Why it is better to invest in real estate than to put your money in the bank

Have you ever thought of how banks make their money? Do you think they are just doing you a favour by helping you keep your money?

 

Here are FOUR good reasons why it is better to invest in real estate than to keep your money in the bank

 

1. Higher Returns

 

Saving is a good culture and also a way of growing wealth over a long period. At times it brings miserliness in some individuals which I perceive as a bad habit. A penny saved in the bank is a penny lent. Putting your money in the bank is a way of lending the bank your money to grow their funds until you need them. Your money is been lent out as loans to individuals, businesses or organizations by the bank at an interest rate of ten to fifteen per cent in their benefit leaving you with little or no returns over time.

 

 Come to think of it, is leaving your money over a long period in the bank especially when you do not need immediate access to it a wise decision? Don't you think you will be better off investing it in real estate for a huge Return on Investment (ROI) rather than keeping it in the bank doing nothing for you?

 

Multiplying your money through investments like real estate is a true and better way of growing wealth in the long run.

 

2. Cash flow/Steady Income

 

Mr Soji that bought a one-bedroom apartment for Seven million Naira in Fairfield Apartments, Abijo Lagos and rented it out to receive an annual rental income of Six hundred and fifty thousand Naira and Mr Ikenna that kept his Seven million Naira doing nothing in the bank to save towards Ten million Naira to buy a car. Which of them do you think will have a better cash flow over time?

 

Of course, you will agree with me that Mr Soji made a better decision and will have better cash flow.

 

Rent from Real Estate provides a steady and reliable cash flow on a month-to-month or annual basis. Mind you, saving towards buying liabilities comes with other expenses. Why don’t you allow your investments to pay for your liabilities?

 

Money is a terrible master but an excellent servant. The ability to make your money work for you even while you are asleep is king. The act of making money your master will leave you with the problem of "Not having enough money".

 

3. Safety and Inflation Hedge

 

Real Estate investment guarantees you safety and security in terms of its value appreciation most especially when you buy land in strategic and promising locations. Hardly will you see the value of land depreciate, it will rather remain in its current value or rise. Unlike money kept in the bank, Real Estate has a great inflation hedge to protect against a loss in the purchasing power of money. With high inflation, your rental income and property value increase significantly which is a benefit to Real Estate investors because the cost of living rises, so does their cash flow. The value of money (Naira for example) can decrease at any time. As a result, the price of goods and services increases.

 

We have seen cases where the value of Naira decrease compared to the dollar especially during this pandemic period. You can imagine what the purchasing power of your savings in the bank is like currently.

 

4. Real Estate Takes Care of your Expenses

 

I remember discussing with a client of mine who complained bitterly about how the bank did not allow him to access the money of his late father due to some certain conditions and requirements. Some sought of documents and processes were requested which at the end was a fruitless journey as it got frustrating along the line. There are so many cases were money kept in the bank by a deceased person ends up becoming the banks own leaving family members with no access to it.

 

A property left behind by a deceased person in this scenario will be inherited by the children or relatives which can be liquidated to afford their education, lifestyles, and daily needs. If it is a rental property, it becomes a passive income for them.

 

Source: Sheriff Alaraba