Real estate business in Nigeria has started booming in recent years making people crazy amounts of money without having to work.
If you’re on YouTube chances are you might have come across some videos where apartments are sold for millions of naira in Lagos and Abuja. Just imagine how much profit (millions) will be made from just that one deal not to talk of having tens of such properties.
Although many businesses as profitable as this in Nigeria may be saturated or difficult to venture into, real estate is still kind of untapped/unsaturated in most parts of the country, so now is the best time to start.
If you’re looking to start a real estate business in Nigeria, or you want to know more about the business, search no further for you’ve just landed on the right blog.
Here today, we will be discussing everything including what real estate is, how the business works in Nigeria, the cost of starting, its profitability, how to start, how to succeed, and along the line, you’ll get to know the best places to start real estate business in Nigeria right now.
Without further ado, let’s get started!
Table of Contents
What is Real Estate
Real estate simply means property(s). That is a collection of buildings and/or lands. Looking at it from an entrepreneurship perspective, Real estate is a business that involves buying and selling or renting a property/properties such as buildings, lands, homes, shops, etc.
How Real Estate Business Work in Nigeria
With the constant increase in population day by day in Nigeria, people need property either for residential or commercial purposes, thereby increasing the demand for real estate, and opening the market to investors, and even real estate agents in the country.
In the past years, if you’re conversant with YouTube, you would have come across lots of channels in Nigeria that talk about real estate, review homes, and properties, and also give tips about the real estate market in Nigeria.
That means it’s just a matter of time before this business becomes more competitive in the country. Therefore, you need to get into the business now as there are still chances of success.
Now, how do you get into the real estate business in Nigeria?…. There are two ways! Is either you venture into the business as an investor or as an agent.
Who is a Real Estate Investor?
A real estate investor is a person who puts money in the line to purchase and own properties with the aim of generating money from them daily, monthly, and/or yearly through rents and outright sales. They are also known as real estate developers.
To become a real estate investor, you need to have a lot of money, and also be able to take huge risks. Although it is the most profitable approach to the business.
Who is a Real Estate Agent?
A real estate agent is an individual who represents sellers and buyers of real estate (usually investors). They are also known as brokers.
A real estate agent works independently, although sometimes under a licensed broker to represent clients.
Unlike becoming a real estate investor, you do not need a huge capital to become an agent. Therefore, let’s see how much it costs to start a real estate business in Nigeria both as an investor, and an agent.
How Much Do You Need to Start a Real Estate Business in Nigeria?
Like I said earlier, the real estate business is a million naira business in Nigeria, so you should be expecting the startup cost to be high, I guess!
Of course, it is! Although the capital to start a real estate business in Nigeria varies depending on your approach. That is becoming an investor or an agent.
To become a real estate investor in Nigeria, you need at least a capital of 5 million Naira to start depending on your location. For example, in some parts of the country, you can get a property for 3 million Naira, renovate it with 2 million Naira, and start from there.
On the other hand, you need little to no startup capital to become a real estate agent in Nigeria.
This is because you can start unlicensed, and look for properties for sale or rent (usually from the locals) then connect the buyers and sellers for a fee. Although, you’ll need to be licensed later on in order to work with bigger investors. We’ll get to that later in this article…
How to Start Real Estate Business in Nigeria: Step-By-Step Guide
Now, let’s discuss how to start a real estate business in Nigeria, after all, that’s what you’re here for.
Here’s a comprehensive step-by-step guide to start a real estate business in Nigeria.
Step #1: Understand the Real Estate Market in Your Area
You may be wondering – What does market research have to do with the real estate business?
Don’t forget – it is a business, and just like every other one, you must do your research, know what’s working, which way to go about it, what to know, the do’s and don’ts, the business requirements, and so on.
Since the value of property varies across every location, some of the things to research are the prices of properties in your area, cost of labour (if required), best places to own a property, agent’s fee, and so on.
To achieve this, you need to look for people already into the business such as investors or trustworthy agents. Then build a relationship with them, and get as much information as possible.
Step #2: Pick a Niche
Now that your market survey is done, you should know the best way to approach the business based on where (location) you want to start.
Thankfully, we’ve discussed the two major niches of operation in the real estate business above. Now it’s over to you to decide on the one that best suits your lifestyle and professional goal.
Although, becoming a real estate investor or agent is the major niche, to get you a clearer picture of these niches, let’s break the niches further down, and also discuss your role based on each niche.
Apart from becoming a real estate developer and agent, below are some other sub-niches you can consider while looking to start a real estate business in Nigeria.
Land Reseller (Land Flipping)
Land flipping or reselling in real estate involves buying land at an extremely low price and reselling later when the value appreciates.
This sub-niche falls under the real estate investment field and is very profitable as you can use the land for farming or other stuff for a few months to years before reselling, although it requires patience and lots of money.
Property management popularly known as “CareTaker” in Nigeria is also a sub-niche in the real estate industry. It falls under the real estate agent’s field and is very profitable.
As a property manager, your job is to make sure that tenants follow the rules and regulations set by the owner of the property, and also pay their rent on time, from which you make money.
That means with this niche, you don’t need to have a property to your name, yet you’re still entitled to a certain percentage on every rent received (usually from 8% to 15%). Although, “truth be told”, it’s really hard to find a client for this niche.
Another sub-niche in the real estate investors field is the property lease. This involves buying or building properties (usually homes and apartments) mainly for rent.
This approach to the real estate business is the most profitable, as you can make lifetime money from it. Although not profitable from the start, you’ll only see success in the long run.
Build and Sell
Build and sell is one of the most popular approaches to the real estate industry in Nigeria. This involves building and selling homes and apartments for a very high value.
