There is no doubt that the safest form of investment is real estate investment and it’s important to know how to invest in real estate because real estate investment is like planting a money tree—it grows over time, providing shade in the form of passive income and bearing fruits of long-term wealth. If you’re eyeing the Nigerian real estate market, you’re in for an exciting journey.
In this blog post, discover how to invest in real estate and maximize your savings from investment deal
Before we go right into it, let’s understand what real estate investment is
WHAT IS REAL ESTATE INVESTMENT?
Real estate investment is simply a way to generate wealth by either purchasing, owning, managing, or selling properties. Ready to kickstart your investment journey and earn some cool cash? Keep reading
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1. Monitor the Nigerian real estate market:
As the saying goes “when in Rome act like the Romans” The real estate market in Nigeria is quite different from other parts of the world.
In order for you to know where and how to invest, you need to understand the market trends, hot locations and developing spots as well, also, observing big real estate companies such as Adron homes, Doxcheque homes limited etc will put you ahead in your investment journey
2. Know the types of real estate investments we have:
There are several types of real estate, which we’ll be discussing below:
i. Rental Properties: Rental properties include homes, apartments, or commercial spaces that you own and rent out to tenants. They generate steady rental income while appreciating in value over time. Rentals are one of the oldest, safest, and most steady source of income from Real Estate. However, a potential disadvantage is that tenants or clients may refuse to pay rent or become troublesome
Why should I invest in rental properties? Property value increases every hour and nothing is better than having passive income from renting out your property. You can also use this property as loan collateral to finance other investments, and it is also possible to sell the property.
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ii. House/ Land Flipping: This involves buying a piece of property at the lowest price possible and fixing it up in order to increase its value.
A good example will be you buying a house that was built in the 90s and renovating it to fit modern aesthetic. This simply means you purchase a property and sell in the quickest time possible for profit. Major real estate companies in Nigeria use this strategy, the secure properties from communities and resell at a higher price to make a good return on Investment.
iii. Real Estate Investment Trusts (REITs): The Lazy Investor’s Dream.
In a nutshell, a REIT is a trust that collects money from several investors and uses it to buy, run, and/or manage real estate that generates income. REITS come in several forms, such as Mortgage REITS and Equity REITS. These REITS, which are listed on the Nigerian Stock Exchange, pay customers dividends on the money they own in properties and investments.
Like stocks, REITs are traded on the Nigerian Stock Exchange (NGX); stockbrokers are the intermediaries for buying and selling REITs. However this form of investing is not so popular in Nigeria
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3. Understand Land laws and title:
Legally binding property transactions can only be done on a properly titled property registered at the state’s registry. The major title you should always look out for is the C of O. The certificate of occupancy (C of O) is a document that confirms the lease of a piece of land to an individual for 99 years.
These are some documents that we should look out for after purchasing a property
If a land is not registered or the survey lodged in the Land’s bureau and duly approved by the governor – through the C of O or allocation – you have no enforceable legal right over it.
4. Choose The Right Location:
Real estate is all about location, especially here in Nigeria. Whichever strategy you choose; the most important decision you would make is the location! Make sure that you are buying a property situated in a prime location.
For example in Enugu, prime locations can be independence layout, Centenary and fast developing areas can be Ugwuomu nike and Emene.
But the thing about prime locations is that they are expensive. Very, very expensive.
So what happens if you do not have the budget for a prime location?
Then consider areas that share boundaries with these prime areas. Keep in mind that certain locations can transform into prime areas over time due to ongoing development
Compared to other sectors of the economy, real estate has been trending upward, drawing investments from foreigners and locals alike as well as from the government and expat community. The industry is still expanding quickly, with a significant housing shortage.
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