Nigeria, a nation with a population of more than 200 million, has a housing need of 17–21 million.
Nigeria, with its rapidly growing population, is a top investment location and a ready market for a variety of investments, including those in technology, financial services, and real estate.
However, it is important for us to understand and recognize the uniqueness of our situation in Nigeria while discussing real estate investing.
You can encounter issues if you don’t recognize, comprehend, or appreciate our peculiarities and attempt to compare real estate investment in Nigeria to that practiced in other regions.
This article will demonstrate to you how to profit greatly from real estate investment.
What exactly is real estate investment?
Real estate is as old as God’s green earth, and ever since man began cultivating land and marking territory, the accompanying commerce that ensued in some way, shape, or form centered on using that piece of earth to make profits, as well as all the activities carried out in said land, gave birth to Real Estate Investment.
If you return to basic economic principles, you will remember the four factors of production;
- Land
- Labour
- Capital
- Enterpreneurship,
Land is located at the top. Traditionally, you couldn’t start a business or engage in commerce unless you had land.
This article will show you how to invest in real estate to make a lot of money in Nigeria, or conversely, how to save a lot of money on your real estate deals.
1.) Learn from Successful Nigerian Real Estate Companies, Businesses, and Developers
If you want to learn how to make successful real estate investments in Nigeria, you must first look at some successful real estate companies and developers in Nigeria.
You must research how they have conducted their real estate investments and remained successful in Nigeria for many years. Despite numerous challenges, they have managed to not only survive but thrive.
The likes of these companies and developers are such as;
- Mixta Africa
- First World Communities
- Brains and Hammers etc
You should certainly pay attention to what they are doing if you want to start a real estate business or invest in real estate in Nigeria. They are doing a lot of things correctly, I can tell you that much.
Just by examining how these real estate businesses managed themselves and engaged in real estate investment in Nigeria, I was able to pick up a lot of real estate knowledge.
They have taught me more than any book or class ever could.
2.) Selecting the Best Real Estate Investment Strategy
In general, there are four (4) major Real Estate investment strategies:
- Rentals:
Rentals are the most traditional, secure, and consistent source of income from real estate.
In Rentals, you purchase a property to rent out on a monthly or yearly basis.
It has numerous advantages, including regular cash flow, asset appreciation, collateral for loans, and the ability to resell the property for a profit.
The disadvantage is that, as with many other Lekki and Banana Island apartments, you may experience long periods of non-subscription.
- Flipping land and houses:
Also known as land/property banking, this involves buying a property with the intention of reselling it for a profit as soon as possible.
Because they actually purchase this land from Omonile for a discount through the use of “sponsorship deals,” they are able to see returns of up to over 100%.
iii.) Real Estate Development
Property development entails buying land, building structures, creating infrastructure, and selling the finished product to the buyer either fully finished with fixtures and furnishings or at carcass level (lintel level).
Companies like Cosgrove in Abuja, where their flagship fully furnished and finished property in Wuye costs NGN 500 million, believe that this is the most profitable tactic.
But in order to position yourself for success, property development demands a lot of capital.
Another less-discussed Real Estate Investment strategy is Real Estate Investment Trusts (REITS).
- REITS:
A real estate investment trust (REIT) is a trust that pools funds from individual investors to acquire, operate, and/or manage income-generating real estate.
REITS are classified into two types: equity REITS and mortgage REITS. These REITS, which are listed on the Nigerian Stock Exchange, pay out dividends to subscribers based on the income generated by their owned properties and investments.
REITs, like stocks, are traded on the Nigerian Stock Exchange (NGX); you can buy or sell REITs through stockbrokers.
Nigeria had a REIT market cap of NGN32-72 billion in 2019, compared to South Africa, which has a total market cap of over $31.42 billion from 31 REITS.
To put this in context, the combined market capitalization of the three REITs in Nigeria is US$131 million, whereas the combined market capitalization of REITs in the United States is around US$898.41 billion.
In conclusion, you can see that whichever approach from the list above you select, namely;
Rentals, flipping houses or land, property development, and REITs, it isn’t a walk in the park, therefore you need to prepare yourself for success.
