Do you want to know how to start your own commercial real estate investment in Nigeria? Do you know how to make the right real estate investment? Have you thought about how to Start investing in properties but you don’t want to fall into the wrong hands?
The first thing that most people imagine when you talk about real estate is the huge capital need. But there is also real estate business you can start with little capital.
In fact, everybody is involved in real estate, even if you are just a tenant. Maybe not the investment side. So, it’s for your own interest if you understand how real estate investing works and how to become a beneficiary.
However, there is also such a thing as bad real estate investing. In fact, many Nigerian have made a bad real estate investment. It may be buying above the value of a property. Or you may have built office spaces in a residential area.
You need to know the right decision to make when investing in real estate. Sometimes, the agents mislead their clients to buy the wrong properties. They care more about their commission. You have to be real estate literate to know how to invest wisely.
What Is Real Estate Investment?
According to Wikipedia, Real estate is a “property” consisting of land and the buildings on it, along with its natural resources. These resources include crops, minerals or water; an immovable property of this nature; an interest vested in this (also) an item of real property. But more generally lands, buildings or housing properties.
On the other hand, real estate investing is the act of making one’s living or making money by building or buying and selling real estate properties. Simply put, it is any real estate activity or enterprise entered into for profit.
Any transaction that involves real estate properties is part of real estate investing. Even if it’s described in this startup guide.
Why Choose Real Estate Investment
There 3 reason many invest in Real estate business. Here are the reasons below:
- To enjoy good cash flow
- Because real estate investment works all the time
- The increase in value of properties over time
Cash Flow Advantage
Cash flow is the first reason anyone should consider investing in real estate business. When you buy real estate with the right strategy and risk assessment, you are able to get a decent cash flow every month.
Consistency In Value
The second reason is that real estate has consistently proven to add value to your investment. Historically, real estate has been one of the main avenues of wealth creation throughout history, only next to Stocks. So, your investment in properties is sure and proven to create wealth for you.
Value Creation Potential
The third on my list is about value creation potential of real estate business. People will always need a place to stay, so your home will only rise in value as demand for housing increases in that location. As the world’s population increase, and it’s now even more faster than before, there will be more greater need for housing than there has been in the past.
Here are also some important benefits of Owning Real Estate:
- Tax benefits
- Cash flow
Types Of Real Estate Investment
There are four types of real estate in Nigeria. The real estate investing opportunities revolves around them. The list includes:
- Land for sale
The property comprises empty lands, farmlands and ranches. The residential estates include new constructions and resale homes. And these are condos, co-opts, town-houses, duplex, triple-decker, quadplexes, high-value homes, exterior.
Planning Real Estate Investment
Real estate is the investment in property, commercial or residential. It’s either on houses For rent or homes for sale. And there are three parties involved in any real estate transaction. The buyer, the owner and the realtor or agent.
The buyer is the willing investor. And the seller is the captive investor. While the agent is the umpire investor. Because the buyer has a choice to buy or not, that makes him willing. But the seller needs money or profit. So, he is a captive of the buyer. While the agent is just an umpire.
It works like this in every real estate transaction. Although sometimes the case reverses between the buyer and the seller. But the umpire is usually the same. That’s why real estate investors are the richest in the business.
They play the role of the three parties. Sometimes they are the buyer or the seller. But most of the times they the umpire. So, they never lose. They are playing all sides if the real estate game. When it’s cheaper, they are the buyer. When properties are high, they turn into the seller. And the never lose.
Going into property investing makes you the buyer, seller and the agent. All three in one. And a real estate investor is involved in the following.
- Houses For Rent
- Houses For Sale
- Homes For Sale By Owner
How to Buy Cheap Land For Sale
You can buy cheap lands anywhere in Nigeria. All you need is to understand how to buy properties that have potentials for profit. It’s not every cheap land that is profitable. But that are features of the valuable cheap land.
Here are what you should for before buying any cheap land:
- Where the land is located in the first consideration.
- What are the major landmarks in the area? Like School, industries, seaport, refinery, a unique government project.
- What is the possible habitation? Like how soon can people migrate to that area?
