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10 MAJOR FACTORS TO CONSIDER WHEN BUYING REAL ESTATE INVESTMENT IN NIGERIA

With the current trend in the real estate sector and the need for individuals to be cautious before dropping their hard-earned money for any project or business opportunity (not just real estate investments) in order to prevent being dubbed or losing out at the end, the need to be better equipped in knowledge cannot be over-emphasized.

Buying a land is considered one of the oldest forms used to determine how wealthy a person is in Nigeria. In times past, it is not unusual to see people measure a person’s wealth by the amount of land they own. Times have passed, and people now understand that there are a thousand and one more ways to determine this. However, the value placed on land cannot be undermined. For some, buying a land is one of those goals to achieve before a certain age or retirement.

At some point in life, you might consider yourself buoyant enough to be your own landlord. One option often considered by a lot of people is buying land to build a house i.e their dream home. Also, to the real estate investment beginner or pro, buying land for investment is considered one of the surest ways to make profits in the real estate industry. There are, however, different reasons why people decide on taking on real estate investments. Whether it is a land ie a plot of land or an acre, there are definitely, however, things to consider.

In this post, I will divide the business opportunities in Real Estate Investments into two:

  1. Real Estate Investment Trust (REIT)
  2. Real Estate Property Purchase
Real estate Investment

REAL ESTATE INVESTMENT TRUST (REIT)

A real estate investment trust (REIT) is a company that owns, operates, or finance income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any property themselves.

Before you invest in any real estate investment opportunity that comes your way or the one you found while looking out for ways to diversify your investment portfolio, the following are your must-know factors to consider.

Note that in order to get your facts right, you will be required to go on a minor research. I guess it will be worth it before you give out your hard-earned money to an investment that will fly away.

  1. The company history and track record:

It is very important you research the following and get answers to them. It may even require you have a physical meeting with the company to get the facts and relate it with what people outside the company are saying:

Who are they?

How long have they been in existence?

What is their operational module?

Has anyone said anything negative about them?

Has anyone heard anything about them?

Etc

Go further to make enquiry from people living close to where they claim their physical office is to confirm if they are genuine or not. Do people living in the area aware of the company or not?

The answer you get for the above will save you a lot from any form of financial loss.

  1. Board of Directors / Management:

Who are those in charge of the company?

What was their business experience before starting the company?

What qualifies them to be able to manage such a company?

Who are they in the business world and the economy?

Have they held any related offices in the past?

What is their integrity level?

Has anything “Negative” being said about each of them in the past (check through the social medial)?

What is their success stories and award won individually or as a group?

What milestone have they achieved as individual and as a group?

What are the mission and the vision of the company?

etc

  1. Government Certification:

It is worthy of note that all companies are meant to register with CAC (Corporate Affairs Commission) in Nigeria. In view of this, you need to get their CAC Registration number and verify its authenticity.

That’s not all! Anyone can register with CAC yet not be a good company to partner with. Go further to see how well they are doing with their annual returns and financial statement.

  1. Insurance Certificate:

This is essential as we all know that with the policy and political instability, the need to insure our investment has never being this critical than now.

You need to know if your investment is insured as evident by the Insurance Certificate you would be given after your investment. This is one of the important documents you should be given after investing in any corporate company.

Therefore, before you invest in any real estate property, ensure you confirm if this will be given to you.

  1. Investment Certificate:

It is important you receive an evidence for investing in a business opportunity and it has to be sealed with appropriate legal seal.

Confirm if this will be given to you before you drop your hard-earned money.

  1. Physical Presence:

This is very important. The following questions should be asked with answers gotten:

Where is their office located?

How many offices do they have?

You should go further to inspect or do a background check on the offices. Do a short fact finding from the people around those offices. It is not enough to see their offices; it is important you ask few questions from people around the locations about how real the company is or is it just a rented apartment as a camouflage. 

  1. Third party Validation:

Try as much of possible to confirm from any platform you are on to palpate what others have heard about them or experienced. Although, this could be subjective due to sentimental attitude of human beings. Hence, you should only add this factor to other major factors mentioned.

  1. Social Media Presence:

This allows them to interact with their existing and prospective clients. Through this, you can easily know and see what others are saying about them.

Do they have social medial presence? Facebook page, Instagram, Linked-In etc 

Do they have a website? What review do people leave on the internet?

 What do they write on their website?

Is their website having many typo-errors? If they can’t pay attention to detail in writing and in getting a good content writer, one should be sceptical about his/her investment

 Is there enough detail on the website or not?

  1. Business Model:

    What profit margin are they offering? Where the profit margin is “too good to be true”, it calls for concerns. You should avoid such investment.

