In real estate investment, one of the first questions you ask as an investor is, ‘How do I buy properties?’. This entails the strategies to employ in buying the ideal properties.
These are the categories of investment strategy that I advocate:
• Perfect bargain purchase
• increase value/potential
• high capitalization rate.
• Speculative purchase
Perfect bargain purchase is the purchase of real estate for at least between 15%- 20% below current market value. I believe there is no fixed price for properties. The price you pay depends on your ability to negotiate a great bargain for yourself.
In the increase value/potential strategy, you buy a property for its current market value, but you select only properties with some unrealized potential. Then, immediately after purchase, you make whatever changes are necessary to increase the value of the property. The increase in the value may be marginal or significant depending on your creativity.
High capitalization rate means that you buy the building on terms that it has a capitalization rate of 10% or more. The capitalization rate is the net operating income (rent minus operating expenses) divided by the purchase price. In other words, it is the cash-on-cash rate of return you would get if you owned the property free and clear. In the absence of a perfect bargain purchase, high capitalization rates are very hard to find. They generally only occur temporarily in depressed markets or in small market niches.
Speculative purchase is the buying of properties which the investor believes will soon increase in value due to market-wide appreciation, not taking into consideration any unrealized potential of the property. No one knows, with total assurance, which areas will appreciate. Many billions have been made by investors pursuing this strategy, but they were simply lucky.
The importance of engaging the services of an expert cannot be over emphasized.

Bukola Ogunsola is the Managing Director of Gritt n Nitt Limited, a real estate consultancy firm based in Lagos, Nigeria. She is an expert in the field of property management, agency and other related services.
+2348037223516, bukolaogunsola@ngritt.com