Real estate investing in Nigeria is one of the major ways that investors create steady income streams. Although, just as there are countless ways for you to make money and build a financial cushion for yourself, there are several loopholes that can limit how much money you make when you invest in real estate in Nigeria. That is why it is important to do thorough research before you dive in.

Check out our article on 5 Factors To Consider Before Buying A House In Nigeria for some valuable tips.

While there are numerous ways to make money in real estate, they all fall under three major factors, which are:

• Value Appreciation
• Rental Income
• Business Generated Revenue

1. VALUE APPRECIATION: 

Over the past few years, the Nigerian real estate market has experienced a slow but steady growth rate. However, a recent Lagos Property Market Consensus report showed that Nigeria’s largest real estate market was arguably unaffected by the COVID 19 pandemic. The Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos chapter, established that investors could make money from the sector despite the pandemic, depending on where they channelled their funds.

Here are some of the ways that investors leverage value appreciation to make money in real estate:

• • Off-plan Investing: Property developers are now creating opportunities for more investors to get investment properties in great locations at rates usually below the market rate.
  • Fix and Flip: This is one of the oldest yet profitable real estate investment strategies in Nigeria. This investing method involves buying old or dilapidated properties in good locations at a low price, then spending some money to repair the property before it is sold off at the actual market price with good profit margins.

2. RENTAL INCOME: 

One of the most popular and evergreen ways of making money in real estate in Nigeria is through rental income because humanity cannot survive without shelter. However, when people think about rental properties, most think of residential rental properties while they forget that there are commercial rental properties. This is probably a side effect of the pandemic as more businesses are now working remotely, leaving more commercial properties empty. Rental properties can come in different typologies and locations depending on the intended purpose. Some of the most popular types of rental properties are family homes, stores, warehouses, vacation homes, studio apartments, duplexes, etc. 

Here are some common ways to earn rental income in Nigeria:

• • Lease: A lease is an agreement between a property owner and a lessee in which the latter rents a property for a certain period, usually several years, with an upfront payment or an agreement to pay at regular intervals. Although the lease style is gradually facing out in Nigeria, some investors are still enjoying great returns on their lease properties.
    
  • Serviced Apartments/ short let: Serviced apartments are gradually becoming a replacement for hotels in Nigeria. In the heat of the COVID-19 lockdown, many homeowners in Lagos discovered the importance of having serviced apartments to tackle the growing demand for Airbnb and short stay homes as Hotels were forced to stop service. In private discussion forums, many of these homeowners gave accounts of how they made more profit from putting their homes for short rent in a few months than they would in a year. For example, a landlord can rent out his serviced four-bedroom duplex for N120,000 to N200,000 per night at an avg of 70% occupancy rate. This means that in a year, he would have made N30,000,000 which is more than 7 times higher than the average annual rent of N4,000,000 for the same four-bedroom duplex. 
  • Shared Apartments: One good way to make more returns on your rental property in Nigeria is through shared apartments. Many investors who have rental properties in relatively expensive neighbourhoods have converted their homes to shared apartments to enable more people to afford the rent. In return, these investors get more rental income from their multiple tenants than they would with a single tenant.
  • Annual/ Monthly Rent: This is the most common rental agreement in Nigeria in which homeowners rent out their homes to a tenant for a monthly or yearly fee. 

3. BUSINESS GENERATED REVENUE:

Several business ideas in Nigeria have close ties to real estate as their revenue is dependent mainly on their location. In this case, investors buy a particular real estate because of the benefits that it can bring to their business. A simple example of businesses that operate this model is a car wash. Car wash owners find the best location, usually on major roads, because it gives them easy access to their customers. Another example is gas filling stations. Because of the nature of business and the high risks attached to petroleum gas, filling stations are majorly located on main roads, where customers can conveniently drive in and out. 

Other unconventional ways of making money in real estate include Joint venture and Project Partnership schemes.

In a joint venture, an investor offers either land or capital to a property development company to start a new construction project. In return, the investor gets ownership rights to a portion of the developed property.

On the other hand, project partnerships allow investors who want quick cash gains to partner with a real estate company by investing some funds in a construction project for a fixed duration. In return, the investor gets their capital + interest at the end of their investment cycle.

Are you looking for new investment properties in Nigeria? Check out our home page www.dradrockng.com for a list of new properties for your portfolio. You can also send an email to marketing@dradrockng.com to book a session with our seasoned property advisors.