Abraham Maslow’s hierarchy divides human needs into three (3) broad categories. The basic needs category describes safety and physiological needs such as food, water, and rest. The second category describes our need for esteem, love and belonging. These are psychological needs. The final category describes self-fulfilment and self-actualization needs.
I like to think that human needs as presented in these three broad categories are first emotional. Remember that saying about a hungry man being an angry man. Even food trigger intense emotions yet we need food to survive. Meeting these needs deliver emotional fulfilment and reward. The amazing thing is that real estate meets needs across the hierarchy from bottom up.
Let me show you how.
First, let me describe real estate.
Investopedia describes real estate as the land along with any permanent improvements attached to the land. Whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and bridges.
This description means that there are many ways to look at real estate. Shows how convertible it truly is. Don’t get stuck looking at it from just a perspective.
The Basic Needs: These are also physiological needs; food, water, warmth, rest, security and safety. Food in agriculture and water is from the ground. Warmth and rest do not happen in isolation. We derive them from a subset of real estate such as a built property. Likewise, within a bounded area is where you feel safe and secure.
When you provide basic needs to your family or other people, you derive a sense of fulfilment. This is regardless of the provision being free or paid for. Sometimes you feel you have self-actualized doing this.
This is why it feels terrible when parents are unable to provide shelter for their wards. Especially when these wards are still financially vulnerable. It even feels more terrible losing your shelter when your ability to earn an income has now reduced as a result of advancement in age or other reasons.
When your basic needs are met, you are in a positive emotional state and motivated to be more productive. This is why the end police brutality protest agenda includes demanding improved remuneration and better living conditions for officers of the Nigerian Police. Force.
The Psychological Needs: Ever wondered why some people buy houses on certain streets and neighbourhood? While there are several reasons, chief on the list is because they want to belong and remain within a certain societal class. Psychological needs are the esteem, belonging and love needs. We crave these emotions at varying degrees and want to have them fulfilled. Real estate is a tool that is used to meet these needs. You have been using real estate to meet these needs and you do not even know it! You derive esteem or have a sense of belonging to a certain class when you occupy or use real estate in certain locations.
There is also the case of perception. Sometimes, people will only regard you based on your house or property investment location on the earth’s map. In many cases, people will only do business with you because your office has a certain address. Apart from the perks of having a Victoria Island business address, it is also to meet these psychological needs.
The Self-fulfilment Needs: Self-actualization is achieving one’s full potentials or attaining a high level of creativity. The Dangote Foundation once donated ₦1,200,000,000 worth of student accommodation to the Ahmadu Bello University, Zaria. Going by the history of the foundation’s activities, finding a deeper level of fulfilment is at the core. By that donation, he has contributed to a people-centred purpose.
While donating accommodation facility deriving a sense of fulfilment, a basic need for the students is being met using real estate. The students will be getting an education with some level of comfort. It then becomes easy to get more creative because there is now shelter besides security.
If you have not taken investing in real estate serious before now, it is high time that you begin to. It is a convertible tool that meets almost all human needs. Real estate makes being a human being possible. It delivers emotional fulfilment. It supports the essence and existence of life.
Therefore, you should pay attention to how you invest in real estate and convert it to meet your needs. Especially if you are not satisfied with the status quo or you are ambitious. Extracting optimum value from real estate does not happen by chance. It requires intentionality.
5 simple ways to be intentional about real estate investing.
- Know how you respond to real estate. We respond to real estate differently and this has been proven by research.
- Check what you know about real estate investing and deriving value from it. While some people are fine with just having a home, you may want more than having a home. How you approach cash flow generating real estate is different from how you approach home-ownership in Nigeria.
- Be real estate investment literate. Even when you plan to just buy a home. Due to real estate investment illiteracy, people end up losing their homes despite all the sacrifice to own one. You don’t want to have that experience.
- Read biographies of people who have legitimately extracted value from real estate. Remember it is universally convertible. For the ambitious investor, you can draw lessons from the experiences of other investors.
- Have a clear and relevant goal about what you wish to achieve using real estate. Your wealth goal is unique to you. Achieving your goal will also not be in an exact manner that someone else will achieve theirs. Find out what works effectively for you.
How you see real estate and being intentional about how you invest in real estate, reduces waste of resources and incidence of loss as is now common. You are also positioned to extract optimum value from your investment.
Oluwakemi Adeyemo is a sought after real estate investment advisor. The expert who helps you to stop losing money in real estate. She delivers sure value real estate services using technology.
Her job is to get to know your investment goals and provide you with expert analysis on real estate investment options. She researches a lot, consults and scrutinizes real estate investments so you don’t have to.