- Has any significant real estate investor bought properties in that area recently?
- Would anyone live there for the next twenty years?
- How fast can the land be sold to a buyer?
Also, you can find cheap lands even within an expensive or high brow area. All the factors I mentioned above may or not apply. But cheap lands in a highbrow area would need proper investigation before purchasing to avoid fraud.
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Examples Of Cheap Land For Sale
I will use Lagos as an example. There are affordable locations in Lagos where you can buy cheap lands now. These locations are suburbs in Lagos, and they are growing at an alarming rate.
These cheap suburbs are being pushed up by current development by the government. The following areas in Lagos are more affordable to buy now.
- Ikorodu area
- Agbado area
- Epe area
- Agbowa area
- Akute area
The land properties in some of these locations sell between N300,000 to N1 million. Although, prices are going up as demand increases. Some people have also bought to sell it when the price goes up.
Places like Epe see price increases. And if you understand the Lagos property market. These places will soon be the new Lagos. The rent prices in Lagos is choking on the cost of living.
So, people are making choices for cheaper accommodation. And these suburbs are the next affordable rents for Lagos. It’s going to see a surge in rental demand in a couple of years from now.
Tips to Buying A House
Any property you are buying in Nigeria, there is a process to follow. Whether it’s buying a house, land or an estate, the process is the same. You have to be extra careful when purchasing properties.
The risk is not really about the value or the quality of the property you want to buy. But the fraudulent nature of property deals in the country. See the steps you should follow when purchasing property anywhere in Nigeria.
- Decide the place you want to buy the property
- Decide your budget and work within your budget
- Start your search online and offline
- Involve the services of a property lawyer or consultant
- Compare features and prices
- Conduct a proper search to verify the identities of the property owners.
- Verify all documents about the property before payment
- Convert all necessary documentation of the purchased property immediately into your name.
It’s also vital to have where you want to buy the property in mind. That usually helps to estimate the cost of ownership in that area. And avoid speculative and deceptive prices. Consult a property expert for proper information.
You can compare prices with other areas if you have more than one site in mind. Also, don’t just limit your search through an agent offline. The internet gives you more extensive reach and the advantage of even finding a cheaper deal.
Most property sellers are those who need the money to solve a problem. If you can know the real owner of the property, you can get a better bargain. Property agents usually inflate the prices to make more profit.
Opportunities In Real Estate Investment
There are several opportunities in the real estate business in Nigeria you can tap into. You just need to pick what works for you. Or what you can start now based on the resources available to you.
However, below is a list of what I consider as real estate opportunities for Nigerians.
- Commercial land for sale
- Commercial Property For Lease
- House Or Office For Rent
- Property Development
- Real Estate Agent Or Realtor
Commercial Land For Sale
Buying land properties of retail value is an excellent real estate investment. Apart from buying lands with future value expectation, you can buy land with resale value. You can still find a good deal in essential locations in your city.
It may be empty lands or building. The nature of property makes it change hands faster than you can imagine. And in the hands of someone, the value is high or low.
Sometimes, commercial lands for sale comes up when an owner dies. The demise children might have reason resale. Either to raise money or share the proceed of the will. Such properties are fast buyer option.
Property Space Leasing
Property space leasing is lucrative in mostly brawl areas. Smart property investors tap into the lack of empty spaces in those locations to make money.
It works best if you buy the space. But you can also lease from owners who don’t have an interest in developing it in a long time. And lease out this space for temporary uses.
This kind of lease is needed by churches or car wash owners and mechanics. Then you will charge monthly rent. And if you own the property, you will still earn more value in the future sale as the property is appreciating.
Build House Or Office For Rent
Building rental apartments and office spaces are still a significant real estate investment. Although some people have built at the wrong locations and couldn’t recoup their investment.
It’s always wise to plan such Investment. A property location determines to a large extent the value and the use of such property. Just like every other business, real estate is no different.
Sometimes people live with the idea that all properties are an excellent real estate investment. But that’s not true. You can make a lousy investment in properties.
Office space must only be built where the demand is high. The same with the apartment buildings. And if you discovered that you have made this mistake, you can convert the property to its best use.
