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 sale.
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.
SOURCES:
Statistics from the UN showed that 85% of the Nigerian Urban populace lives In rented apartments
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