How to Become a Successful Real Estate Investor in Nigeria.Kehinde LAWAL
Who is a native investor?
An investor is someone who leverage money in a business/product, so as to generate profit or reward. So traditionally, anybody can be an investor no matter how much you earn.
However, some certain set of people have coined themselves to be the modern/real investors; they are the venture capitalist and angel investors.
- Angel Investors are individuals who can invest between $10,000 and $1,000,000 in a business.
- Venture capitalist are the few individuals or firms that can invest over $1,000,000 in a business.
I intentionally shared the figures above to broaden your mindset as regards investment. People invest millions of dollars in property and products, and I won’t want the average Nigerian to settle for less, judging investment by the petty deals they see around them.
Just to serve as validation; I started investing with as low as ₦2,500 and right now I can boast of investing $1,500 each in about 3 products/businesses. Not much though! But it’s something when coupled with the experience have gained.
I believe if we keep going and growing(learning), we shall one day have the capacity to invest over 1 million dollars in properties/businesses.
Roadmap to Becoming a Successful Real Estate Investor in Nigeria.
A real estate investor this time around is simply anybody that invest or put money in real estate’s. Popular example of which are lands, houses and commercial buildings etc.
Real-estate investors are not only limited to building properties from scratch, they can as well buy and sell properties or buy, renovate and sell properties etc.
Most people will jump into searching for property for sale in Nigeria, thinking the money is in the deal, No! Knowing the rudiment of real estate investing is very vital, and it begins with having a clear understanding of the terminologies used on a day-to-day basis.
Real Estate Terminologies
Listed below is the simplest definitions to some of the commonly used terminologies when doing real estate in Nigeria:
- Real estate Brokers: These are professionals who facilitate the buying and selling of landed properties. My mentor “Robert Kiyosaki” do call this people broke people, simply because they can’t take all the deals that comes to their table, they’re broker than you’re.
- Land: This the solid surface of Earth that is not permanently covered by water.
- Agent: This are local and unlicensed individuals who act like real estate brokers. They are much popular in developing countries like Nigeria, since they are more accessible to investors and home buyers than the real-estate brokers. They help you scale through properties for sale in Nigeria.
- Property: a property is anything you can own and use. Everybody has a right to own properties.
- Real estate investing: According to Wikipedia “Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit.”
- Real estate deals: This a complete real estate purchase or transaction. Don’t ever over-look the process of making deals, as it is far more than just paying the seller.
- Real estate options: options in real estate are the various ways to make money in real estate. Popular options are;
- Purchase and sale of land/properties;
- Buy and rent of properties;
- Buy, renovate or development of properties;
- Other less common options are buying units in housing and commercial estate yet to be constructed and selling after they are constructed.
Real estate investing just like any other businesses, is dependent on sales and cash flow. You can’t be a successful real-estate investor if you constantly run out of money and you don’t know how to raise money.
Though it’s very obvious you can’t buy every property that comes your way, knowing how to secure funds for purchasing the property will help ensure you get your hands on the right deals.
Based on a research I did recently, I confirmed the only accessible source of loan for real estate in Nigeria, to be the commercial banks. Other sources are not reliable because they are not always accessible when needed and the requirements are quite bulky.
Even LAPO and other common micro-finance bank won’t borrow you money to do real estate in Nigeria.
So how do you start or fund your real estate deals?
The easiest way to start your real estate deals and fund them successfully is to start small.
Start by purchasing real estate with the little money you can raise i.e. (buy a boys-quarter, half plot, an office/shop unit etc). Afterwards, gain the needed expertise you need to source and manage big funds.
In addition, start helping other people make profitable deals; build your portfolio and before you know it, investors will be on the look-out for you. You can as well use the profit you make from helping others to buy more real estates.
Let others know you’re now a prudent expert, when it comes to real estate in Nigeria.
Know your Aim in Real Estate: Two Types of Real Estate Investments.
According to Robert Kiyosaki (the popular author of the Times best seller book “Rich Dad Poor Dad”), when it comes to investments, there are primarily two things people invest for: capital gains and cash flow.
Capital Gains are the one-time profit you make on the sale of an investment. The strategy behind capital gains is to buy and sell. In order to realize capital gains, you must sell the asset. As long as market prices go up, capital-gains investors win. But when the markets turn down and prices fall, capital-gains investors lose.
Cash Flow is an ongoing stream of income you receive from an investment. You may receive this money on a monthly, quarterly or annual basis, depending on the investment. The strategy behind cash flow is to buy and hold.
My advice is to buy or develop properties that produce cashflow and in few occasions depending on the property market, you may completely sell off your property for capital gains.
Real Estate Investing Tips.
Below are my time-tested tips for any Nigerian going into real-estate investment:
- At first, invest more time than money: Don’t look for huge deals requiring huge amount of capital, thinking you will make more gain. Instead, invest more time in searching for properties and working alongside a broker/agent. You have to gain experience from small deals, so don’t jump stages.
- Choose a property that is close to you: The worst real estate properties you can buy when you’re just starting are the ones very far from your home. Remember, being successful in a new business require first learning and gaining daily/weekly experience. Purchasing a real-estate property where you hardly visit, is too risky for a start.
- Fall in love with the area and not the house: Note this down! It’s the area that gives real estate the value and not the house itself. There’s no point building or purchasing a nice hotel in a village, it’s of rare use. In addition, don’t be too attracted or attached to a real estate that you won’t be able to do without it. Therese always better deals to come.
- Buy property that has problems that you can solve: A major tip for newbies is that they should look for property that has problem they can easily proffer solution to. Identifying problems and knowing the ones you can solve is better than looking for sugar-coated or ready-made deals.
- Before entering a negotiation, have a maximum amount you will pay: The maximum amount you can offer for a property is very important prior to entering a negotiation. If your offer is not accepted after reaching the maximum limit you high marked, move on. There is no point using all the money you have to purchase a property and having nothing left to renovate, build or market it.
- Know your broker very well and pay them well: Study your broker, is he an investor or a home buyer looking for fast profit. Also, do pay them well or else they won’t get you better deals. As Robert Kiyosaki will always say, “most people will either tip a waiter than tip their broker; that’s tipping someone who is costing you money, instead of somebody who is making you money.”
Final Tips: Take action and take it now!
Haven read what it takes to be a successful real estate investor in Nigeria, nothing will happen if you don’t buy any property; so get up and start doing your homework as regards the next property you’re going to buy.
I suggest you implement Donald Trump and Robert Kiyosaki’s method. Donald spent more time analyzing the property, and he always ensures he has more information than the other party that is buying or selling. On the other side, Robert would spend 3 month to investigate 100 properties before buying one.
That’s exactly what you need. Invest more time in finding property for sale in Nigeria and make sure you check a lot of deals, so as to sieve out the real deals from the scams.
I will conclude this writeup by giving you one of my favorites warren buffet’s quotes.
“Don’t be afraid of bidding too low when you’re buying and asking too much when you’re selling.”
… Warren Buffet.
It’s my joy to see you purchase your first property, so BIP me when you do.
Always to your financial success.
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