Well I will say it’s because the poor never does what the rich does, and the rich keeps doing what made them rich.
I am so sure you have heard the expression, “The rich keep getting rich.” This is often because high networth individuals and investors pool their resources, and are able to invest in Nigeria’s best performing, most stable real estate assets. In fact, the wealthiest already own most of Nigeria’s “High Ground”, of large and expensive assets.
Before now, I used to think the rich have a conspiracy plan against the poor…. and that plan is simple… to keep the poor perpetually poor and used their poverty to build wealth for themselves.
I used to have the mentality that rich people used poor people’s head to get rich until I discovered that the inequality between the rich and poor are not caused by any other but the poor themselves.
The difference between the rich and the poor is not about fairness, taxes, salaries or government until I met my RARE Mentor who shaped my thought completely, it was his guide that helped me build and grow my small business into a mega one.
I recall my RARE Mentor used to say that you don’t build wealth by increasing your salary or pay lesser tax or association with a government, you build wealth by basically doing what the rich does all the time… investing and keep investing
What does the rich do differently from the poor? You might ask.
Simple. The rich invest in asset producing income. The poor eat up their funds. You cannot fight the principles of success. And they don’t just invest, they invest codely…
How you might ask… The rich don’t invest generally… They don’t invest where the general public invest in. They invest codely and in fact secretly… That is the conspiracy.
Take for example, certain big guns invested in MTN and Econet when the telecommunication companies were still finding their feet in the Nigerian market. Those who took up the investment are reaping massive returns on their investment. But the hard truth is that the investment opportunities were never advertised to the general public. Not even a large proportion of Nigerians knew some people invested in the companies.
I have also learnt that you don’t have to have all the money to invest in an opportunity, all you need is to invest to own a small stake in an opportunity and as the business grows, your investment grows.
I discovered also that manay Nigerian elites are investing massively in real estate opportunities investing small portion of the funds required. For example in building some of the world’s tallest building in the world known as Burj Khalifa, the developers of the project sought for investment through a pooling system that allowed individuals to directly invest with as little as $500 in hotels, apartments and other development projects.
This pooled real estate investment is a combined funds of multiple investors which when added together, create greater purchasing power and rewarding investment opportunities through a simple economy of scale.
By pooling resources with other investors we are able to achieve something greater than waht we could achieve on your own.
An adage in the busines world emphasizes the need to use other people’s reources to build wealth. By pooling funds together which investor is responsible for the wealth of another investor which invariably helps to create exciting returns for all investors at the end of the day.
Few people in Lagos, Ogun, Enugu, Portharcourt and Cross-river can afford to buy these kinds of investment properties. And you know, these location are currently where most users of real estate pay premium value for in terms of residential, office and shopping rent.
As a result the prices of buildings within these axis are relatively high, while their returns are relatively high as well, compared to other states, but there is a major market where the rich in Lagos, Ogun, Portharcourt and Cross-river invest in that many residents don’t know about… it is what I called the Underground Private Investment Opportunity (TUPIO).
TUPIO is an investment platform that is never advertised but the rich knows about and invest in before the crowd get to have knowledge about.
Nobody heard about Shoprite Investment Option until it had been sold and Shopriet already operational. Nobody heard about Oriental Hotel been sold to investors until Oriental Hotel became a household name in hotel industry in Nigeria nor were you aware of the square metre investment of Four Points by Sheraton being sold to investors.
The rich invest codely and secretly. They don’t invest in the open market, they invest in the secret market, that is what makes them rich. Many rich people own several real estate projects within Lekki axis by investing in square metres investment option that guarantees them returns of their investment for life as the project succeeds.
The rich understand that you don’t make money by using a real estate product but by investing in a real estate project. That is how you make money so the rich don’t buy a unit because he want to use but because he wants his money to work for him.
The reason a lot of Nigerian investors are not cashing in money in real estate is simply because they are not following the principles of successful real estate investment.
My first investment in real estate was not to use the product but to provide opportunity for others. I pooled resources along with 15 others and bang, in less than 12 months, our investment was worth over 1.8billion naira where I onbly invested 1million naira. It is the same principle I have used again and again.
Real estate investment is sweet if you do it right… by pooling resources together, you will be able to invest in the higher ground too. Just imagine you earn about N7million naira annually. No matter how hard you try, you will never buy a property in Victoria Island. it would be an uphil task, but pooling reources with other investors, let’s say about 100 of your earning cadre makes investing in Victoria Island a possibility.
One thing I learnt from my mentor was that it doesn’t have to be expensive to start investing, you can start with what you have.
I recognized the need to use what I had in 2011 to invest in real estate and Whoola!!!! it was one of the best decisions of my life.
In my line of work, I have been assembling small groups of investors for Property Barons, for years.
The group is comprised of a few other (typically 14-30) investors, with similar investment goals. As a group, you will invest directly in a piece of real estate. Each member of the group will hold title to the real estate as a Owner-in-Common sharing profits and risk as co-owners of a real estate investment deal.
These investment deals can last from 5-35 years, with an initial of 1-4 months to meet the target of rising the investment and meeting initial operating expenses and trimmed where possible.
Then there is a holding and developing period, where the property is worked upon to increase value which last for another 6 months until each of the 4 engines that drive property investment returns reaches its peak level.
At this point, the investment is producing the highest achievable rate of return to the Pooled Fund investors. It is at this point that the property is prepared for sale.
This is one secret I learnt from my mentor so particularly well that got me well positioned to facilitate this type of investment for private investors too.
A lot of people mistake asset management for property management. The two are different. As an investor, you must clearly understand the difference or you might end up investing poor real estate deals that suck up all your fund and leave you with property that you don’t need.
Real estate investments should be proactively managed on an ongoing basis. Every real estate investment needs an operating plan tailored around the owner’s specific investment objectives. This plan should articulate specific strategies and tactics aimed at tracking and influencing the moving parts of YOUR real estate INVESTMENT.
An effective operator must understand whether a property is stable, in transition, or in need of repositioning and have a plan that anticipates and responds to the unique opportunities and pitfalls associated with that particular opportunity.
Your knowledge of real estate economics and proven process for applying that knowledge to specific real estate investments are the keys to your success.
Chudi Kalu
Kalu writes from Lagos.
