REAL ESTATE AN OVERVIEW
An estate has several meanings depending on the context in which it is being discussed. At common law, an estate is the totality of the legal rights, interests, entitlements and obligations attached to a property. The term „estate‟ is
also used to refer to the whole of a person‟s property or of a particular kind of property (such as „real estate‟ (meaning land and buildings) or „personal estate‟ (meaning goods and chattels).
In the context of wills and probate, it is all the property that passes under a will or the law of intestacy, which has to be administered by the executors or administrators. It refers to the totality of the property which the deceased owns, in which some interest was held.
Two notable types of types of interests are obtainable in land and they are:-
Equitable and Legal Interests
Legal Interests run with the property while Equitable Interests are those recognized by law of equity (ie having to do with good conscience) and the law is therefore bound to respect them. Thus a Trustee is a Legal owner of Property which vests in him, while the beneficiary under the trust has only an equitable estate in the property. Therefore Legal Interests and Equitable Interests can run concurrently in land.
Ownership / Estate in Land
An estate in land may be any carved out portion of the allodial or fee simple, which is the most complete
ownership that one can have of property in the common law system. An estate can be an estate for years, an estate at will, a life estate (extinguishing at the death of the holder), or a fee tail estate ( to the heirs of one‟s body) or some more limited kind of heir (e.g. to heirs male of one‟s body).
Fee simple estate may be either fee simple absolute ie when there is no condition to passing the title or defeasible i.e. when the grantor has placed a condition on a fee simple estate. Estate in land can also be divided into estates of inheritance and other estates that are not of inheritance. The fee simple estate and the fee tail estate are estate of inheritance: they pass to the owner‟s heirs by operation of law, either without restrictions (in the case of fee simple), or with restrictions (in the case of fee tail).
WHAT IS MONEY?
At first sight the answer to this question seems obvious; the man or woman in the street would agree on coins and banknotes as money. What about
cheques? They would probably be less willing to accept them than their own country‟s coins and notes but bank money (i.e. anything for which you can write a cheque) actually accounts for by far the greatest proportion by value of the total supply of money. What about I. O. U.s (I owe you), credit cards and gold? The gold standard belongs to history but even today many rich people in different parts of the world would rather keep some of their wealth in the form of gold than in official, inflation-prone currencies. The attractiveness of gold, from an aesthetic point of view, and its resistance to corrosion are two of the properties which led to its use for monetary transactions for thousands of years. In complete contrast, a form of
money with virtually no tangible properties whatsoever- electronic money- seems set to gain rapidly in popularity.
All sorts of things have been used as money at different times in different places e.g. Amber, beads, cowries, drums, eggs, feathers, gongs, hoes, ivory, jade, kettles, leather, mats, nails, oxen, pigs, rice, salt, thimbles, vodka, yarns, and zappozats (decorated axes).
It is almost impossible to define money in terms of its physical form or properties since these are so diverse. Therefore any definition must be based on its functions.
Functions of Money
Specific functions (mostly micro-economic)
; Unit of account (abstract)
; Common measure of value (abstract)
; Medium of exchange (concrete)
; Means of payment (concrete)
; Standard for deferred payments (abstract)
; Store of value (concrete)
General functions (mostly macro-economic and abstract)
; Liquid asset
; Framework of the market locative system ( prices)
; A causative factor in the economy
; Controller of the economy
Not everything used as money has all the functions listed above. Furthermore the functions of any particular form of money may change over time.
“What is now the prime or main function in a particular
community or country may not have been the first or original function in time, while what may well have been a secondary or derived function in one place may have been in some other region the original which gave rise to a related secondary function.
From the foregoing therefore we can rightly say that money is anything that is widely used for making payments and accounting for debts and credits.
“Money originated very largely from non-economic causes:
from tribute as well as from trade, from blood-money and bride-money as well as from barter, from ceremonial and religious rites as well as from commerce, from ostentatious ornamentation etc.”
One of the most important improvements over the simplest forms of early barter was the tendency to select one or two items in preference to other so that the preferred terms become partly accepted because of their qualities in acting as media of exchange.
Objects originally accepted for one purpose were often found to be useful for other non-economic purposes and, because of their growing acceptability began to be used for general trading also, supplementing or replacing barter.
Thus the use of money evolved out of deeply rooted customs: the clumsiness of barter provided an economic impulse but that was not the primary factor. It evolved independently in different parts of the world.
Because (in principle) money is anything that can be used in settlement of a debt, there are varying measures of money supply. The narrowest (i.e., most restrictive measures) count only those forms of money available for
immediate transactions, while broader measures include money held as a store of value which can be in the form of Real Estate.
Real Estate Investment in Nigeria
Financing real estate investment has in recent times become more problematic as a result of the complex interaction of several factors. Not least among these are excessively high interest rates charged on loans, stringent repayment requirements and almost impossible pre-qualification conditions imposed by lenders.
Competing short term investments in the foreign exchange market attract funds away from long term lending such as is best for real estate investment and this is not too surprising since funds available to the banks themselves are obtained on short term basis. It is therefore imperative that alternative funding approaches be examined which can eliminate or at least mitigate the difficulties hitherto experienced.
