By Noah Ibrahim
Real estate has existed for centuries and has brought about
several investment yields to investors but only a few have
tapped into this goldmine. Real estate is a huge industry and
there are a lot of opportunities to invest in which makes it a vast
market for everyone. Although there are factors that mould
today’s real estate investment market as against what was
obtainable decades ago. Learning the basics of how to invest in
real estate is the first step in choosing a strategy and making
your choice of investment based on your budgets and long term
goals. Regardless of the economic downturn, it is still the easiest
and safest means of investment in Nigeria.
According to the Federal Mortgage Bank of Nigeria
(FMBN), the present housing deficit is at N22million contrary to
the previous statistics of N 17 million. The World Bank has
estimated that it would cost Nigeria as high as N59.9trillion to
bridge the housing deficit in Nigeria. With these huge deficit
numbers, there is a pivotal question to ask. Are you seeing these
numbers from a consumer perspective or from the perspective of
a business opportunity?
The demand for retail stores, workspaces and homes would
continue to skyrocket because the population of Nigeria is
steadily increasing. A lot of people believe real estate is a long
investment but that is not always the case. It is important to find
out the kind of investor you are. Are you are a short term
investor or a long term investor?
For a long term investment buy-and-hold is the way to go and it offers the possibility of maximizing your return over a long period of time while Short
term investment, on the other hand, is one you hold on to for
three years or less then sell.
Real estate investment opportunities in Nigeria are endless,
below are five opportunities to consider.
1. RENTAL PROPERTY INVESTMENT
Rental property investment is the most popular form of real
estate investment. It involves the purchasing and leasing of
properties to tenants, which could be on a monthly or annual
bases. The properties range from single-family homes to entire
apartment building depending on your cash flow, an investor
might choose to rent out an entire single-family home or rent out
individual rooms to tenants. this type of investment guarantees
steady income and the opportunity to gain appreciation over a
period of time.
Lagos is a home for over 22 million people, and as these
statistics increase so is the demand for accommodation too due
to the population of job seekers moving to the cities. Statistics
from the UN showed that 85% of the Nigerian Urban populace
lives In rented apartments. this fact undoubtedly makes this a
profitable real estate opportunity. Owning a rental property not
only leaves you with a fixed income yearly but it also assets that
would appreciate in the long run.
2. FLIPPING PROPERTIES
House flipping involves the purchase of run-down properties with
an intention to renovate and resell. How does house flipping work? House flippers find homes that are in a dilapidated state,
make a great bargain, oversee and manage renovations from
start to finish and sell these homes for a substantial profit.
Flipping lands is also possible, this works when a piece of land is
purchased and resold when there is an increase in value.
This form of investment pays the developer more than having to
start a building from scratch. With this, you can invest money, get
returns in six months or a year and purchase another property.
3. COMMERCIAL REAL ESTATE INVESTMENTS
People believe real estate is just about owning houses and do
not look through to the commercial aspect. Commercial real
estate is the purchasing, leasing, and selling of real estate
properties which are nonresidential. These real estate properties
could be for businesses, retail stores, office spaces, etc. As an
investor rent is collected from each business that operates within
the structure or the structures could be put up for an outright
4. REAL ESTATE INVESTMENT TRUST (REIT)
Real estate investment groups are like small mutual funds that
invest in rental properties. In a typical real estate investment
group, a company buys or builds a set of apartment blocks then
allow investors to purchase them through the company, though a
lot of people aren’t aware that it is a way to trade real estate
just like stocks and bonds. There are various benefits attached to
REIT. One of these is portfolio diversification For investors
interested in diversification, as real estate investment offers an
alternative to equities and fixed income securities. When
compared to other forms of real estate liquidity is another
benefit derived from REIT as it makes for relatively liquid assets
that can be sold very quickly to raise money. REIT gives investors
access to non-residential investment such as office buildings or
malls which are highly liquid.
5. PROPERTY DEVELOPMENT
Investing in property development is really capital intensive. This
is a type of investment that entails the purchase of property in
nice locations and developing them into commercial structures or
luxury apartments and resell for a higher net profit. Property
development investment is very location-sensitive.
In conclusion, Real estate investing offers a lot of opportunities
than most investments. Once you’ve done your background check
about the different real estate investment strategies, you have a
better understanding of the kind of investor you want to then
start small and invest smartly.
Noah Ibrahim is a young, innovative entrepreneur and real estate professional and is the MD/CEO of Novarick homes and properties. To get more insightful views by Noah Ibrahim visit his blog www.noahibrahim.org