Real Estate Business in Nigeria, A-Z Beginner's Guide

Whether as a real estate agent or as an investor, you can make a lot of money by starting a real estate business in Nigeria, A-Z Beginner's Guide

All you need to know about Real Estate Business In Nigeria

Real estate business is completely different from every other business because it is absolutely all about "investment" and it is considered to be one of the most profitable and growing businesses.

Whether as a real estate agent or as an investor, you can make a lot of money by starting a real estate business in Nigeria.

You should consider real estate if you are looking for the best way to invest your money, as I have said earlier, it is all about investment.

Such investments are always very lucrative. If you are in doubt, just look up any of the richest people in Nigeria, Africa or in the world; you will find one form of real estate investment.

Starting your own real estate business can absolutely give you the seven-figure job of your dreams.

Today, you will learn how you can make your first investment in real estate and earn some serious profit, regardless of the amount of money you want to put in.

Here is a complete beginner's guide about real estate and all you need to know before going into the business.

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What is real estate business?

A real estate business is a business entity that deals with the buying, selling, management or investment properties. Real estate agents help homeowners and investors buy and sell all types of properties.

4 Types of Real Estate

There are so many types of real estate, each with a unique purpose and utility. The main types are:

1. Land
2. Residential
3. Commercial
4. Industrial

1 Land

This is the baseline, Land typically refers to undeveloped property and vacant land. Before you can increase the density and the value of this property, you have to combine it with other properties (called assembly) and rezone it.

2 Residential

This is the most common type of real estate, it consists of housing for individuals, families, or groups of people.

3 Commercial

Commercial property refers to land and buildings that are used by businesses to carry out their operations. Examples include shopping malls, individual stores, office buildings, parking lots, medical centers, and hotels.

4 Industrial

Industrial real estate refers to land and buildings that are used by industrial businesses for activities such as factories, mechanical productions, research and development, construction, transportation, logistics, and warehousing.

Real Estate Business in Nigeria

Real estate business has become a gold mine over the years and many smart entrepreneurs have tapped into it and are making a lot of money.

Nigerians always look to either buy or rent buildings because they are always in need of residential apartments, office buildings and commercial outlets and they sometimes need to consult a real estate agent or expert before making their choices.

This explains why the real estate industry abounds with business opportunities and has been ranked as the 5th largest contributor to the GDP of Africa’s largest economy.

Is A Real Estate Business Profitable in Nigeria?

If you handle your assets intelligently, the simple answer to this question is absolutely YES! Real estate business is profitable. The most common way a real estate business can be profitable is through appreciation.

Appreciation is the increase in value of an asset over time. The asset can be an undeveloped land, residential properties and even commercial properties.

Achieving profit in your real estate business comes through selling your asset after it increases in value. Secondly, real estate profits from generating income through regular payments or rent.

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Investment opportunities in real estate

Buying a house or building one is not the only way you can make a real estate investment. The market has lots of opportunities. Here are some of them:

1. Land Flipping

Land flipping is a type of real-estate investment that involves buying lands at a low price and selling at higher prices to make huge profits.

This type of real-estate investment is profitable when you buy in a rapidly developing area, in which case you can make up to 300% in profits within a few months, or years, as the case may be.

You can start small by buying just a plot. Or if you have enough capital, buy as much land as you can and keep selling all year round.

Two things to keep in mind while acquiring lands:

1. Ensure you obtain all the documents for the land that show you are buying from the legitimate owner. The documents should include a Certificate of Occupancy or a Governor’s consent. Ensure that you don’t get mixed up in land issues. Acquire lands with the appropriate land titles.
2. Buy in areas that are rapidly developing if you want to sell within a couple of months. Some areas are faster than others.

Benefits of Land flipping

• High profits
• Low or zero maintenance costs.
• Ease of sale

2. Become a real estate agent

Becoming an agent is a very good option if you don’t have the capital to make an investment like "Land Flipping". You can simply offer your services to property owners who are looking for a buyer.

When you become a real estate agent in Nigeria, you get a commission after you find a buyer for the property. The common rate is 10%. So let’s say you find a buyer for a 30 million naira property, you stand to get a commission of 3 million naira.

You need to possess good networking skills in order to locate buyers and sellers. Here are some of the roles you'd have to play:

1. Advertise the property to the public through notices, fliers, banners and so on. Advertising on the internet is the easiest and cheapest method you can use.
2. Take buyers to see the property (property inspection), answer important question about the property and negotiate prices on behalf of the seller.
3. You must always be ready and available to answer any questions buyers may have.

Benefits of becoming a real estate agent

• Little or no investment capital required.
• It has great earning potential.
• And it grows your network.

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3. Property development

Property development involves acquiring depreciated properties that you can renovate and rent or sell at a very high profit. Unlike "land flipping" and "becoming an agent" property development requires a huge capital investment. 

As with any real estate investment, a good location is crucial if you want to make reasonable profits.

You have to make sure that the development costs will be far outweighed before you go ahead to invest in property development. 

If you spend like 3 million naira in renovations, make sure you can sell the property for at least 4 or 5 million naira.

Benefit of property development

• You will earn a higher profit than when you buy and sell undeveloped land.

4. Open space leasing

This simply means buying a land in a good location. And then you wait for the land value to rise, then start to earn monthly fees by leasing the land to people for temporary use. 

For example, you can lease it to a church, mechanics or car wash, or other businesses that can construct a makeshift structure that will be easily dismantled when you are ready to sell.

Benefit of Open space leasing

• You earn extra monthly profits before actual land sale, etc.

5. Rental properties

Building or purchasing a rental property is the most popular real estate investment in Nigeria. It is one way to keep earning for life. As a landlord, you receive monthly or yearly income after you build or buy properties and rent them out to tenants.

The biggest difference between investing in a rental property and other types of real estate investments is "maintenance", You'd have to regularly maintain the building to keep it in good shape, accepting bad tenants who damage your property or delay rent payments can be another big "wahala".

If you are not in a good location or don't invest in maintenance, you face the risk of not attracting any tenants at all.

Benefit of Rental properties

• Earning passive income for the rest of your life.

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6. Franchising

This is when you acquire land in different fast growing locations and use it to establish a business, such as a fast food restaurant. You buy land in various other locations, build your structures and find franchisees who will manage the restaurants on your behalf.

It may seem that brands, such as Mr. Biggs, McDonalds, Chicken Republic, and many others that exist today are only involved in the fast food business. But real estate acquisition is a major part of it. These lands quickly appreciate in value over time.

Benefit of Franchising

• Own land in several major locations across the country.
• Run a sustainable business while acquiring high value real estate.

Conclusion

Investments are essential for wealth creation. It’s not enough to leave your cash in the bank, where you will get negligible monthly interests. Invest in real estate today. It is something you have to do at some point before you retire, if you want to be comfortable financially. Why not give yourself a good head start?