Conventional sources of real estate finance, apart from equity sources, include loans from banks, finance houses, insurance companies or pension funds, issuance of stocks on the capital market, sale and leaseback transactions and sale of receivables. Lawanson (1996) described sources peculiar to Nigeria to include equity, debt and hybrid approaches. Private equity including informal sources have been noted to be grossly inadequate due to the sheer bulkiness of real estate investments and the relative scarcity of equity funds emanating from retained earnings or profits.
Issues in Real Estate Investment in Nigeria
A review of the choices commonly made by most investors in Nigeria indicates the popularity of three major investment outlets. These outlets are in the Stock Market, Money Market and the Real Estate. This can be attributed to the capacity of these investment outlets to be a good store of value, in addition to their capacity to appreciate and be readily convertible to cash i.e. their liquidity.
Some analysts have identified a correlation between the depth and breadth of an investor‟s purse and how he allocates funds to any of these investment options. This is due among others, to the volume of funding required to participate in each investment window and also the return expectations. It has been proved that big time investors consider Real Estate, medium size investors go for Stocks while the small easily find opportunities in the money market.
Practical Complexities in Real Estate Transactions
Behind the beauty of Real Estate transactions is the lurking danger of getting entangled with fraudsters and charlatans which can rubbish the ambition of an upcoming real estate enthusiast. This is because, unlike the capital and money markets, transactions in real estate are associated with certain formalities, which if not properly observed can lead to a lot of problems. In other words, it remains the most regulated, the most abused and the most fragile transaction that needs all technical details to be perfect, otherwise it could result in a lot of losses and stress. The return is high, the risk is high. This is why necessary precautions must be observed in considering this investment window. There are usually two major areas that are often considered when investors tinker the real estate option. They are:
; Developed property.
To most investors, land seems a gradual way to start. The reason is that small savings can gradually be mobilized to commence the development of an already acquired land as opposed to the big saver who scouts for available estates to acquire.
In fact, the surest way to begin the journey to real estate acquisition starts with the acquisition of land. More than will be usually expected, such ambition usually meets with frustration and disappointments not only form the swarm of land speculators but largely from certain statutory demands which conspire with customary impositions. Thus one needs to be quite cautious in this aspect.
All one needs is a lot of carefulness, a lot of considerations and streams of disagreements. It is on record that out of 100 plots of land purportedly acquired in Lagos State alone, 75 are enmeshed in hostile
disagreements. The result is that monies are tied down for years even with slim chances of their being recovered. This is where the INVESTOR BEWARE tag becomes an issue of first consideration even before commencing a harmless enquiry. There are common sense approaches to solving this problem as well as a regulatory approach. Whichever way you want to choose could be acceptable but the guiding instruction should be that you take the course that will not deplete your fund before the real investment. Note that the process of making ordinary land acquisition need to make adequate preliminary enquires before getting to the point of making an offer and advancing to the contract stage. Much of the Lacuna in land acquisition is hidden away from this preliminary state, which means one need rounds of it to make confirmation.
At what time can your anticipated investment in land as a prelude to investing in real estate meet the brick wall? At what time will an investor remain confused as to what happens with monies stuck in a land deal? The answer is quite simple. It is the time one takes off with a faulty consideration, wrong preliminary moves and failure to answer some fundamental questions. But if one has done all these, then one will only sit at home and watch one‟s
land appreciate at the universally agreed 25% annual growth rate.
ADVANTAGES OF INVESTING IN REAL ESTATE
There are many gurus out there that contend that real estate is a panacea where you cannot lose
money .Although this is false, there are a number of advantages to investing in real estate. The biggest factor in marketability of an investment is supply and demand. The following are the advantages
; Real Estate Is a Good Inflation Hedge
People like investing in rental properties because
they're tangible assets you can see, feel and visit. You
can leverage real estate investments with a mortgage
or two, allowing you to control a valuable asset with
very little money. That's why "cash poor" investors are
attracted to it. If the property goes up in value, you can
multiply your wealth.. Residential prices have risen
steadily year after year and spectacularly in some hot
; Taxation Advantages
Investing in real estate or home ownership also has tax advantages. You can either deduct the interest expense of your mortgage payments, and if you live in a state that levies property taxes, you can deduct that as well. A home can be a shelter for your income as well as a shelter for your family.
; High Returns on Investment
Another big advantage is that it is an extremely expensive product. Each sale you make generates more profit potential for this reason. One reason real
estate is such a popular investment is because it can also meets the basic human need for shelter. In fact, housing costs are the single largest expenditure in almost everyone‟s budget. On average, 26 percent of your earnings will be spent on housing. Recent estimates place the total market value of single-family homes near $9 trillion. Obviously, real estate represents a very large part of the overall economy. The need for shelter can therefore not be
; Income Appreciation
A primary financial advantage of an investment in real estate is its potential for appreciation, which can provide a good hedge against inflation. For example, if you own a house, the value of your home should increase over time and your equity will increase as you pay down your mortgage. The equity in your home represents the market value minus the amount you owe. That represents cash that you have available if necessary, cash that you can obtain by taking out a home equity