Despite being a great business that offers you opportunities, and wealth, you need to know the loopholes that may likely affect how you move up in the industry.
Beginner's guide: How to make money from Real estate in Nigeria
With Real estate investment, you can rest assured of steady income streams.
Nonetheless, these mistakes are avoidable only if you are thorough with your research and also, be very familiar with the legal aspect of real estate.
How does real estate function and what does real estate do?
A real estate investment is a financial strategy that involves the management, ownership, purchase, rental, and/or sale of a property for profit.
Meanwhile, real estate investors come in several ways with just one universal purpose- to make a profit. When a property increases in value, it affects the cost. Furthermore, the costs involved in owning and maintaining the property must not exceed its increased value.
Investment strategies are chosen based on need and this can be short-term or long-term. There are various types of investment property and investors invest based on which brings more profit.
When you fast turn, it means you buy a property and sell it quickly. But when you invest for a long-term purpose, it means that you buy a property and rent or lease it out over a long period and in this process, you gain more from the rent and the growing value of the property.
How then do you invest in real estate in Nigeria?
Real estate is the real money-spinner. Despite the economic downturn caused by the Covid-19 pandemic, people are making a whole lot of money from it.
1. Invest in rental properties
Rental property is a lucrative business if you are well schooled on the ins and outs of it. Apart from knowledge, put your renovation skills into use.
Rental properties have always been an old-time practice and people have made so much money from it, even to the point of handing such properties over to children or families to keep gaining from it after the owner must have gone.
You purchase a property and then rent it out to tenants. However, as the landlord, you are responsible for paying the costs of maintaining the property.
Rental properties can be a stable source of income for you if you do it right, most especially being patient enough to manage tenants.
But this is not a kind of investment you don’t monitor especially if you don’t live close to or within the property, as you have to maintain and run your property in a way that the value doesn’t drastically depreciate because the property looks dilapidated.
As the landlord, make sure that you are actively involved and if you are not close to the property, especially people who don’t live in Nigeria, you should employ a professional manager.
2. Real Estate Investment Trusts (REITS)
Real estate investment trusts are collective investment schemes regulated by the Securities and Exchange Commission (SEC). These schemes pool investment capital from investors to acquire income-producing real estate or mortgage loans, or a combination of both.
People can go for Real estate investment groups (REIGS) because they are ideal for people who want to own rental properties without the stress of managing them. But, an investment in REITs requires a capital cushion and access to financing.
In a REIT, there is a provision for an investor to own one or several units of self-contained living space, while the investment group manages all of the units on the investor’s behalf.
These are what they do:
-Interviewing potential tenants.
The only benefit the company takes is a percentage of the property with the monthly rent.
3. House Flipping
House flipping in Real estate investment is the process of buying and reselling for a quick profit which requires little to no effort on the part of the owner. As long as you have the money and knowledge of the selling process, it’s a smart business to do.
This affords you the opportunity to start small but the more money invested, the higher your chance of profit-making.
Please note: Don’t just dabble into it. The process of flipping houses requires extensive real estate experience, marketing, and renovation. Asides from this, you also need capital in case you have to do some repairs before selling.
4. Property Development
In property development, properties are bought in good locations and redeveloped into fancy apartments, offices, commercial structures, etc. and this is why it’s capital-intensive to run but then, the profit margin is encouraging.
You can double your investment easily but in this case, location also matters.
Real estate investment is a smart and assured way to create wealth for yourself, but it’s not magic. You have to do your research concerning location, cost, benefits, etc. before trying to delve into the industry.
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