Running a car dealership is potentially a very profitable business model as it is unlikely that people will stop buying cars regardless of external factors. These include both everyday cars as well as luxury cars which often sell for hundreds of thousands of dollars apiece.
However, Zaf Baker, and entrepreneur, pivoted from a successful car dealership business to expand his reach into real estate as well. Some might consider the real estate business to be a tricky one especially in times such as these with the COVID-19 outbreak. However, Baker has gone on to be rather successful in his endeavors and a closer look at his story shows why real estate is a profitable business that should be invested in with benefits that extend far beyond just immediate profit.
- Housing is essential: There are some basic needs that all humans cannot do without and these include food, clothing, and, of course, shelter. This means that the housing business will literally never go out of style because people will always have a need for where to live. They are different factors that affect how well the housing market does but the market itself will always exist.
An example of this is the 2008 global financial meltdown in which the housing market saw a significant decline in value. However, the market would go on to recover all that was lost because after an economic crisis ends, one of the first things people try to do is find a better living situation. This seems to be repeating itself with the COVID-19 outbreak and recessions around the globe. This means that properties, for now, can be purchased at a cheaper rate and then can be monetized for a higher fee once the financial crisis is over. This also means that the real estate business can continue to make money indefinitely as humans will require shelter indefinitely.
- Personal use: Besides making money from the real estate business he owns, Baker also has a number of hotel-serviced apartments around the world which are kept vacant for his many travels. Besides the fact that you can make money from real estate, you can also make personal use of it. For example, if you or your loved ones travel a lot or you will be entertaining loved ones from out of town, having real estate at your disposal will save you money on hotels and other external accommodation and will also be a great convenience to you and your loved ones.
This is why a number of real estate entrepreneurs keep properties with specific apartments or areas that are restricted for them and their families as this offers a double benefit for all involved. If you do decide to take advantage of this, determine how much of your real estate portfolio will be dedicated to money-making and how much of it will be needed for personal use.
- Multiple means of monetization: One of the beauties of real estate as a business is the fact that there are many ways of monetizing it each with its own unique advantages. Baker, for example, does property development which is a very lucrative global business. On the other hand, you may also choose to rent out your properties long-term to customers as many landlords choose to do. Alternatively, there is the option of short term renting such as with Airbnb in which a single property can serve multiple users over each financial year. Finally, you might decide to sell off properties or upscale older property while still profiting off it.
- Steady income and generational wealth: As previously mentioned, real estate can be an indefinite money maker as they are certain properties that are rented for generations and continue to net an income for as long as the property or the land it is built on exists.
Furthermore, real estate can also serve as a source of generational wealth to be passed from one generation of a family to the other. Baker’s family, for example, is heavily invested in real estate, and globally, real estate is one of the most common forms of inheritance. Thus, if you are trying to build a portfolio that can be passed on to your dependents, real estate would be a good idea.
- Lower entry barriers: When many think of real estate, they imagine they would have to invest a large sum of money in order to get started but this is not necessarily true. Especially in times like these due to the COVID-19 pandemic, one can get a single piece of property for a fee that is not too high and begin to pay off the mortgage and other associated fees with the rent derived from it. Needless to say, real estate as a business does not necessarily mean and exuberance entry fee.
On the surface, one might wonder why Baker would choose to make the leap from car dealership to real estate as a business but the above shows that it is a profitable niche to enter with a world of benefits for those involved.