How to invest in Real Estate in Nigeria

Are you looking for a viable investment opportunity? Then you should consider real estate business.

The business is profitable but involves huge capital investment. You gain appreciable increase in profit over duration of time.

In most countries the sector offers different opportunities dependent on the type of investment. Here are different ways to invest in real estate.

Challenges Faced in the Real Estate Sector

Despite the huge earning potential investors face many challenges. The sector involve huge amount of money. Before investing in the sector you need to carry out due diligence.

This is because of fraudulent practitioners, capital flight, litigation, false documentation. Other difficulties are property maintenance, monetary cost for perfecting titles, tenement rates. More include inflation, long period to recoup purchase value on rented property.

• Huge capital investment
• Fraudulent practitioners
• Capital flight
• Litigation
• False documentation
• High cost of property maintenance
• monetary cost for perfecting titles
• tenement rates
• inflation

By Haithem Elgasi - Own work, CC BY-SA 4.0, https://commons.wikimedia.org

Ways to Invest In Property

There are five major ways to invest in property. You can leverage on a collective investment scheme or buy to rent. Other ways involve land, building flipping and property development.

• Buy to Rent
• Property Development
• Building Flipping
• Collective investment scheme
• Land Flipping

Buy to Rent

Buy to rent involves purchasing a property and renting to tenants. The business provides regular income, however recouping your entire investment might take several years.

The investor may choose to rent commercial office space or residential. Becoming a landlord is not a get rich scheme. However you enjoy regular earnings and property appreciation.

Property Development

To invest in property development you need serious money. This type of business is capital intensive. Real estate developers fund their project through bank loans, core investors and crowdfunding.

The location of the property is very important to the profitability. Properties in prime locations attract 100% profit on investment. Make sure you carry out a cost benefit analysis before investing hard cash.

In Nigeria it is not uncommon to find association’s leveraging on collective funds for property development. Such projects are usually meant for members.

Land Flipping

You can buy a land wait a year and flip for a tidy sum. The business format is simple but effective. Property value regularly appreciates with time so purchasing prime land is wise.

Some investors purchase huge parcel of land and sell in plots. The only risk involves land owner authentication, genuine documentation. Makes sure the land is free from litigation or indigene claim.

Building Flipping

Flipping a building is profitable once you have perfected the skill. You need to find a building in a popular area carry out repairs, resell.

The purchase price should be right to accommodate cost of repair, remodeling, sale. Some buildings require simple upgrade to increase their value exponentially.

Collective Investment Scheme

Collective investment schemes pool together the resources of the collective for property investment. This is an effective strategy to own physical property or part of an investment.

An investment scheme regulated by the Security and Exchange Commission is the Real Estate Investment Trust. The REIT uses collective capital to acquire investment in the real estate sector.

This fund has professional managers and provides direct investment opportunities. Opportunities for investors include portfolio diversification, liquidity of funds. REITs are bought /sold like stocks on major exchanges.