She believes that real estate is designed to sustain human existence and it is the bedrock of wealth creation. Therefore she helps you gain real estate investment literacy which increases your confidence as an investor, shows you how to prevent losing money to optimize profit and create wealth.
Twitter handle https://www.twitter.com/realkemiadeyemo
Lagos Real Estate Regulations: The peaks and the dips
The regulatory process also appears to be one that will help recover more taxes from real estate transactions and practitioners.
The Lagos state government recently enacted a Law: Lagos State Real Estate Transaction Regulatory Authority Law, which will curb activities of unscrupulous real estate agents and those who pose as estate developers to scam investors.
A lot of citizens have fallen victims to fictitious real estate investment opportunities that are non-existent in reality. Hence, this law will be enforced by the Lagos State Real Estate Transaction Department to avoid repeated occurrences.
Although, the department has now been upgraded to an agency called Lagos State Real Estate Regulatory Authority (LASRERA). The regulatory agency will coordinate, monitor and regulate the activities of practitioners in the real estate business in Lagos.
The regulatory process also appears to be one that will help recover more taxes from real estate transactions and practitioners. The government should track real estate transactions for tax remittance and inventory purposes. But with a process that improves real estate business efficiency.
Section 11 and 12 of the Code of Conduct states that;
(11) Agency fee(s) shall be as follows –
(b) Sale or Purchase of interests in Land and Buildings where two or more agents are retained by the owner/vendor for the sale, the fee shall be the 15 per cent of the total proceeds of the sale.
(12) A Licensed Real Estate Practitioner shall not prepare any legal document pertaining to any transaction handled by him but must be prepared by a Legal Practitioner and the fees shall not be more than 12.5 per cent of the total consideration.
This means that each principal in a transaction would bear a certain cost of at least 15% fee to realtors or brokers. The party who must also have an attorney will add an extra cost not more than 12.5%.
These closing costs are not the only cost associated with a real estate sale or a buy transaction. There are several other expenses associated with a real estate business or transaction. Any cost on a real estate transaction affects the asset value and a part of these costs recurs every time a piece of real estate is bought or sold.
There is an agelong deficit in housing inventory besides the over $900B dead capital. An increase in real estate transaction costs put a nail in the coffin of the already dead capital. This means the hope of resuscitating the dead capital is now almost zero.
Without a doubt, there is a need for proper inventory and records of real estate transactions. There must be other efficient ways to achieve an updated inventory, while also ensuring proper taxation where necessary.
For instance, in enforcing the land use charge in the year 2018, Lagos State embarked on an activity to capture the assessed value of properties in the state. The activity was carried out working with stakeholders in the state such as Estate Surveying and Valuation Companies. This shows that there can be a more efficient way to capture real estate transactions in the state without much increase in the transaction cost.
The 15 per cent fee as stated in Section 11b of the Code of Conduct would also appear as an incentive. To draft in for formal registration, more real estate professionals in the brokerage business. Although, this does not mean tax remittance will come naturally.
Going by the 27.5 per cent least added cost per sales transaction as suggested by the Code of Conduct, to an investor, there has to be a strong justification and value exchange for such fees. A real estate investor will prefer to reduce these fees as much as they can and in any ways possible; although, caution is advised here.
There are lots of creative ways to reduce transaction cost while getting the best value and also preventing falling victims of a scam.
A few ways to keep transaction costs low while still getting quality services are;
- Be real estate investment literate. Profitable real estate investing is not rocket science neither is it a walk in the park. For a first time or repeat investor, sufficient knowledge through education or experience is key.
- Set a clear real estate goal. A goal is a picture of the desired outcome with steps on how to get the desired outcome.
- Integrate teams and collaborate where possible on aspects of your real estate project or purchase regardless of your portfolio size.
- As a major decision-maker in your real estate purchase, you can leverage on relationships that you have built with experienced professionals where applicable.
Federal Mortgage Bank disburses additional 8,700 homes, N112 billion in three years
NHF collections increased by 80% or N186 billion to reach a cumulative amount of N418 billion as of September.
In a bid to boost the delivery of affordable housing for Nigerians, the Federal Mortgage Bank of Nigeria (FMBN) has disclosed that it spent an additional sum of N112 billion and built additional 8,700 new homes between 2017 and 2020.
This information was revealed in a statement issued by the Head, Corporate Communications Group of the Federal Mortgage Bank of Nigeria, Mr. Lawal Isa, on behalf of the Managing Director, Mr. Ahmed Dangiwa.
Highlights of the statement:
- The total sum of N265 billion has been disbursed as housing fund by the Federal Mortgage Bank of Nigeria. This sum indicates an increase of N112 billion or 74%, up from N152.5 billion disbursed by the institution as of 2017.
