Real Estate in Nigeria, most especially in Lagos has become one of the goldmines in the country. It is one of the best ways to build a sustainable stream of income.
If you understand how the industry works, you should be able to make a lot of money from this line of business.
Despite the lucrativeness of the real estate business in Nigeria, there are still some loopholes that can limit your ability to make a fortune in the industry. This is why we at Moart Company Limited have come up with a means by which you can make money while sleeping as a property owner. We’ll talk about this in another article.
As an investor in real estate or an aspiring one, you can learn to avoid some of the mistakes people make when they venture into real estate investment.
In this guide, we’re going to discuss extensively about Real Estate Investment in Nigeria, what you need to know about real estate investment, how real estate investment works, how to invest in real estate, the advantages and many more.
I’ll advise you to stick to the article to the end because there is a lot of value you can get if you read to the end.
Without us wasting too much time, let us dive into the topic of today’s discussion.
Also Read: OVERVIEW OF THE REAL ESTATE MARKET IN NIGERIA
Also Read: LAND BANKING A GOOD INVESTMENT VEHICLE
How Does Real Estate Investment Work? (Real Estate Investment Explained)
Real Estate investment is more of a financial strategy that involves the ownership, management, rental, and purchase of properties with the sole aim of making a profit. With this mentioned, you’ll realise that the real estate business comes with a lot of possibilities when it comes to profit banking.
There are several ways in which you can actually invest in real estate. But one thing you need to understand is that real estate businesses solely rely on different economic factors to make you some profits.
When we talk about these economic factors, we’re simply referring to the increase in the value of properties because the cost of owning and maintaining a property must not exceed its increased value.
In the real estate investment business, there are different investment properties. This is why as a good investor, you must be able to choose based on your needs. This can either be a long-term or short-term investment. It will help you determine the way your profit will be coming in.
Some of these properties fall under the category of fast-turn investments due to the fact that those properties buying and selling processes are always quick. Some professionals will call it properties “flipping”. When you consider using the long-term investment option for your real estate business, you can buy a property and rent or lease it out for some years. This might be a long period of time. As time passes by, the property will begin to increase in value, then you sell off.
When you look at this investment option, you’ll notice that the investor is banking profit using two different strategies.
Let me give you an example that clearly explains what I’m talking about.
As a property owner or investor, you can buy a property for 10 million Naira. This property might be situated in a location like Lagos where properties are of high value due to the population of people in Lagos and the high demand for residential buildings. Your property can be rented out with a projection of 5 years to get back your investment of 10 Million. After 5 years have elapsed, you can then sell the property for a value of 13 Million. With this, you must have made a profit of over 13 Million Naira within the span of 5 years.
Not everyone can wait patiently for 5 years, but if you must make a huge profit, then I believe 5 years is good enough to make X2 of your investment.
How To Invest In Real Estate (5 Investment Options)
In the real estate business, housing is not the only investment option in the business. There are so many options out there for real estate investors in Nigeria. Some of them are not physical properties, but they can make you so much money when done properly.
Below are different ways to invest in real estate with different reasons why you should consider investing in real estate.
Property Flipping
The property flipping option in real estate is a type of real estate investment strategy whereby an investor purchases a property with the aim of selling and not using it for the sole purpose of making a profit. The investor’s “Flippers” buy his desired property to hold for a short period of time then sells off once the value of the property has increased in the market.
In property flipping, there are two major approaches to property flipping
- Repair and Updates
- Hold and Resell
Repair and Updates
As the name implies, as an investor using this option, you can buy a property which you believe will increase in value due to different factors and then make some maintenance and updates.
Once you complete the repair process and sell off at a higher price.
Hold and Resell
This type of flipping is different from that of repair and update. This involves more of buying a property and fixing it up, you accept the market value is rising, hold for a few months, and then sell at a profit.
The only setback with this type of flipping is the limited cash flow into your business. The reason is due to the fact that the longer you hold a property, the lesser money you make.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) are more of a company in the operation, ownership, and finance income generation. In this real estate investment, assets are placed under the professional management of a company in other for individual investors to earn dividends from real estate without them having to buy, manage, or even finance any properties themselves.
With this, all of the companies under this form of real estate investment scheme always ensure that their Real Estate Investment Trusts are publicly traded on different securities exchanges, and investors will have the option to buy and sell them just like how it is done in the stock market throughout the trading session.
Renting Of Properties
This form of real estate investment option involves the renting out of office and residential properties.
This form of real estate investment has to do with buying properties and then renting them out to tenants or companies. The rental of properties automatically makes you a landlord at the same time, makes you responsible for the payment of the cost of maintenance of the property.
Despite the fact that this form of investment looks profitable and easy to run by anyone, it also comes with a downside. Some of the major challenges being faced in this form of real estate investment is the problem associated with having bad tenants in your property. Some of these tenants might cause a lot of trouble to their fellow tenants, or even cause trouble by damaging your properties.
The renting of properties as a real estate investment requires time, work, and dedication to maintain your investment (Rental Property).
Real estate investment groups (REIGs)
Real estate investment groups (REIGs) are businesses that solely focus their resources on real estate investment. Their major focus and purpose are for real estate investment groups to buy, renovate, sell, or finance properties with the aim of making more profits. If you are looking forward to making money from this line of investment, you’ll not necessarily need to be a landlord.
These companies will ensure they build different properties, most especially residential apartments. The company will now allow investors to buy them through the company by joining the group. As an investor, you’ve got the liberty to own as many units of properties, most especially self contains. This doesn’t mean that the company doesn’t manage the home units and takes care of maintenance, advertising, and finding tenants. In exchange for this management, the company takes a percentage of the monthly rent.
Online Real Estate Investing Platform
These are online spaces for connecting investors who want to finance projects to real estate managers. These platforms have opened up pooled fund real estate investing to everybody. An investor expects to receive monthly or quarterly distributions in exchange for taking on a significant amount of risk and paying a fee to the platform.
Conclusion
We hope you find this article helpful, if you do, don’t forget to share it on social media. This will encourage us to write more informative, Insightful, and educative articles like this in the future. You can check out our available lands for sale on our product listing page. We have different affordable lands you can buy in fast-developing estates in Lagos, Nigeria. These lands can be acquired through our various instalment packages if you’re currently not financially buoyant to pay for the land. These packages range from 3-6 month monthly instalment payments.
We at Moart are here to serve you. Our aim is to ensure Land Lords Grow Rich While In Their Sleep. You can contact us from our contact us page or better still, you can place a call. We’ll be looking forward to hearing from you.
