HOW TO MAKE REAL ESTATE INVESTMENTS IN NIGERIA AND IMPORTANT THINGS TO CONSIDER BEFORE YOU DO - Engraced Choice Properties

Engraced Choice Properties

HOW TO MAKE REAL ESTATE INVESTMENTS IN NIGERIA AND IMPORTANT THINGS TO CONSIDER BEFORE YOU DO

Real Estate Investments in Nigeria

One of the main ways to generate consistent income streams is through real estate investing. While real estate investments in Nigeria presents a variety of chances to increase wealth and financial security, there are many pitfalls that may restrict how much you may earn. It’s important to conduct extensive study and educate yourself on the legal ramifications of real estate before you get started in order to prevent making expensive missteps.

We’ll walk you through the various options to invest in Nigerian real estate in this article. Additionally, we’ll be outlining their advantages and disadvantages for you.

As an added bonus, we’ve also provided a thorough list of the fundamental factors you should take into account before starting a real estate investment enterprise in Nigeria.

How Does Real Estate Investments in Nigeria Work?

There are various sorts of investment property, and wise investors base their decision on whether they are looking for profits in the short or long term. The practice of purchasing a property and selling it rapidly (often known as “flipping”) is referred to as fast turn investing. Purchasing a property for long-term rental or lease and earning income from both the rent and the property’s rising value is known as long-term investing.

The management, ownership, acquisition, purchase, rental, and/or sale of a property for profit constitute a real estate investment. similar to what you could encounter with a Nigerian real estate firm. Although there are numerous real estate investment strategies, they all rely on the same economic conditions to be profitable. The property’s worth must rise as the initial component. Additionally, the expenditures of owning and maintaining the property cannot be greater than its increasing value.

How to Make Real Estate Investments in Nigeria?

Despite the country’s present economic crisis, the real estate industry is currently growing in Nigeria and making people millions of dollars. The most common ways to invest in real estate are listed below.

  1. Rental properties

Land ownership and investing in rental houses are both established traditions. After purchasing a property, you rent it to renters. The upkeep costs of the rental property are your responsibility as the landlord.

For individuals with DIY and restoration abilities and the patience to supervise tenants, investing in rental houses may be a rewarding enterprise. Even while this tactic doesn’t need much money up front, it does need a lot to pay for maintenance and cover the months when it’s empty.

Pros:

  • Regular income is provided, and properties may appreciate in value.
  • leverages resources to increase returns
  • Associated costs are deductible from taxes.

Cons:

  1. Tenant management can be tedious.
  2. Possibility of property damage by tenants.
  3. Possible vacancies lower revenue

When you own rental properties, you become a landlord with a lot of duties. You must be actively involved in managing and caring for your property. If things start to feel too stressful, you might pay for the services of a professional manager.

2. Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts are unfamiliar to many people in Nigeria (REITs). The Securities and Exchange Commission (SEC) oversees collective investment plans known as real estate investment trusts, or REITs (SEC). These schemes pool the money from investors to buy mortgage loans, income-producing real estate, or a mix of the two.

For those who want to own rental properties but don’t want the effort of managing them, real estate investment groups (REIGs) are the perfect option. Access to financing and a reserve of funds are necessary for an investment in REIGs.

A single investor may hold one or more self-contained living units in a REIT, and the investment group takes care of managing each unit on the investor’s behalf, including upkeep, advertising vacancies, and conducting tenant interviews. tenants. The business receives a portion of the monthly fee in return for performing these management duties.

Pros

  • Renting involves less involvement than owning rentals.
  • The asset generates revenue and appreciation.
  • An alternative to stocks and fixed-income assets is real estate investment.
  • As compared to direct real estate investments, REITs offer more liquid assets for sale that can be easily sold to raise money or take advantage of other investment possibilities.

Cons

  • Vacancy issues
  • the same costs as mutual funds
  • Easily manipulated by dishonest managers

REITs are a good investment for stock market investors who want consistent income, much like dividend-paying equities. In addition, REITs are quite liquid and let investors invest in non-residential properties like shopping centers and office buildings. To put it another way, you won’t need a realtor to assist you in getting your investment back.

