For real estate investors to achieve desirable returns in 2020, they may have to follow Forbes’ recommendations, including use of technology, protection strategy, tax awareness and continuous learning as the way to go.
According to Forbes Real Estate Council, investors can implement the four measures to up their competitive game and prepare themselves for even greater real estate investing success in 2020.
“For real estate success in 2020 and beyond, the key steps investors should take are to go digital, get your legal house in order, prepare now for tax time and always seek out education opportunities. These will be the hallmarks of real estate investing success in 2020,” Heath Silverman, Stessa’s co-founder/Chief Executive Officer and a member of Forbes Real Estate Council, said.
Go digital and ditch paperwork
There is no doubt that the digital revolution has improved people’s way of life in so many different ways, from social media to online shopping and vacation planning to the payment of bills. Real estate sector is also not left out as industry players are now buying and managing real estate investments through the use of technology.
According to Silverman, ditching the paperwork and going digital was a game-changer in his real estate investing business, and “it can be in yours too.”
Heading into 2020, the CEO recommended that industry players should set up the processes and systems so they can go almost entirely digital
If real estate investors go digital, Forbes said they are likely to be exposed to the following benefits: reduction of physical storage space, bank-encryption security to minimize the risk of document theft or loss, and preservation of historic documents such as year-end financial statements for tax purposes.
Other benefits that may arise from real estate digitalisation as highlighted by Forbes would be: Efficient retrieval and information sharing with business partners, CPAs or attorneys 24/7 from anywhere in the world and all of the aforementioned according to the American business magazine will encourage low-cost of operation and will also promote a more friendly environment.
According to Forbes, real estate digitalisation makes it as simple as taking out one’s smartphone and having the answers at fingertips.
“I don’t know how many times I’ve been on-site at one of my properties, chatting with a property manager or vendor, at a bank or talking with a member of my team when I needed to reference a document,” Silverman said.
Asset protection strategy
For the New Jersey-based organisation, real estate investors who think it’s easier to ask for forgiveness than permission may be in for a rude awakening when they start getting into legal grey areas. Forbes said that real estate investors should know that following rules and regulations shouldn’t be viewed as an obstacle. “People who have been there, done that know that it is important to protect yourself, your assets and investors from a worst-case scenario,” it said.
For real estate investors to get asset protection strategy in order, Forbes recommended that they protect themselves by obtaining full coverage insurance for the property. Example of such insurance should include property damage and theft, fire and construction insurance, liability insurance that covers claims from tenants and their guests and loss of income with business interruption insurance coverage.
It stated also that it is critical that an investor’s tenants should have renters’ insurance and can provide proof of coverage. “At the end of each year, I like to review current insurance coverage to ensure that it’s still adequate — perhaps there have been changes to a building over the years. There may also be ways to reduce your costs if some coverage is no longer needed,” Silverman said.
Prepare today for tax success tomorrow
According to Forbes one of the main reasons investors channel their funds to real estate is for tax benefits, as such it advised that as investors are digitizing their business, they should take the opportunity to get all their tax documents ready and organized for filing, whether on their own or with an accountant.
“It’s never too early to begin preparing for tax season,” it said. On how real estate players can smooth their tax information-gathering process, Forbes recommended: Tracking income and expenses throughout the year by using digital tools, uploading and storing documents and receipts whenever they are received.
Other measures include talking with their accountant about how they can take advantage of other tax strategies like pass-through deductions and casualty losses.
Silverman believes that real estate education is a building block to the success of an investor. “We learn, we take action, we make mistakes and we adjust accordingly,” he stated.
The CEO, therefore, recommended some of his favorite resources for learning to invest in real estate in 2020 and they included: Books on real estate written by experienced investors.
Online seminars through blogs, videos and podcasts that are free and on-demand, were some sources highlighted by Silverman.” One of my favorite podcasts is Bigger Pockets, and there are various others to choose from and add to your list,” he said.
With a housing deficit of more than 17 million units, the Nigerian real estate sector is faced with challenges ranging from the high cost of construction which makes it almost impossible for the country’s low-income earners to afford.
According to industry sources, about 97 percent of lands in Lagos are unregistered, which makes it difficult for banks to validate claims to land or for land occupants to use their properties to create wealth. This is one of the reasons property market has liquidity issues.
World Bank’s real estate data published in 2019 revealed that it takes 111 days to get a construction permit in Nigeria, whereas the same papers can be obtained in 155 and 170 days in South Africa and Ghana respectively.
Also, the cost of obtaining the document in Nigeria is higher than that of Ghana and South Africa put together. It cost 27.5 percent of the warehouse value to acquire a construction permit in Nigeria whereas in Ghana and South Africa, they cost 4.6 percent and 2 percent respectively.
“The major issues that continue to affect housing delivery in Nigeria, which also accounts for the wide demand-supply gap, include constraints related to the high cost of securing and registering secure land title,” said Nasir El Rufai, Kaduna State governor.