Real Estate and its diversification in the Nigerian Economy -…
How To Make Money In Real Estate Business In Nigeria
How To Make Money In Real Estate Business In Nigeria
Considering the fact that real estates business in Nigeria was previously taken for granted in Nigeria, I’d say it has become one of the most lucrative and economically encouraged business in Nigeria.
Real estate is a business enterprise that involves selling, renting or leasing of lands or landed properties. That’s putting it in the layman’s language. Real estate is lands with buildings worth economic value.
In Nigeria, real estate has a lot of potential but is also a very challenging industry to delve into. The challenges involved have served as a barrier to letting these potentials unfold. Therefore, this article will not just tell you how to make money in it, it’ll also show you how to succeed tremendously in the real estate industry.
Unlike other business plans where you’ll have to invest in ideas that could become a liability to your name, investing in real estate is one of the best decisions you’ll ever make. The reason is that with real estate you have assets that bring monthly or annual profits into your account without lifting a finger.
The difference between regular business investments and real estate is that the first consumes more money overtime than the other. Meanwhile, the latter only requires that much amount at the start and then incurs profit over the years. For instance, a plot of land in a village in Delta State could be a million naira in 2014. By this year 2017, that amount would have multiplied to triple the original amount.
Basically, this article aims to reveal the different areas of real estate investment that is practiced in Nigeria. It will also show the different ways with which superfluous profit could be gained through these different categories.
These are the different categories in real estate that can be explored for better profits. If you’re just starting out, you should consider one of these categories and then diversify once you’ve made good progress in the first category selected.
This is one of the easiest ways of making it in the real estate industry. It simply requires that you buy a plot of land and sell almost immediately for profit. If you’re a newbie in the real estate world, this is just for you because It is basically buying a piece of land and then selling it off immediately with added cost to increase profit. All you need to make it work is have the start up fund for as small as just a plot of land, knowledge about real estate industry in Nigeria and you’re good to go. After you’re first time with your startup budget, feel free to invest your profits in other lands and make more money.
It’s easy to make fast profits here.
Profits from first sales can be used to invest in other lands.
You’ll need startup capital for this category
In nigeria, acquisition of landed properties require a lot of documentation, this will consume time and resources.
Leasing Open Spaces
This category operates differently from the land flipping category. Here, you acquire an open space property and lease to customers who just need temporary or makeshift locations for their business. It also allows for your property to appreciate over the years it’s being occupied by tenants. This way, you don’t just earn profits from your present tenant’s rent, you also earn from tenants in the future.
This category allows for property appreciation.
Getting a good location that is available for leasing is usually a challenge.
Starting Real Estate Agencies.
Land flipping might be one of the easiest ways to thrive in the real estate market but, agencies are by far the easiest and commonest category. It doesn’t require start up capital or any form of investment. In this case, you simply scout properties and assets for rent or sale, sell or rent to the client and then get a percentage commission for your service. So basically your job is to scout and advertise these properties in the best way you can to ensure that your service is hired.
Anyone smart enough can go into real estate agency; you just need to be a good scout and have impeccable customer service. Plus, there are so many ways to advertise properties now, there’s print media, social media which can sell almost anything, websites and some companies have taken it further by having mobile applications that serve as the medium to reaching the clients. There is no such thing as impossible when it comes to agency and technology combined.
You don’t need startup capital.
It does not require investing in any property.
There are lots of mediums to publicize your service.
Commissions will not be as much as returns gotten from long term real estate investments
You never truly know the quality or state of the property you’re consulting for.
Estate development also known as property development is the category in real estate where we have the big shot players. They are called property developers and their job description is buying landed properties and developing them into luxurious apartments, offices, service apartments or commercially worthy properties. Developers simply buy lands in very good, central and commercial locations. Thereafter, develop the property they’ve acquired and then receive the proceeds from rent and payment from clients. The best part about this type of estate investment is that, even if you invested N100m or more on the property, you’re sure to get it back or even triple that amount in the years ahead.
A vivid example of where this type of real estate investment takes place is Lagos state. Forget about the politicians and the music or movie stars, there are individuals who buy properties in Lekki, Victoria Island, and Ikoyi, develop into luxurious apartments and place them on rent. In most cases, the apartments become extremely flamboyant and can be passed for a new apartment. If that’s the case, the developer is going to be earning a lot more than he bargained for. Yes, developers don’t just buy lands, they also buy old properties. Real estate development is for those in the big leagues and starting with other categories might be a better option if you plan to start small. When you make it big, you can join the big players as well.
