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BusinessDay’s Millennial Hangout has transcended its role as a learning platform, becoming a catalyst for transforming mindsets and inspiring the next generation of business leaders. By orchestrating conversations and sharing expert insights, the program empowers millennials to achieve remarkable success and create impactful business stories.
The November edition of BusinessDay’s Millennial Hangout, currently on their YouTube platform, delves into the timely and thought-provoking topic of “Return on Real Estate Investment.” This insightful discussion features an impressive panel of distinguished experts, including the esteemed Mr. Oluwabusuyi Adonis, the co-founder of CAF Limited, and other notable industries.
Mr. Oluwabusuyi Adonis’s contributions to the discussion were particularly impactful, drawing from his wealth of experience and expertise in the business world. His insights left a lasting impression, offering valuable lessons for entrepreneurs, investors, and industry professionals alike.
Mr. Oluwabusuyi Adonis discussed the pros and cons of Commercial and Residential real estate investments. He first mentioned that humanly speaking, the necessities of life are food, clothing, and shelter and the location we choose can be influenced by that. The necessities are nearness to the property be it for commercial or residential use.
The first pro he delved into was high demand. Many people have started working at home and desire to have their mini offices in the comfort of their homes. Many initiatives were found during the COVID time, and people got to see that they could work from the comfort of their homes and also, they can have a comfortable home with a space large enough to fulfill both residential and commercial purposes. Post-COVID has now made the demand for residential properties more than commercial properties, and it’s likely used by those working in the digital space rather than those working in the industrial space. So, in return, this became a con for commercial properties because many people have gotten to see the need for just residential properties over commercial properties due to the advancement that the wave of COVID brought about.
He further delved into the second pro of residential real estate, which is the low cost of investment because you can start with two or three units and not so much space is needed. In the case of commercial real estate, requires more space, but the cost of acquisition is more even though the regulations around it are quite more than a residential view.
Regarding scalability, it is much easier for residential properties than commercial properties, and the financing would be minimal.
He further talked about the managerial challenge; it’s a major con in the residential aspect because you would be dealing with individuals and not companies that already have a built-up system and structure that is well organized.
In the aspect of returns, he was emphatic in disclosing that there can be no comparison between Residential real estate and commercial real estate when it comes to this regard. The residential returns are little compared to the commercial returns because it is mainly used for business which he gave some practical illustrations.
Mr. Oluwabusuyi also talked about emotional intervention. This is a con in the residential aspect because it is a direct contact with who you are renting from, and it could happen that the house is being released from an emotional standpoint rather than a business standpoint. So, the customer could get to pry on your emotions and have you favor him or her. But in commercial real estate, it’s not a direct interaction. You may likely not get to relate to the owner of the property and do things the formal way with a realtor or a legal practitioner other than the main owner of the real estate property. So, most times in the residential view there is a one-on-one negotiation based on emotions.
With commercial real estate, there can be long-term leases but when it comes to residential, especially in cities like Lagos, the regulations tend to favor the tenants more, which makes the owners of residential real estate properties limited. He stated that it is value-based and it is much easier to do five years of leasing with commercial real estate than with residential, which is acceptably one year.
He further buttressed the point of location consideration being a golden rule. He said land is what appreciates, but the building technically depreciates. So, you should look at the margin of your profit because buildings would require that you repair per time, renovate, and make some major adjustments as time goes on, so you would have more than enough finances to keep up with that and still have a reasonable profit.
He discussed McDonald’s innovations and their investment in real estate, noting that a significant portion of their profits comes from it. He further stated that they ventured into real estate due to stability. Real estate deals with assets, and this tends to bring income monthly or yearly, depending on the agreement.
Lastly, he said, Real estate gives tax benefits, and this is a medium most companies and some individuals tend to use for wealth creation. They also could serve as collaterals for big loans for individuals.
Through his contributions, Mr. Oluwabusuyi provides a roadmap for millennials to navigate the complexities of real estate investments. He offers practical advice on how to identify lucrative opportunities, mitigate risks, and maximize returns on investment. His expertise is a valuable resource for young entrepreneurs seeking to establish a strong foothold in the real estate sector.
The program’s emphasis on knowledge sharing and mentorship is particularly noteworthy. By providing a platform for experts like Mr. Oluwabusuyi to share their experiences and insights, BusinessDay’s Millennial Hangout inspires a new generation of leaders and entrepreneurs. This initiative not only fosters growth and development within the real estate sector but also contributes to the broader economic growth and prosperity of the nation at large.