3. Real estate investing

Investing in real estate is buying and selling properties quickly for a profit. It is among the best investments one can make, and the owner needs to put in little to no effort. You are prepared financially and are knowledgeable about land ownership and the purchasing and selling procedure.

If you wanted to make hundreds of millions of dollars, you would need a lot of cash, but you could start small by purchasing just one plot and work your way up to purchasing tens of plots and acres, selling them continuously all year long.

Flipping houses involves a lot of real estate expertise, marketing, and restoration. One needs the necessary funds and the ability to supervise repairs when they are required for house flipping to succeed.

Pros

  • capital is committed for a shorter amount of time.
  • can provide prompt returns

Cons

  • needs more in-depth industry information
  • unexpected cooling in hot markets

Because they rarely save enough uncommitted cash to cover the mortgage on a property over the long term, flippers who are unable to rapidly sell a house may run into problems. Losses may snowball as a result of this.

4. Development of Property

Real estate development requires a lot of capital. In this scenario, properties are bought in desirable locations, renovated into opulent apartments, buildings for commerce, etc., and then sold at a very high profit margin.

For instance, if you invest N200 million in building a home in a prime area, you should anticipate receiving at least N400 million when you sell it. When thinking about property development, a good site is essential.

Real estate investment is just the beginning. Within these instances, there are innumerable real estate investing possibilities. The real estate market has a lot of promise, but like with any investment, you need exercise caution, perform your due diligence, study, and balance the pros and cons before acting.

THINGS TO THINK ABOUT BEFORE INVESTING IN NIGERIAN REAL ESTATE

Only 37% of Nigerians were home owners in 2011. For potential investors and the general public, information is the key to closing this information gap. Additionally, by streamlining the procedure, obstacles to investment in the industry can be removed.

These 8 steps should be taken into account if you want to invest in real estate.

1. Research your topic

There are many platforms where you can find the information you require if you are interested in the real estate market. The mainstream media, the internet, your surroundings, and interacting with locals are a few of these outlets. For search phrases on Google and other pertinent Nigerian real estate websites, you can set up Google alerts. This way, you’ll always be current.

2. Select The Particular Real Estate Market

Depending on your objectives, pick the industry that will benefit you the best. It could be a workplace, commercial property, shopping mall, or apartment. For instance, investing in residential real estate might not be the ideal choice if you’re looking for a quicker return.

3. Locate Real Estate Booming Markets

Although they might not be growing right now, improvements in the infrastructure and improved access to the core business areas could soon change that. Building a highway eases traffic, and since the working class tends to move in that direction, it makes sense to build high-rise buildings to rent to them.

4. Select the Location and Method of Your Fundraising

The source of money may differ depending on where you are in life. It could come from relatives, close friends, or financial institutions. As an alternative, you might have the cash on hand. As you approach the bank or other establishment, be sure you are prepared. To convince them to grant you the money, your strategy must be convincing enough.

5. Pay Attention to Details

Be careful not to do business with somebody you can’t trust. Make sure everything is handled properly, from the owner’s worries to the government obligations, by consulting an expert, such as a lawyer.

6. Be Law Aware

One of a Nigerian’s rights is to own property. The 1978 Land Use Act, however, grants state governments authority over land that is located inside their borders. They go through a lengthy and bureaucratic process before making it available to you. You will get a certificate of occupancy before you can use the land, sell it, or develop it.

7. Consider the future

Your property of interest may not now be near any essential infrastructure, but if it is in one of the ever-growing urban districts, you can’t go wrong. You might sell it for millions more than you paid for it after a few years, compared to when you first bought it. Keep in mind the big picture at all times.

8. Use online advertising

You cannot afford to ignore the Internet as a real estate investor in the Nigerian market. The Internet is a cost-effective approach to drive visitors to your business after it is up and running, regardless of whether you have a website or maintain a social media presence. You might be able to attract customers or sellers with online marketing.

In Summary;

The finest choices when it comes to buying real estate in Nigeria are those that benefit you as the investor. Take into account your time, resources, and desire to handle any arising domestic concerns.

How would you like to know the best real estate investment to start with? Right time? The right time to invest is always now! Click here to talk to us Or Check out our ongoing projects you can invest in.

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