You get properties in good locations to develop
Profit is gotten over the years for a long period of time
For multiple owners, there’s a truckload of income annually
maintenance of these properties could wane.
Depending on the location, these landed or already built properties could cost a lot to develop.
Apartments For Houses and Offices.
This is another category in real estate in Nigeria that one could invest in. This is also for the big players as well, because it involves an individual building apartments for offices and houses; all for rent or sale. If you’re a newbie, this will be quite challenging for you.
The apartments remain in your name and will continually bring you profit.
You get to decide their cost of renting or leasing every year.
Maintenance of these properties usually costs more because of the eventualities that occur.
There are a lot of people that think that all they need to go into the real estate industry is intelligence and the ability to convince people to hire their services. They’re right, but that’s a half truth. That’s not all you need. You’ll need a basic knowledge or some training in this area, the ability to persuade people, recognition and legalization of your organisation and many more.
Below are a couple of things you need to know to help you thrive as a real estate developer.
Understand The Crux of Real Estate
It is very important that before going into real estate in Nigeria, you need to understand the basics and the things that you stand to gain, lose or endure in the industry. Most investors seem to think that having properties for sale and persuasive skills are all you need to make good money. Truth be told, the money doesn’t exactly come out immediately, but it does. It is true that real estate is a very lucrative venture, however, the profit doesn’t come immediately.
You need to first accept that you might not get what you invested immediately after sales. A typical example is buying a plot of land in Lagos state for 5million naira and expecting the same value in profit the following year. That’ll take miracle. It’ll take more than a year to get your capital back, before your profit rolls in. It could work for an already recognised estate agent but for a newbie, patience is of the essence.
Don’t be one of those self acclaimed estate agents who have absolutely no idea what they’re doing in the industry. Educate yourself. You really don’t want to run into real estate agents from other countries and have absolutely nothing to say about the business.
Get books, watch materials online, get a diploma if you want but please get some education on this subject. The difference between you and the regular estate agent is that, you’ll have technique and brushed up talent, while he’ll only have his instincts to rely on. If you’re informed, nothing can deform you or take the skills from you and you’ll be playing in the big leagues.
Concentrate on One Category.
I’ve met a couple of new entrepreneurs in this industry who have good prospects and a bright future. Well until I discover they’re all over the place. They never focus on one category and that’s bad for business. No one ever started this with doing everything. You pick one category and developed it till you’ve become the very best in it. Eventually you can develop the plan and delve into other areas for more profits..
Don’t Spend Your Own Money.
This might just turn out to be really funny but it’s the truth.. If you take out time to investigate, you’ll discover that these so called big league players don’t invest their own. You’re encouraged to use other people’s money for the investment in real estate, get the funds back and pay your loans. If you’d never taken anything serious before? This is one you should take pretty seriously.
Another way to do this is to go into partnership with someone. This way they could pay for investment and you could bring in the profit from those investments.
Now to Your Negotiation Skills.
More than anything in this industry, you better be good at negotiations. It is 90% of the real estate work. So if you didn’t have any skills at all, then it’s time to get schooled on it.
Unless of course you plan to spend more money than you’ll get in return for a property, you should always investigate to be sure there aren’t other Realtors on that property. If there are 5 agents on that property, they each would already have their commission on the price. Before you know it, you’re paying twice the normal price.
You can also try to ensure that your seller doesn’t read your emotions and sees that you’re excited about the property. It’s always best to let them know that there are many other options to pick from. If they’re desperate to sell, they’ll drop the price.
In some cases, they are desperate to sell as the property might have stayed too long with them and it’s beginning to lose its value. Merge your investigation and negotiation skills together; you’ll need them.
Scouting! Scouting! Scouting!
There is no real estate business without scouting. You have to hunt and be ready to look for as many properties as possible. They are out there and if you don’t get them someone else will; maybe me! The more you scout properties, the more people you meet. Ever heard the phrase, everyone is a potential client? No? Go to business school! Keep searching, as it also affords you the opportunity to network.
