Real estate investment in Nigeria has been what a lot of entrepreneurs want to venture into, as it becomes more and more popular.
Investing in real estate is one of the things that can secure your future in terms of finance, as it is a good source of passive income.
If you’re an entrepreneur or even a salary earner in Nigeria that wants to channel your income into a long-term investment, real estate is a good option. With it, you don’t have to work actively again when you’re old or retired
In fact, if you’ve been watching YouTube, you would have come across lots of young entrepreneurs having a real estate portfolio worth millions if not billions of naira across the country.
Do you want to know how they did it? Then keep reading, because that’s why we’ve curated this article to show you exactly everything you need to know about real estate investment in Nigeria. These include, how to invest in real estate, how much it costs, as well as tips and tricks to be successful as a real estate investor in Nigeria.
Without further ado, let’s get started!
What is Real Estate Investment
Real estate investment involves buying, managing, and selling or renting out a property(s) including homes, lands, and apartments for profit.
Someone who does all that listed above is known as a real estate investor, or a real estate developer.
Real Estate Investment in Nigeria
Investing in real estate in Nigeria is very easy as all that is required is the money needed. This is because unlike in other countries like the US, you don’t need a lot of paperwork to own a property in Nigeria.
The real estate industry is a very profitable one in the country as there have increasingly been demands for properties, especially in cities like Lagos, Abuja, Port Harcourt, Asaba, and Ibadan.
Investing in real estate is also profitable in other parts of the country as well. In fact, the market is still untapped in some states. That means, you still have a high chance of success in becoming a real estate developer in Nigeria.
So, let’s see how to invest in real estate in Nigeria.
How to Invest in Real Estate in Nigeria
As an entrepreneur, there are multiple different ways of venturing into the real estate business as an investor, and they include:
1. Rental Properties
The most popular real estate investment practice by lots of people in Nigeria is rental properties. This involves purchasing a property and then renting it out to tenants.
Owning rental properties is very profitable in Nigeria, as they are usually built as “Face Me I Face You” in most parts of the country. Although with new ideas from real estate developers, rental properties can be townhouses, apartment buildings, and even duplexes, as they generate more profits than the traditional “Face Me I Face You” houses.
Regardless of the type of rental property, owning one requires a lot of patience as a landlord. Also, you are responsible for paying the costs of maintaining the property.
2. Real Estate Investment Trusts (REITs)
Although not so popular in Nigeria, real estate investment trusts (REITs), are collective investment schemes regulated by the Securities and Exchange Commission (SEC). This scheme is created when a corporation sources investment capital from investors to acquire income-generating real estate or mortgage loans, or a combination of both.
Here’s how it works – You as an investor looking for a REIT, put down your money (to be joined with other investors). Then, the corporation uses all the investors’ capital to buy a big real estate, where each investor will own several units/properties from which they will be generating income.
In a REIT, a single investor can own one or several units of self-contained living space, and the corporation manages all of the units on the investors’ behalf, including maintenance, advertisement, as well as interviewing potential tenants. Then, In exchange for conducting these management tasks, the company takes a percentage of the monthly rent.
3. House Flipping
Another way real estate investment in Nigeria can be practiced is house flipping. This involves buying and reselling real estate for profit.
This method of real estate investing is the quickest way of making money from the industry in Nigeria, as there are always properties up for sale in most parts of the country. It requires little to no effort from the investors, and also, there’s not much property ownership and continuous maintenance experience required.
House flipping requires a lot of money to start, as you need to buy and renovate properties before reselling. As an investor going into house flipping, you must be able to quickly take note of repairs when needed and have a little knowledge of renovation.
4. Build and Sell
If you’re looking to invest in real estate in Nigeria and make huge returns quickly, building and selling real estate is a good option.
Just like the rental property, this real estate investment method involves building, but instead of renting out, you’ll be selling the property once the project is completed.
Build and sell real estate investment in Nigeria is becoming popular, especially in Lagos and Abuja where there are more investors willing to buy real estate to turn into rental properties.
Just like house flipping, investing in real estate using this method requires a lot of money, as developers are responsible for the cost of land, as well as building the structures. Although, it generates a lot of profits in the end, as real estate sells for hundreds of millions if not billions of naira in Nigeria.
5. Land Flipping
Although rental properties, house flipping, and building and selling are the most popular ways to invest in the real estate business in Nigeria, land flipping is also a great real estate investment.
