Property investments remain one of the best types of investment to start, maintain, and transfer generational wealth in Nigeria.
I can tell you this because I have seen, witnessed and experienced.
Nigerians, if not every individual in different parts of the world, take their time to venture into. Probably, because of the risk involved in it.
However, you can’t talk about risk if you do not know and understand how property Investment works in Nigeria.
It’s not the same with other countries, that’s why you need to know what property laws guides this country. Once you achieve that, you are good to go.
For instance, knowing what to do in a State like Lagos will sure be a risk management for you.
Let’s look at what real estate investment is all about and journey together!
Introduction To Property Investments In Nigeria
Property investments simply mean purchasing real estate in Nigeria for the purpose of generating income through it.
This is one investment that guarantees your earnings because of the undeniable fact that property prices increase every year.
Here are the few reasons to venture into real estate investment.
- Getting a property in Nigeria is the most safe and long-term investment one can make now.
- It’s also a way of getting passive income. It’s the same as building wealth while sleeping.
- Real estate investment in the commercial creates an opportunity for diversification in the investment portfolio of the investor.
Types of Real Estate Investment You Can Start In Nigeria
We’ll be looking at the different types of property investments in Nigeria that guarantees your income.
1. Residence
When you count common investment strategies for investors to supplement their income, this should be among the top three.
This is where the investor purchases a residential property and rents it out to tenants to generate higher returns.
The renting period could be short term or long term. Of course, the same thing applies to the payment renewal depending on the contract agreement.
To safeguard your investment, you need one of these best property management companies in Nigeria.
2. Commercial
Commercial property investment is specifically for business purposes which is very common in Nigeria.
It could be a space or building rented out to a business owner.
3. Industrial
This type of property investment speaks of factories, manufacturing companies and distribution centers.
The demand for warehouse is growing daily as a result of produce increase in manufacturing sectors.
4. Land
This type of investment is quite common and the capital appreciation is profound in the industry.
5. Buy, Fix and Flip
This method is simply buying undervalued properties and renovating them to increase the value.
Before venturing into this method, ensure to research the cost of renovation to know if it’s worth it.
Here are some home decor and interior design ideas that will be helpful.
6. Buy to Hold
This method involves buying properties with the intention of not selling for years or decades with the purpose of increasing the value of properties to have higher returns.
Before venturing into this method, ensure that the location, security and other important factors to look out for before investing is favourable in order to attract quality tenants or buyers for easy and sustainable cash flow.
7. Crowdfunding in Real Estate
Real Estate Crowdfunding is a method of raising capital to fund property projects in a collective way through the contribution of investors in Nigeria.
This method enables investors that are still growing financially to take part in it hence, making this type of investment accessible to other aspiring investors.
Real estate crowdfunding is fast rising in Nigeria which could be as a result of the high yield returns which attract investors in renowned cities like Abuja and Lagos, Nigeria.
Of course, there are crowdfunding platforms in Nigeria where these take place and we’ll be looking at these platforms below.
Benefits of Property Investments in Nigeria.
Investing in real estate comes with lucrative opportunities if well guided with the right strategies. Let’s look at some of the benefits in real estate.
- Capital Appreciation
Property prices has displayed an increase in price consistently which makes real estate investment attractive option for investors.
- Government Policies
The government has created a favourable policies and environment for investors in Nigeria which makes it appealing for domestic and foreign investors .
One of the favourable policies is the introduction of relaxed regulations and tax incentives by the Real Estate Investment Trust (REITs).
- Demand For Housing
The high demand for housing has made the market less risky and a reliable stream of income for investors.
- Leverage
Leveraging on borrowed funds to boost and increase investment potential is also one of the benefits in real estate.
- Tangible Asset
With real estate investment, you have physical property that holds great value and can also increase in value as the year goes by.
- Building Legacy
You can build and establish a financial legacy with real estate investment that will last for more than decades.
- Overall Control
Having partners or professionals (lawyers, real estate agents) that give legal advice does not automatically give them authority over investment decisions, you still remain the one that has the overall Control and authority in decision making.
Factors To Consider Before Investing In Real Estate In Nigeria
It’s essential to know factors that can make or mar your investment. Gathering these knowledge will give an edge to know when to invest and when to be on hold.
- National Economic
The national economy has a significant impact on investment in real estate, especially a Nation like Nigeria where the economy is heavily dependent on oil, making it susceptible to fluctuations and of course with the past experiences, it can be relatable to investors.
- Location
The location is a very important factor before investing in real estate in Nigeria because it will become an edge to having high yields or becoming less of an asset.
Some of the things to consider in location are the security, access to amenities, the texture of the land – swamp area or solid place etc.
There are locations in Nigeria that can yield higher returns and some include Lagos State – Ikoyi, Lekki, Ajah, Ikeja are some places in Lagos one can consider investing if well guided.
Lagos State is the commercial hub of Nigeria, investing in this location is sure to yield higher returns.
Another location in Nigeria is Abuja, the capital city and center of political power.
Here is a list of the best places to invest in real estate in Nigeria.
- Law and Regulations
The law and regulatory environment of real estate can be full of complexity which is why having a legal advisor in real estate can give you an edge in understanding rules and regulations governing real estate in Nigeria before investing.
- Financing Options
Knowing your investment goals will help you know the financing options that align with your goals as an investor.
There’s a particular capital necessary for real estate investment hence, exploring your financing options will go a long way in helping you choose your best options for your investment.
Real Estate Investment Strategies in Nigeria
Putting risk management in view in real estate is crucial to help you navigate well in your journey of investment.
- Market Survey/Research
Going for market research before venturing into any real estate project will save you from crying a river as a result of losses.
Making research will enable you to know the demand, economy impact on investment and which investment method trends in a particular season in order to know how to top up your game as an investor.
- Create a Team
A community is always better than a single person doing everything. Having a team of lawyers, property agents, real estate agents and reliable professionals will help detect investment that can drain you and also provide advice that will keep your ball rolling and keep you in check throughout the investment process.
- Background history
Make your due diligence in investigating those that you will be working with, that is your team, there are still fraudsters in the guise of real estate agents.
Investigating their background and transactions with other investors will help you find the right team that you can trust and partner together to avoid losses like theft and lack of accountability.
- Be Current on investment issues
Be updated on the issues concerning real estate investment by listening to news on real estate investment, the laws and regulations governing real estate investment that may affect tax and ownership. Being current will help you manage potential risks and top up your investment strategies.
- Insurance Coverage
Having insurance coverage for real estate can never be overemphasized as they provide shield against risk from natural disasters, theft and liability claims.
Always make a review to ensure your real estate coverage is insured all round and check if there are necessary adjustments to make in your portfolio as an investor.
Conclusion On Property Investments Types In Nigeria
Property Investment in Nigeria has lucrative opportunities if one will know and understand the market, with the aid of professionals in the industry.
The last thing you also need is to have a strategic mindset and long term perspective, these will surely help you navigate the market and the yield will be so profound.
