How To Invest In Real Estate In Nigeria
I know you're here because you're probably thinking of investing into real estate in Nigeria, and you want to know some of the strategies you can use to achieve your goals. But before we proceed, let me explain to you, what real estate investment is. Read On.
What is real estate investment?
Real estate investment is a business that involves the management, ownership, purchase, rental, and sale of properties for profit.
There are several ways of investing in to the real estate business, which I'll be sharing them with you shortly.
There are different types of property investment, and you can choose to invest using one or more of these strategies based on your needs, budget and expertise.
By 2011, only 37% of Nigerians were house owners and the numbers keeps increasing every year. Therefore if you're thinking of investing into the real estate industry, then I'll advice you go ahead.
How To Invest in Real Estate in Nigeria
1. Rental
Imagine you own a house(Flat) and you rent out all the rooms to tenants, every year, you’ll be receiving house rent as a landlord or landlady.
Investing in rental properties is an age-old practice as it's land ownership. You purchase a property and then rent it out to tenants. As the landlord/landlady, you are responsible for paying the costs of maintaining the property.
Rental properties can be a lucrative business for those with do-it-yourself (DIY) and renovation skills, and who are patient enough to manage tenants.
Although this strategy does not require significant capital, it does require substantial funds to cover the maintenance costs and to cover vacant months.
Advantages Of Rentals
- Provides regular income and properties can increase in value
- Leverages capital to maximize returns
- Associated expenses are tax-deductible
Disadvantages Of Rentals
- Managing tenants can be tedious
- Tenants could potentially cause damage to property.
2. Land Flipping
This involves buying a piece of land, and reselling it for profit when it appreciates. It is one of the smartest investments one can make, and it requires little to no effort on the part of the owner.
In terms of money as well as knowledge of land ownership and the buying and selling process, then you are good to go.
However, you would need a substantial amount of money if you want to make hundreds of millions, but you can start small by buying just one plot and grow to buy tens of plots and acres and keep selling them all year round.
The process of flipping houses requires extensive real estate experience, marketing, and renovation. For house flipping to work, one must have the capital and be able to oversee repairs when needed.
Advantages Of Land Flipping
- Ties up capital for a shorter time period
- Can offer quick returns
Disadvantages Of Land Flipping
- Requires a deeper market knowledge
Hot markets cooling unexpectedly
Flippers who are unable to unload a property quickly may find themselves in trouble because they rarely keep enough uncommitted cash to pay the mortgage on a property over the long term.
3. Property Development
let me show you, for instance, imagine you buy a land ( 500,000 ) in a good location, and you spend 10million to build a house on it, and you latter sell the house for 20million! How much profit is that? 9500,000! That's how wonderful this strategy is.
Property development is a very capital-intensive industry. In this case, properties are acquired in nice spots, redeveloped into luxury apartments, commercial structures, etc., and then sold at a really high-profit margin.
For example, if you spend N200 million developing a house in an amazing location, expect to sell it for at least N400 million. A good location is critical when considering property development.
Investing in real estate is only the tip of the iceberg. There are countless variations of real estate investments within these examples.
As with any investment, there is much potential in the real estate sector, however, you should make careful decisions, do your homework, research, and weigh out the costs and benefits before taking action
So Decide on the specific property market Depending on your goals, pick a sector that will benefit you more. It could be office, industrial property, retail centres or residential units.
For instance, if you want speedy returns, investing in the residential market may not be for you.
According to a developer in business day article, a shopping mall in Nigeria is sold off before it is even complete while residential units take several years to actually sell out.
Identify booming real estate markets
They may not be booming now but owing to infrastructure development and ease of access to central business districts, that may be changing soon.
Where a highway is constructed, it eases traffic and the working class tends to move in that direction, making it a worthy cause to build high-rises to rent out to them.
What does this mean?
If you have identified residential real estate as your interest, you need to target the middle class.
Nearly half of the middle class in Nigeria (people earning an average monthly income of N80,000–N100,000) are purchasing goods or planning to do so to improve their lives as years go by. This indicates a significant consumer boom
The Real Estate sector is currently booming in Nigeria and people are making millions in it, irrespective of the economic downturn, it can be seen as a real money-spinner.
You don't have to use all the strategies listed above. If you're new to this industry, I'll advice you stick to one strategy until you've gained more experience then you can use all the strategies.
Conclusion
I know you're probably thinking of investing into the real estate industry this year, please I want to encourage to you to proceed with those plans and dreams as the real estate is a money making industry.
But I also to you to be sure about the real estate company you'll be working with. You can check here for a list of some genuine real estate companies you can choose from.
And also check out some lands for sale in Nigeria.
Comments