There are still many corner pieces around busy cities across the country. The most valuable part of a property investing is the corner piece. They face two streets in a busy place. Their value is not the same as other properties.
Commercial Property For Sale
As a property developer, you are tapping into the gap created mostly by lack of affordable properties in highbrow areas. It’s different from just building common housing or offices for rent. The primary focus is on selling the properties after development.
It’s a just a strategy of developing properties into luxury apartments or offices and selling them at premium rates. Although, this real estate business is capital-intensive. But it very lucrative.
The secret is to find the right place to build the required properties. And then develop the property to a luxury taste. The right feature in the right area is vital. However, you should also be aware of current property rates in the place you want to develop luxury apartments or offices.
Who’s A Real Estate Realtor?
This opportunity can require little or no startup capital. However, it’s the most profitable investment opportunity in real estate. But your primary real estate business is providing help for transactions in real estate.
You can start a real estate agency without even studying real estate management. Although, I recommend you still get some form of training to develop your skills. But it’s one business you can start on a small-scale as well.
The opportunity for a real estate business agency is significant. As a real estate agency, you can do any of the property business while still earning money from your agency services. That means apart from winning commission on property sales, you can buy lands and flip it for profit.
You can offer property Space leasing, build and rent houses and offices and develop properties for sale.
Realtor First Time Home Buyer Tips
If you are a first time buyer this tips would help you a lot. Even if you have been in the business a long time, you will find some tips here you may never have been using.
- Hire an experienced real estate consultant
- Pick the location you want to buy
- Get details about cost of properties in that area
- Budget for all home ownership costs
Points On Real Estate Investment
There are several real estate investment opportunities depending on where you live. But planning your real estate investing should not be confined to one place. Go where you can find value and higher returns on investment.
Point One: Do Your Research
Don’t buy real estate properties as a novice. Always research properties before you buy. Don’t allow agents to push you into rushing to pay. Every real estate investor takes their time to research properties before buying.
The best way to buy properties is to select the area yourself and start your search for a suitable property. It gives you room and time to do your research before buying properties there.
Point Two: Find Out Recent Property Value
You need to know what current buyers paid for a property in that area. Although this may not be final proof of price in Nigeria, it will give you an idea. And you should also find out why the owner wants to sell.
If you know why the owner is selling, you may have real bargaining power. Sometimes, agents usually tell the buyer that the owner wants to move. But most properties are sold out of a need for money. Other reasons are immaterial.
Point Three: Look For Other Attached Value
Sometimes the real value of the property may not be the property itself. Find out if there are other attached values the seller may not even be aware exist. If you want to sell after buying, that may help increase the value of the property instantly.
There are several attach values in real estate business. As simple as an increase in rents in a nearby neighbourhood can influence property values. In anticipating an influx of new neighbours, property owners might increase rates.
Point Four: Define The Reason For Investing
Okay, now you need to be clear why you are buying that property. Although this might change if you have a better option of converting it for more profit. But having a plan in place is the real estate investing.
For example, do you want to sell it after how many years? Or do you want to use it for self? And if for sale, what’s the revenue projection and when is the possible cash out time?
Point Five: Invest Only In Cashable Properties
This one is important for real estate investing. Don’t buy properties that don’t have recouped time. If you are buying for your grandchildren also make sure it’s cashable. Any property you can’t sell quickly when you need cash may not be a good investment.
That way, you should spread your properties as well. That would help you revert to an area for safety when you need to raise money fast. You don’t want to find yourself tanked by any government policy or natural disaster that hits an area and devalued all properties in such area.
A real estate investing is a plan against time. You cannot invest in real estate and be worried about your future. That is why some believe that real estate investment can make you live longer.
However, the most important real estate is land. And there are essential features of a property. They are unmovable properties. It can only be one such property in that place. You own both what’s on top and underneath.
And you can also tap into the virtual lands. Real estate opportunities abound everywhere you look. forever, men will continue to buy and sell real estate. And it doesn’t end in just domain names.
You can start a buy or rent platforms online. We have great examples like propertyng.com, tolet.com.ng and several others in the Nigerian real estate market.