The real estate market is becoming more and more popular nowadays. Not only individuals but also many businesses are making profits out of this sector. Real estate investment, particularly in Zambia, can be pretty beneficial. So, you might be curious to know why you should consider investing in this sector. No worries. This article will help you get rid of your curiosity.
Investing in real estate can benefit your business as you can diversify your portfolio, force appreciation, and make lifelong passive income. Moreover, due to Zambia's current housing deficit and booming economy, one can make a lot of profits from their investment in this sector. Besides, you can get tax benefits, which would be highly beneficial for your business.
Investing your hard-earned money in a new sector might make you anxious. And, if you do not know what you can get in return, it is normal to feel hesitant. So, in this article, we'll discuss some top reasons why your business should invest in real estate, along with some other information you might find helpful.
7 Reasons Why Your Business Should Invest In Real Estate
It would be best if your business invested in real estate because of the sector's tons of benefits. The industry has a lower risk and a considerable possibility of forcing appreciation. Besides, portfolio diversification, obtaining tax advantages, and passive incomes are other benefits of real estate.
Most people are hesitant to engage in real estate since they believe it is risky or requires a large sum of money. However, neither of these assumptions is true. So, to comfort you, let's go over a few excellent reasons why your business should invest in real estate:
1. Competitive Returns
Higher risk usually results in higher returns. As a result, particular stocks may do exceptionally well. The risk and return reduce when investing in a portfolio of stocks. However, the amount of time you hang on to the property has reduced your chance of losing money in real estate.
Your home's value rises whenever the market improves, and you gain equity. In the share market, the risk is constant. So, various events outside of your hands might harm your investment.
As your properties are tangible assets, you have more power over your investment. You may utilize it to generate multiple income streams while also benefiting from capital appreciation.
2. Lower Risk
Since there is a finite quantity, land retains its worth, and prices increase with time. Thus, real estate holdings have a lower risk profile than bonds and stocks. It is mainly because their performance is not entirely dependent on their management.
3. It's Possible to Force Appreciation
Unlike stock and bonds, you may force appreciation in real estate. It may seem strange, but it is possible.
Firstly, you have to understand that real estate develops over time. The real estate grows 3%–5% each year without someone doing anything but maintaining the property. However, completing upgrades or repairs can accelerate the appreciation rate. However, you won't necessarily have to do extensive renovations.
Furthermore, it is no doubt that adding rooms or completing a basement would add better value to a property than simple aesthetic updates. Still, even modest bathroom and kitchen updates can significantly impact its value.
4. Help You Diversify Your Business Portfolio
If you have ever discussed investing with a financial advisor, you know the need for diversity. Well, once you diversify the investment, the risk is spread out. Real estate has always been a safe physical asset to diversify your portfolio's risk. Many people have gained fortune purely through real estate investments.
5. Obtain Tax Advantages
Real estate or property investors, like every business owner, may benefit from numerous tax deductions. If you buy a property and rent it, you are just running a business. So, here are some of the expenses you can generally deduct as a business owner:
● The loan's mortgage interest
● The loan's origination points
● Costs of maintenance
● HOA dues, real estate taxes, and homeowner's insurance
However, before assuming that you can deduct expenses, always consult with a tax professional. A professional will be well aware of your local area's real estate tax laws. But remember that real estate investing has its advantages. On the other hand, in the case of bonds and stocks, you may only deduct your investment when you sell them for much less than the purchase price.
6. Make a Lifetime of Passive Income
Real estate investment allows you to earn an additional long-term income when purchasing a home.
You can market your property investment in the neighborhood and attract tenants after purchasing it. And you can make a consistent monthly income by converting the assets into rental properties. However, it would be possible mainly if you could find trustworthy renters who might stay for long.
You won't have any trouble making money each month, provided the property is well-maintained, and you can find suitable tenants.
7. Better Control
You won't have to leave your real estate investment to a firm or the government to handle. Instead, you can manage all your assets by yourself. For example, you may boost your returns by acting on possibilities for growth.
Moreover, remodeling your properties is one of the best ways to increase your property investment profits.
The Real Estate Market in Zambia
Given Zambia's growing economy and population, investing in the thriving real estate industry has become crucial to solving the country's housing shortage. So, the real estate sector in Zambia is booming due to high demand but supply shortage.
The Government of Zambia has adopted steps to encourage domestic and international investors to invest in property on a large scale. It implements motivating and facilitating legislation that encourages residential housing development or real estate investment in the Republic.
Furthermore, the state has a 3.6 percent overall GDP growth rate, with 18.2 million people and 68.9 billion US dollars in GDP. All these factors contribute to a high demand in the real estate sector in Zambia.
Moreover, the housing shortage now stands at around 1.5 million, forecast to rise to about 3.3 million before 2030. As a result, despite the global crisis, Zambia is undergoing a comparatively significant development surge in public, commercial, and residential infrastructure.
Nonetheless, with increased construction within Lusaka throughout the previous half-decade, there seem to be new investment houses for sale. Builders identified Lusaka as a good investment site. It is, however, particularly for high-end residential units with sophisticated fittings and modern architectural designs in readily accessible areas.
But because of COVID-19, the percentage of interested tenants has decreased in recent years, rendering the real estate market a landlord's market. In the last half-decade, corporates, expatriates, a limited number of visitors, and business individuals have been the target markets of rental housing.
Besides, self-build houses established for rental or owner-occupation dominate the real estate market. As the housing industry is more informal, there seem to be fewer turnkey projects available.
It is because prospective homeowners must cover development expenditures. For example, they have to get a land title for the property, dig a well for water, install septic tanks, etc. So, considering the present state of the population boom and housing shortage, the real estate market would be very profitable for your business if you invest in Zambia.
Real estate is an excellent investment since it may assist you in earning money passively. And, if you have more incredible opportunities in your country, you can make way more profit out of the sector.
So, don't hesitate to buy real estate in Zambia and start enjoying the fantastic benefits. You won't regret it. Thanks for reading through. Best wishes for your business!