June 20th, 2022 at 12:15 pm
5 points that damp Investors’ enthusiasm for real estate in Africa
Investing in a residential property can be one of the best decisions you can make especially if you are keeping it for a long period of time. However, it is also possible for it to be one of the worst decisions to ever make. The following are the cons that dampen the enthusiasm of investors in Africa.
1 . To begin with, REAL ESTATE HAS A LOW LIQUIDITY
Unlike other investment options that are highly liquid, and can be profitable when bought and sold in a fraction of a second, real estate investments are illiquid which means that it is difficult for such properties to be sold quickly without incurring any loss. Investors who want to be gaining profit must be ready to have the property for a long time or lease it out
2 . Secondly, IT REQUIRES MANAGEMENT AND MAINTENANCE
As an investor, once you purchase a property you will be faced with managing and maintenance of the property. Sometimes you need to factor in the payment of real estate taxes, insurance, management fees, and maintenance. These costs keep piling up even when the property sits empty.
Sometimes, there are some unexpected maintenance issues that arise and the repair and replacement of these could leave your cash reserve empty.
3 . Thirdly, REAL ESTATE IS IMPACTED BY RENT CONTROL
When investing in a property there is a possibility that the government can impose some control on how much to take as rent and this will greatly limit your ability to raise your rental charges.
4 . Also, THE TRANSACTION COST OF REAL ESTATE IS HIGH
The cost involved in buying and selling a property is a lot. Some of the costs involved in the transaction are commissions, title insurance, loan origination fees, and a variety of closing costs.
Comparatively, the cost of real estate transaction greatly affect the value of the investment and make it more difficult to turn a profit, unlike other investment options.
5 . Lastly, HAVING A PROPERTY REQUIRES YOUR TIME
You need to spend a significant amount of time when investing in real estate. Also, you need to see which vicinity is conducive for you to invest. You need to also identify some challenges faced in the community and find ways of solving them.
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