Owning property has been a sign of wealth and status for centuries. In recent years, real estate investing has become even more popular, and Nigeria has always been a good place to invest in real estate due to its excellent profit potential. Across the world in developing countries like Nigeria, there are a variety of opportunities through which you can invest.
Investing in real estate guarantees great returns on investment, and is arguably the best way to build and preserve wealth. Having said this, there are several ways of actually investing in real estate: each coming with its unique advantages. However, we will be focusing on 6 ways to invest in Real Estate.
This article will highlight how to invest in real estate in Nigeria and some of the best types of investment opportunities on offer.
Investing in real estate through buying property
Capital is a prerequisite of investing in real estate. There can be a considerable sum involved depending on which real estate investment strategy is chosen.
Making money from real estate in Nigeria is easiest when you buy a property directly from the owner or a property company. The buying, holding and selling of property have made many people millionaires. It has also enabled the wealthy to safeguard their assets for future generations.
Below you will find several different methods of investing in real estate and how you can make money from each strategy. Many of these ways require little to no money, so you will be able to identify opportunities that are best suited to you.
Buying residential rental properties
Buying rental properties is a tried and tested way of real estate investing. With rental properties, you can generate passive income and build wealth at the same time. Investors profit through collecting rent from tenants plus gain from property price appreciation over time.
For maximum benefit, rental properties must be sited in good locations: places where you can quickly rent your properties out to longer-term tenants. This will allow you to generate a steady cash flow for an extended period.
Rental properties may include a combination of flats, condos, terraces, townhouses, bungalows, duplexes etc.
Invest in Airbnb
Airbnb rentals are a great investment opportunity for anyone seeking to make money from real estate. Airbnb has become a popular short term rental platform worldwide: as more and more travellers look for alternatives to hotels. This rise in demand means Airbnb hosts can increase nightly room rates. At the same time, it lowers the vacancy rate of rooms.
With Airbnb, you will be renting out your properties for only a few days or weeks at a time. This gives you the option of utilizing the property for your own needs when you need to,
Investing in an Airbnb property also lets you enjoy the benefit of your property appreciating over time. The key here is to invest in property where there is demand for short term rental: think vacation destinations such as Abuja and Lagos in Nigeria.
Fix and then flip a property
With flipping, It’s best to look for properties where there is already a strong demand, as this will make it much easier for you to sell later on. Accordingly, you need to have a decent knowledge of the local real estate market and be able to renovate cheaply: to make a good profit.
The quicker you buy and sell, the better, as you will be able to minimize any property maintenance costs such as insurance, taxes and mortgages payments.
Property development: buy land and build a house
It involves all the processes of transforming land or buildings into something with higher value.
By adding value to a property, in the form of erecting a structure, for example, you can profit more than if you had sold the land undeveloped. Property developers are driven by the desire to maximize the value of the properties they develop.
This method of investing usually requires a lot of capital; hence people often enter into joint venture partnerships: where one party has the land and another party comes in to develop it. The proceeds are then split, depending on the terms of the joint venture agreement.
Invest in agriculture via buying of farmland
These days, it is advisable to invest in agricultural land. Because good farmland is becoming scarcer while at the same time the global population is steadily increasing: thus creating more demand for food.
You can sell harvested produce directly to the buyer, lease the land to farmers or flip the land for a profit.
Due to the low costs of farmland, investors with limited funds may benefit from this investment. With the urban expansion, in developing countries such as Nigeria, that rural agricultural land you buy now may become urban within the next 5 to 10 years!
Conclusively, Nigeria offers many opportunities for investing in real estate – each with its benefits.
Make sure you do your research on the market you choose to invest in and formulate an investment strategy.