People go with this approach because you can make your profit within a few months, unlike a property lease that takes years to break even. Also, unlike property lease, little risk is involved in buying and Selling, as you don’t have to care for maintenance and governmental issues (we’ll get to that later in this post).
Property flipping is just like land reselling, just that this involves buying, renovating (if necessary), and reselling homes, apartments, warehouses, and other commercial properties.
This is a very simple approach, it requires a lot of money to start, but highly profitable. Using this approach, you can bag in big bucks every month as it takes less time than the build-and-sell approach.
Step #3: Come Up with a Realistic Business Plan
Although the Real estate business in Nigeria is one that anybody can start, without a strategic and realistic business plan, you’re bound to fail.
Just like every other business, whether you’re approaching the real estate business as an investor or an agent, you need to pen down your aims and objectives, and how to go about them.
You need to outline plans for the business, usually based on your capital, point out the major challenges that may come on your path and how to solve them, outline the best strategy for you as a newbie which usually ends up in starting small, and later expand.
More so, one important thing to implement while drafting your real estate business plan as a beginner is to make it niche-focused and make it as realistic as possible.
Step #4: Arrange for a Startup Fund
As we all know, at the end of the day, the real estate business comes down to money. The more you invest, the more you’ll make! Therefore no amount is enough to start the business.
That is why putting yourself together in terms of funding the business is an important step in venturing into the real estate industry in Nigeria.
There are lots of ways to source capital for a real estate business and they include:
- Funding from personal savings
- Seek investors or venture capitalists that will sponsor the business for a percentage of the profit made or company equity
- Seek funds through business partnerships, private money lenders, as well as friends and family.
- Opt-in for the mortgaging method. E.g mortgage from a bank and a government loan. Although the interest in the funding may be overwhelming.
- If you have land already, or your current financial state can afford land, you can partake in a joint venture. That is you as a landowner will provide your land as equity and developers deal with the funding, where both parties agree on a specific percentage of the profit at the end of the day.
Step #5: Register Your Business
Since the real estate business is a professional career, it should be treated in a professional way. Therefore, your business needs to be registered whether as a developer or investor.
Registering your real estate business in Nigeria helps a lot, as you’ll be able to work with high-class people, and also be able to get more investors and funding. Also, you’ll be able to operate anywhere in the country without any disturbance.
In Nigeria, you can start by registering your real estate business with the corporate affairs commission (CAC), as well as a Limited Liability Company (LLC). However, CAC is enough if you can’t afford LLC registration from the start.
More so, you can own properties in Nigeria without those registrations above. Although, you need to watch out for the rules and regulations guiding professional real estate bodies in Nigeria to ensure that you are working in line with the law.
Some of the popular real estate professional institutions in Nigeria include; Association of Estate Agents in Nigeria (AEAN), Real Estate Developers Association of Nigeria (REDAN) and Nigerian Institution of Estate Surveyors and Valuers (NIESV).
Step #6: Brand Your Business
Once your real estate business is legally registered, the next step is branding. Although not necessary, for a successful real estate business, you need to have a website, a unique business name and logo, a business card, and a marketing kit.
Literally, branding your business simply means doing everything possible to ensure consistent lead generation and build brand awareness. Also to make sure that your real estate business is trustworthy in order to make customers loyal.
Step #7: Get Started
The last and most important step in starting a real estate business in Nigeria is to get started.
This is the step that will crown all the efforts put into the business from step one to step six, and a mistake or poor execution of this step could ruin your entire business.
Just like the popular saying – “It is easier said than done” – It is easier to read this blog about real estate than put all that you’ve discovered to work. A lot of Nigerian businesses fail due to poor execution. So, if you don’t want to be among them, you need to get to work.
This business is a day-to-day activity, which means you need to show up every day on your construction site, do some marketing, networking, and client orientation, as well as close deals.
How Profitable is Real Estate Business in Nigeria
With the whole hype of real estate business, the trend, as well as people talking about the business as a profitable one that has made them financially free, is real estate business profitable?
Of course, it is! However, not something that will make you a good profit overnight, in a week, months, and sometimes years.
Just like the cost of starting the business, the profitability of a real estate business in Nigeria depends on your approach, and how much risks you can take.
Since the business is growing rapidly, it is difficult to give a certain profit margin. However, an average real estate investor in Nigeria could make up to 20 million Naira yearly profit, while an average real estate agent could make up to 3 million Naira as profit annually in Nigeria.
Real Estate Business in Nigeria – FAQs
Is Nigeria good for real estate?
Yes, with the rapid increase in population, the real estate business is a good one to venture into in Nigeria.
Can I invest in real estate with no money?
Yes, you can start real estate without any money, just that you’ll need to approach the industry as an agent.
How big is the real estate industry in Nigeria?
The real estate industry in Nigeria has been continuously growing rapidly contributing 5.28% to the real GDP of the country for the period under review (around USD5. 3 billion).
How do I get into real estate sales in Nigeria?
To get into real estate sales in Nigeria, you need to become a real estate agent. That is connecting buyers and sellers. You need good networking skills to succeed in real estate sales.
What is the fastest way to sell real estate in Nigeria?
The fastest way to sell real estate in Nigeria as a developer is to look for a reputable real estate agent to work with.
What are the documents required for real estate business?
Some of the necessary documents needed in the real estate business in Nigeria include a certificate of occupancy (C of O), land receipt,
The real estate business in Nigeria is undoubtedly one of the fastest-growing and most profitable sectors. If you’re looking to venture into this business, there’s no better than now. With this post about how to start real estate business in Nigeria, I believe you have all you need to get started right away!