Remember what I said about networking? The more you scout properties, it’s most likely you’ll find other realtors like you. Trust me, you can’t trust them! However, the world is black and white. Not everyone is good and not everyone is bad. You will meet some pretty greedy realtors; hopefully you don’t get swindled first. You’ll also meet the genuine realtors as well.
Nevertheless, that’s not your purpose of meeting them. The real reason is to hear about more properties for sale, yes selfish interests but it’s allowed. Networking is the way to passing information and business opportunities in this generation, so buckle up and get meeting some colleagues.
Let’s talk about locations.
I wish I could explain in a one liner text to you how important it is that you get a property in an accessible and reasonable location.
There are a couple of things that could go wrong with the wrong location. Once it’s not accessible, it is going to be tough to get workers in there for renovation, it’ll cost more Money because there’ll be more casualties, and getting a client to buy the property would be a tug of war. It’s better to get a centrally accessible location; it’s better for everyone.
This is usually a challenge because to recognize properties with future potentials takes a lot of guts. At first it might not look like a good decision but in the years to come it would make millions. Here’s one example. If you hear about a school that’ll be built in a particular village, you could take advantage and buy a piece of land before the school starts construction. During the time before the school, the price of a plot could be 150 000 naira. By the time the school arrives, that same plot would be sold for 500 00 or more. Give it five years and we’re talking millions.
You have to open your eyes and ears to information that could become a real estate opportunity. By the time students arrive, you’d have built a hostel that would bring more profit than the original price.
Another thing to look out for is if the government plans to build roads in a particular area. Find a property to buy there because people like the easy stuff. They want to be able to get to work early enough and not go through Lagos traffic. It is a lot but you can get through it.
Math is back!
If you hated math in school then you need to love it now; if you don’t want to be cheated. It’s quite simple though, you just need to know how much you’re buying, how much it’ll take to renovate and how much profit you’ll get from the sale. Basically, you’re adding the cost price to the money spent for development to get a new selling price that would bring you profit. That can’t be so hard.
Association and Recognition.
Well, you’ll want to be legally recognized as a realtor so you will have to get a property licence to practice in peace, and to be taken seriously. The industry is controlled by the Real Estate Developer’s association of Nigeria nf fully supported by the Federal Mortgage Bank of Nigeria. Get a licence, get practicing, get recognized.
Mistakes are allowed.
Truth be told, there’s hardly anything you’ll do for the first time without making a mistake. As a newbie, you have a lot of learning and catching up to do. So it’s only natural that you make a mistake here and there.
Don’t let your mistakes be the end of your career. You can always start again, no matter how far you’ve gone. Do not beat yourself up or run away from it. It’s not going to be easy and you won’t like it, but it will be absolutely worth it.
Beware of Fraudsters
In Nigeria today, people create things that don’t even exist or lay claim to properties that isn’t theirs. It’s the one reason you need a licence. So you will not be considered fake and you won’t be swindled as well. Don’t go paying for properties you’re not sure about. Confirm it and be sure of its legitimacy before purchasing.
Learn, Learn, Learn.
Knowledge used to be power, now it’s the use of knowledge that makes you powerful. It gives you an edge, you know secrets that people don’t know and you’ll use them to your advantage. Do not stop learning, read books, get materials that can help you hone the skills you’ve acquired. Nothing can defeat a man with knowledge about his environment and beyond. Information that you have cannot be taken from you or used against you. Use what you have learned to make as much profit as possible and don’t stop learning.
Real estate is simply investing in properties for sale to other people. By properties, anything from a plot of land to an apartment, offices, hotels, open spaces etc. This article has succeeded in telling you the different categories of real estate and the things you need to do to start up a real estate business in Nigeria.
Real estate in Nigeria and the world is still one of the most lucrative industries in business and all it really takes is hardwork and hardwork! Nothing short of it. To succeed in this industry, you’ll need a lot of patience, knowledge, hardwork and perseverance.
Even if you didn’t need these in other countries, you need it in Nigeria. Where the competition is stiff and those in the business are not very friendly with the information they have. Well, that’s why I’m here and I hope that with this you’re able to fuel your hunger to succeed and impact into the real estate business in Nigeria.
Lastly, learning is an everyday activity so no matter how far you go in this business, there is still something you don’t know that’s making someone better than you in the world of works! Don’t stop learning!!!