How To Invest In Real Estate In Nigeria

Investing in real estate is one of the best ways to level up your future investment or quick(flipping) portfolio. And it has been proven to be one of the main ways to generate consistent income streams. We, however, will be discussing how to invest in real estate in Nigeria in this article and explain the necessary steps to take to invest in real estate in Nigeria.

While real estate investing in Nigeria presents a plethora 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 blunders. See this post on the deed of assignment in Nigeria for more information.

It is important for us to understand and recognize the uniqueness of our situation when discussing real estate investing in Nigeria. 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.

You can make a direct investment in real estatE via owning a home, a rental property, or another property. A Real Estate Investment Trust is another option for investing in real estate indirectly (REIT). Many people and businesses invest in real estate, starting in Lagos (a commercial city) and moving toward Abuja’s political hub.

That said, 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 venture in Nigeria.

What Is Real Estate?

Real estate is referred to as the land as well as any permanent, whether natural or -made, structures or improvements related to the property, such as a house.

One type of real property is real estate. It contrasts from personal property, such as cars, yachts, jewels, furniture, and farm equipment, which is not permanently affixed to the land.

There are differences between land, real estate, and real property, while they are frequently used interchangeably. Land includes the trees, minerals, and water that are present on the earth’s surface up to its center and above it in the upper atmosphere.

The immobility, invulnerability, and distinctiveness of land, where each parcel of land differs regionally, are some of its physical properties. Real estate includes the land as well as any enduring human constructions, including homes and other structures. An improvement is any addition to or alteration to the land that raises or lowers the property’s value.

Real Estate Investment

Real estate investment is the management, ownership, acquisition, purchase, rental, and/or sale of a property for profit. 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.

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.

Types Of Real Estate

Here are some of the types of real estate in Nigeria

• Residential Real Estate: Any landed property bought for residential purposes is a residential real estate. Examples include single-family homes, condos, cooperatives, duplexes, townhouses, and multifamily residences.

• Commercial Real Estate: Any landed property used exclusively for business purposes, such as apartment complexes, gas stations, grocery stores, hospitals, hotels, offices, parking facilities, restaurants, shopping centers, stores, and theaters.

• Industrial Real Estate: Any property used for manufacturing, production, distribution, storage, and research and development.
• Land: This ncludes undeveloped property, vacant land, and agricultural lands such as farms, orchards, ranches, and timberland.

How To Invest In Real Estate 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 on how to invest in real estate in Nigeria are listed below.

1. House Flipping

2. Rental Properties

3.  Property Development

4. Real Estate Investment Trusts (REITs)

5. House Hacking

6. Become a Real Estate Agent

7. Online Real Estate Investment Platform

1. House Flipping

This real estate investment method 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.

2. 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.

In rentals, you purchase a home to rent out on a monthly or yearly basis. It has many benefits, such as consistent cash flow, asset appreciation, the ability to serve as security for loans, and the ability to profitably sell the property later.

The drawback is that, similar to most Lekki and Banana Island apartments, your apartment can go unoccupied for extended periods of time.

3.  Property Development

Real estate/property development requires a lot of capital, it is capital intensive. 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.

4. Real Estate Investment Trusts (REITs)

5. House Hacking

House Hacking is another real estate investment technique to imbibe in Nigeria.  If you purchase a piece of real estate, like a duplex, this technique will work.

Simply reside in one property, rent out the additional ones, and you may start making money without putting any effort into it. Isn’t it simple money? You get to live in your home for free and can utilize the rent to pay for your expenses.

This also provides you with practical experience as a landlord without having to invest in a rental home. This is what many experts believe to be the most effective non-financial, non-experienced real estate investment strategy.

6. Become a Real Estate Agent

Another way to invest in real estate in Nigeria is to become an agent. To start making money, you may become a full-time real estate agent or launch a side company. Although it isn’t exactly investing, it’s a terrific opportunity to learn about real estate deals and the wider real estate industry while also making money.

Even better, you may make a career out of it by enrolling in a set number of programs to broaden your expertise and earning your real estate license. Finally, the majority of realtors pay for access to multiple listing systems and join their local association of realtors.

To start producing money with this strategy, it takes time and effort. You are paid as a leasing agent when you assist a renter in finding a specific rental property.

7. Online Real Estate Investment Platform

These online marketplaces link property managers and common investors who want to fund projects. Everyone can now invest in real estate through pooled funds thanks to these platforms. In return for assuming a sizable level of risk and paying a fee to the platform, an investor anticipates receiving monthly or quarterly dividends.

These websites are referred to as crowdsourcing platforms. Simply lend your money to seasoned property managers and watch as your cash grows. These platforms include Wealth.ng, Rise Vest, and Coreum.

Conclusion

The benefits of investing in real estate in Nigeria are numerous and can vary depending on the goal of the investor. The finest choices when it comes to investing in 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. Additionally, you can read our articles on the Nigerian land tenure system, certificate of occupation, and land excision. We, however, hope you enjoy reading about how to invest in real estate in Nigeria