realised the houses that were receiving these letters were the ones that bordered the proposed land development, which wasn’t ideal because a lot of people weren’t receiving these letters,” he said.

“Between the two streets about 15 houses received it.”

He said two weeks to respond was not enough and there should have been a full community consultation.

“Everyone’s supportive of housing, there’s obviously a housing crisis, but there’s a proper process,” Mr Jones said.

“A lot of our concerns are the infrastructure and access to this development.

“The schools are at capacity, the medical services are at capacity and it’s quite a rushed process.”

Consultation process ‘fallen over’: Kingborough Mayor

Kingborough Mayor Dean Winter said while he was supportive of more housing in greater Hobart, the local community was concerned about the consultation process.

“This is actually putting the whole project in jeopardy, it’s lost the community support already before the consultation’s already finished because people don’t have the information they need to make their own assessment,” he said.

“They’re concerned about infrastructure, they’re concerned about overcrowding and environmental impact and until the government gives them the information they need … they are going to be concerned.”

Cr. Winter said the consultation process did not appear “genuine”.

“Locals have only been given 14 days to respond and very few of them were made aware directly by the Government,” he said.

“People haven’t had enough time, they haven’t got all the information they need and therefore the consultation process has really fallen over.”

TasCoss chief executive officer Kym Goodes said building new affordable and social housing is a high priority for Tasmania.

“What we’ve heard over many months now is the long delays that can happen when trying to get housing stock built,” he said.

“My understanding is there will be 15 per cent of it dedicated to social housing and the balance of the development will be more affordable housing.

“So we can address those 3,000 people on the waiting list looking for somewhere to call home.”

Labor MP David O’Byrne said getting affordable housing built was crucially important.

“But we’ve seen with the Huntingfield development that you can’t trust this Government with anything,” he said.

“They have driven the Tasmanian community into this crisis … and now they’ve failed to consult and work with the local community on what could be a really important development.”

In a statement, Housing Minister Roger Jaensch said the fast track rezoning legislation does not apply to the development application process, which will go through the normal council process.

“The accelerated rezoning process shaves an estimated six months off the typical rezoning process, without compromising planning and community considerations,” he said.

“The act requires that adjacent land owners are notified, which is consistent with the Land Use Planning and Approvals Act 1993.

Source: Abc

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