Land flipping can be practiced profitably in any part of the country, as there are still enough lands without any structures or buildings on them in Nigeria. This method of approaching the real estate industry as an investor is very profitable as you can buy a plot of land for 500,000 Naira, and resell it for 1 million naira after a few months.
How to Be Successful as A Real Estate Investor
Investing in real estate could be the best investment you’ll ever make if it goes well. However, if done the wrong way, it could be the worst. Therefore, there are some steps real estate investors should follow to be successful, and they include:
1. Understand What You’re Getting Into
As a beginner, before owning your first property, you must first understand the industry and how it works. Of course, it’s real estate, everybody knows it! However, there are some hidden things that you’ll only know after starting, such as:
It Requires a Lot of Money
To invest in real estate, you must make sure that you have a substantial amount of money in your bank account because there’s more to invest aside from purchasing the property such as renovation costs, and the cost of some documents.
It Requires Patience
Of course, everything “investment” takes time, but real estate investment takes more time. For instance, if you own a rental property, you can expect to start making money right off the bat, it takes years to start bagging in profits. Therefore, real estate investment is a long-term game.
Understand the Role of Government
The Nigerian government also has some roles to play in the real estate industry which all investors need to know and keep in mind.
From ratification, and giving titles to approving transactions, and governors’ consent, not understanding the role of government in real estate could get into trouble.
Risk is Involved
Real estate investment in Nigeria comes with a lot of huge risks which could lead to loss of money. These risks involve fraud, collapsing of property, and also, government order, especially in cases of infrastructural development.
Knowing all these risks beforehand would prepare you, and prompt you to do more research on the areas where you want to start.
2. Learn From Successful Real Estate Companies and Investors
Companies like Mixta Africa, Revolution Properties, Landswey, Cosgrove, Rendeavour, etc., have seen a lot of success in the real estate industry in Nigeria, and also left some footprints behind for beginners.
Things get easier when you have someone you look up to. As a beginner, to be successful, you need to look into other real estate investors’ and companies’ success stories. Study what fueled their success, and how they’ve managed to tackle all the challenges and continued to thrive for years.
Doing this will help you a lot, as you’ll be prepared for what may come your way, and of course, you will find your way through hard times.
3. Work with the Right Agent
As an investor, chances are you’re more likely to work with real estate agents than not. This is because they are the ones that source properties for many developers, as well as look for clients (tenants, and even investors).
However, in most cases, some real estate agents here in Nigeria are not trustworthy (they are 419). So, to be successful as a real estate developer in Nigeria, you need to make sure that you take your time and look for a good agent to work with.
4. Choose the Right Location
In real estate, location is key! The location of your property determines its value. For example, a 3 bedroom bungalow in Lagos could sell for 30 million naira in Lekki, while that same type of property may cost 10 million naira in Magodo, Lagos.
Also, the cost of rent varies across every area and states across the country. Therefore, the more valuable the place your property is located, the better. E.g, you can’t compare the rent at Port-Harcourt, and Asaba, to the rent in Lokoja, Kano, or Akure.
5. Take Advantage of Valued Areas
Following from the above, to quickly make a lot of money from real estate, you need to also take advantage of valued areas such as areas of government interest.
These areas include places in the town where there is currently infrastructural development like the construction of roads, rail tracks, bridges, and so on.
Once those infrastructural developments are done, people are more likely to relocate to that area, making housing cost high at that time, which in turn, make you a lot of money.
6. Expand Into Other Real Estate Categories
As a beginner, it is really advisable to start small and grow. Once you own a few properties, e.g rental properties, you can venture into the build and sell or flipping category of the business where quick money can be made and vice versa.
Investing in Real Estate in Nigeria – FAQs
Can I invest in real estate in Nigeria?
Yes, you can invest in real estate in Nigeria and make a lot of money.
Is buying property in Nigeria a good investment?
Yes, Nigeria is a good place to invest in real estate, as there are more population and high-demand properties.
Can I invest in real estate with no money?
The only realistic way to invest in real estate with money is through sellers’ financing. However, here you’re more like an agent than an investor.
How do I start investing in real estate with little money in Nigeria?
The best way to start investing in real estate with little money in Nigeria is through land flipping. Lands are still very cheap in most parts of the country, for example, you can get a plot for 200K and resell for 250 to 300K.
Real estate investment in Nigeria is undoubtedly the best investment anyone can put their money into, and make lots of money in the long run. If you’re looking to start, I believe this post on how to invest in real estate in Nigeria has covered everything you need to get started.