Yes, real estate is a booming sector in the country but you should stay clear of those offers that are “too juicy”.

  1. Testimonials of Existing Investors:

This is very important. This allows you to know if they are keeping their words or not. It helps you know if they are keeping to terms and conditions of the contract or not. It helps you know if the investors are getting their returns and as at when due.

This can be gotten on their social medial pages and on their website.

Now, I will be moving on to talk about the second business opportunity in Real estate and the sevearal factors you need to consider before venturing into it. Before then, however, kindly take out some time to look through a few of the properties I have for sale.

PROPERTIES FOR SALE

REAL ESTATE PROPERTY OWNERSHIP

It is no news that many have gone through several phases of enquiries about this question – What is the most important thing to look for in real estate?

While location is always a key consideration, there are numerous other factors that help determine if an investment is right for you. In this section of this book, I will be showing you some of the most important things to consider if you plan to own a property (landed property or structure). 

  1. Property Location

“Location is to property investment what water is to the body”. What determines the worth of your property today and what it will be tomorrow is Location.

Proximity to social amenities such as airport, stadium, shopping mall, recreational centre, good access road, nearby educational institution etc is key to boosting what you will get in return on such property.

Also, having a property close to manufacturing companies can make such property not be good and will not sell for residential purposes.

  1. Investment Purpose and Investment Horizon 

Given the low liquidity and high-value investment in real estate, a lack of clarity on purpose may lead to unexpected results, including financial distress – especially if the investment is mortgaged.

Identify which of the following broad categories suits your purpose, and then plan accordingly:

  • Buy and self-use. Here you will save on rent and have the benefit of self-utilization, while also getting value appreciation.
  • Buy and lease. This offers regular income and long-term value appreciation. However, the temperament to be a landlord is needed to handle possible disputes and legal issues, manage tenants, repair work, etc.
  • Buy and sell (short-term). This is generally for quick, small to medium profit—the typical property is under construction and sold at a profit on completion.
  • Buy and sell (long-term). This is generally focused on large intrinsic value appreciation over a long period. This offers alternatives to compliment long-term goals, such as retirement
  1. New Construction vs. Existing Property

New construction usually offers attractive pricing, the option to customize, and modern amenities. Risks include delays, increased costs, and the unknowns of a newly-developed neighborhood.

Existing properties offer convenience, faster access, established improvements (utilities, landscaping, etc.), and in many cases, lower costs.

Here are some key things to look for when deciding between a new construction or an existing property:

  • Review past projects and research the construction company’s reputation for new investments.
  • Review property deeds, recent surveys, and appraisal reports for existing properties.
  • Consider monthly maintenance costs, outstanding dues, and taxes. Costs such as these can severely impact your cash flow.
  • When investing in leased property, find out if the property is rent-controlled, rent-stabilized, or free market. Is the lease about to expire? Are renewal options favorable to the tenant? Who owns the furnishings?
  • Quality-check items (furniture, fixtures, and equipment) if these are to be included in the sale.
  1. Overall Real Estate Market

As with other types of investments, it’s good to buy low and sell high. Real estate markets fluctuate, and it pays to be aware of trends. It’s also important to pay attention to mortgage rates so you can lower your financing costs, if possible.

Stay up-to-date with trends and statistics for:

  • Home prices and home sales (overall and in your desired market)
  • New construction
  • Property inventory
  • Mortgage rates
  • Flipping activity
  • Foreclosures
  1. Your budget

This is the primary thing. You would need to look for properties within your budget and analyse the best out of the listed ones. No matter how attractive a property is, if your budget is below the price, there is little or nothing you can do about it except you source for capital to augment what you have on ground. However, while doing, ensure you have done due diligence on such property to know it is a worthy investment on the long term.

  1. Government Policy

Ensure you pay attention to the policy in the real estate market per time and the follow through in order to know the best time to dive in and the best time to hold on.

  1. Documentation/Legal seal

For any property you are buying, ensure all the paper works are done and seen before dropping your heard-earned money

  1. Avoid Properties with dispute

Properties with family or related dispute should be avoided as much as possible. You don’t want to engage in anything that will make you to bring out extra cash in order to cement the ownership of your property having paid for the earlier cost.

This can be discouraging and can stall the progress of such project. Therefore, stay clear such offers.

In conclusion, Real estate can help diversify your portfolio. A real estate investment can also provide steady cash flow, substantial appreciation, tax advantages, and competitive risk-adjusted returns, making it a sound investment.

Of course, just like any investment, it’s important to consider certain factors, like the ones listed above, before you invest in real estate – whether you opt for physical property, REITs, or something else.

For further enquiry and recommendation of Real Estate Companies:

+2347063400787 [WhatsApp]

Samson Babalola

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