Nigeria Real Estate: 5 Sure Ways to Make it a Profitable Investment

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Nigeria’s real estate sector has always been a secure and profitable investment instrument. Stories abound of people who have become extremely wealthy as their property investment appreciated exponentially. In a Niarametrics Article, Chief Onyema, the founder and CEO of Air Peace recounted how he had his breakthrough in real estate when he was on a salary of 500 naira per month.

When I was squatting in Oshodi, I had these garage boys that were my friends and one happened to belong to a family that had this large expanse of land in Alagbado. He took me there, showed me their properties and I helped them to bring some buyers. A week later, after I got the employment, the entire family sent for me, and gave me about 400 plots of land in Alagbado to sell on their behalf at N5000 per plot..

Investing in Nigeria real estate is now very popular. Nigeria with an increasing population of about 200 million remains in dire need of housing and other property needs. It remains a sure way for profitable investment for a refined living and secured future. Most importantly, Nigeria’s real estate sector offers various investment streams. There is something for everyone in the real estate sector. Some include but not limited to

  • Land Flipping
  • Real Estate Rental Investment
  • Real Estate Investment Trusts (REITs)
  • Property Development
  • Investing in Room Rentals

1. Investment in Land Flipping

Note that in many instances, land flipping can be seen as a fraudulent practice. All the same, with professional real estate guidance, it remains a good entry point. Land flipping simply means buying today and reselling as it appreciates. It is a quick and sure way of investment in Nigeria real estate. Though you can make a lot of profit if you acquire numerous plots to resell, you can also start at any possible scale. Once you understand the intricateness of land ownership in Nigeria, you are good to go. knowledge. It also comes with its risks as you can also fall into the hands of frauds. Like we wrote in a previous article – Simple Steps To Avoiding Fraud When Investing In Real Estate, include

  • Buy properties with good titles
  • Always do your due diligence like conducting a proper search of the title documents
  • Do some inquiries on the property company you want to transact with
  • Always deal with Professionals in real estate
  • Ensure you take possession immediately after payment

2. Real Estate Rental Investment

One of the most profitable and secured real estate investments is to buy properties and rent them for private or commercial use. With enough capital, such capital investment comes with relatively lower risk. This is due to the fact that in Nigeria, rent is usually paid in advance. Again, most businesses cannot afford to buy their own properties so renting for commercial use becomes their best bet. When investing in rental properties, it is always advisable to go with professional real estate firms to reduce mismanagement and eroding revenue due to lack of property maintenance. A good estate firm will help you rent, manage tenants and maintain the property for a more secure revenue stream.

3. Real Estate Investment Trusts (REITs)

You may ask, ‘What are REITs?’ According to investor.gov

Real estate investment trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.

REITs operate as a combined investment program. A company pools funds together to invest in properties and manage on behalf of the investors. In Nigeria, REITs are regulated by the Securities and Exchange Commission (SEC). Like other stocks, they trade on the major exchanges and are known as publicly traded. Some also registered with SEC but not publicly traded are referred to as non-traded REITs.

In Nigeria, there are currently three registered REITs according to. Global Law Experts. They include

  • Skye Shelter fund (now SFS Real Estate Trust (SFS REIT)
  • Union Homes
  • Property Development Corporation (UPDC).

Like every other real estate investment portfolio, there are advantages and disadvantages. According to Investopedia the pros and cons include:

Pros
  • Liquidity
  • Diversification
  • Transparency
  • Stable cash flow through dividends
  • Attractive risk-adjusted returns
Cons
  • Low growth
  • Dividends are taxed as regular income
  • Subject to market risk
  • Potential for high management and transaction fees

4. Real Estate Property Development

Though property development is the most capital-intensive form of real estate investment in Nigeria, it means the most profitable and secured. Nigeria real estate property development entails buying land, building, and selling it. It is an investment portfolio that can generate a lot of fortune if professionally guided and in a choice location. Investment in Nigeria real estate property development is not something you should do without a professional real estate firm. For an optimal outcome, an organized process which comprises stages like

  • initiation,
  • evaluation,
  • acquisition,
  • design and costing,
  • permissions,
  • commitment
  • Implementation
  • Let, manage or dispose

5. Investing in Room Rentals

This type of real estate investment might not be as popular in Nigeria as in other parts of the world like the USA. All the same, with the internet today, it is easier to rent part of your accommodation through sites like Airbnb. This is usually not a long-term investment plan. You only rent a spare room as long as it is convenient for you.

In conclusion

The Nigerian real estate investment sector is booming with a lot of portfolio streams. Outlined above are some popular ones. It can never be overemphasized that steps must be taken to avoid fraud when investing in Nigeria’s real estate sector. In Newera Homes, we are committed to helping you discover a refined living with a trusted real estate investment.

Call us or send us an email to know more or make any inquires.

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By Udo Davis

Udo is a seasoned and highly experienced Real Estate expert. He holds a Higher National Diploma in Estate Management from the Federal Polytechnic Nekede Owerri, Imo State in 2000 and a registered member of the Nigerian Institution of Estate Surveyors and Valuers (NIESV).

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