- About 8,700 new homes have been built between 2017 and 2020, representing a growth of 43 percent to attain a cumulative of 29,133 funded housing units.
- Within the period, the National Housing Fund (NHF) collections increased by 80% or N186 billion to reach a cumulative amount of N418 billion as of September.
- Home renovation micro-loans increased by over 2,000% from about 2,600 loans to about 56,000 loans in the last three years.
- About 570,000 contributors had been added to attain a contributor base of over 5.1 million NHF subscribers.
- 34 out of the 36 states of the Federation were compliant regarding workers’ contributions, with five states resuming contributions within the past three years.
How to own your home in 5 years without a mortgage
The invest-to-homeownership option is ideal when you do not have enough cash to buy a home in one fell swoop of payment.
Home ownership is usually top on the list of all the reasons why people want to invest in real estate, globally. Real estate is in no doubt an indispensable tool designed for the support and sustenance of human life. It is also a tool created for mankind to express creativity, desires, and ambition. When the Coronavirus pandemic spread across nations, governments were forced to give shelter-in-place orders, causing us all to stay in our homes for months. This shows that homes are indeed a necessity. Yet, it is beyond reach for many people in developing countries who desire to own one.
Mortgage loans are one of the common options for homeownership in many countries because it is believed to create some ease of home ownership. In Nigeria, mortgages have not been effective. In cases where it is accessible, it is expensive.
The case for mortgage ineffectiveness is a result of many underlying issues bedeviling our development as a nation. This article seeks to provide you with a creative homeownership option that is legitimate and efficient in achieving your real estate investment goal as an individual seeking to own a home.
The mortgage option requires you to provide equity of 20 – 30 percent of the total value of the home sale price. This also means that the home will be the collateral for the loan as you increase your equity over a period of years. Loss of income or ability to earn an income during the tenure of the mortgage translate in most cases to losing the home to the lender.
The loss of ability to earn income high enough to repay a mortgage is bad in itself. Losing that home to the lender makes it worse as you would have lost your homeowner status and in some cases, the equity.
An alternative to the mortgage option is the invest-to-homeownership. It is a creative real estate investment option. It allows you to invest equity with a real estate business or private home developer. The equity is used to execute projects and turned over until the equity builds up to an agreed amount required to own your home. This option creates leverage that is not available in the traditionally popular options.
The invest to homeownership option is ideal when you do not have enough cash to buy a home in one fell swoop of payment. It also does not need you to pay interest. Instead, the returns on your equity accumulate towards your home purchase. The real power of compounding in real estate comes into play.
Five major conditions that make invest-to-homeownership work
1. Your choice of the real estate developer
The developer must have a track record of executed and sold-out residential units. Invest-to-homeownership relies a great deal on the integrity of the developer. The first test of the integrity of a real estate entity is the track record and the quality of claims.
You should choose based on qualitative pieces of evidence and not emotions or appeal.
2. The project locations.
The developer must have ongoing residential projects in strategic locations of the city. These projects must be real and positioned to sell out. This is because not all locations are profitable for all kinds of real estate business goals.
3. The readiness of the developer to work with you
The developer must be desirous to accept your equity on respectable terms. This is because people management can sometimes be a tall order. If managing a bank loan will be easier, a developer may choose the bank above accepting to use your funds to execute projects thereby growing your homeownership equity.
4. Your mindset and belief
Many people, hold the belief that owning a home in Lagos, Nigeria is hard. This belief sets you up to miss creative opportunities.
Invest-to-homeownership option is a simple yet effective way to achieve a homeownership goal. A cheaper option that takes money out of your pocket fewer times than the popular mortgage option.
5. Ability to adopt and trust the process.
Your readiness as an intending homeowner and willingness to trust a transparent process when you find a developer who offers you one. The real estate investment terrain in Nigeria is still evolving. With many unpalatable experiences dotting the landscape. These experiences are due to a combination of several issues. Some real estate stakeholders have been able to master some fundamentals of the evolving terrain and can minimize foreseeable issues. Your ability to identify a trustworthy process, helps you harness the opportunity to own your home interest-free.
With the invest-to-homeownership option, the risk of losing your home to a lender in the case of protracted default or loss of income is eliminated. The developer that you choose to work with is obligated to deliver to the terms that will be agreed upon at the point of investment. You should carefully choose a stakeholder who can and will deliver on your homeownership goal in record time.
You may be interested or have questions about the possibility of the invest to homeownership option. In addition to letting you know this option is possible and available, we want to answer your questions too. Send ITHO via WhatsApp to 07062028677 or email to [email protected]