Are you wondering what real estate is all about?
You are thinking about how to make money in real estate?
The real estate sector is a lucrative investment option in Nigeria. Its viability can be attributed to the ever-growing population of Nigeria, which has attracted local and foreign investors. Recent technological advancements have also led to a change in personal taste and style among individuals. These factors, among others, play a crucial role in the growth, modern fineness, and style of real estate in Nigeria today. As a result, the market is expanding daily. However, the real estate business in the Nigerian terrain is not new, for it has existed for years.
This article is a guide for any novice wanting to know more about real estate in Nigeria and how to get into the real estate community. You will gain fresh insights into what real estate is, the types of real estate, and most importantly, how to invest in real estate.
What is real estate-simplified?
The term “real estate” has numerous definitions. In simplified terms, it is any form of property that consists of land, natural resources, and artificial attachments made by man. Buildings, minerals, water, and permanent structures are all examples. Real estate is land and everything on it.
Types of Real Estate Property
There are 5 major types of real estate property anyone can invest in.
A. Residential Real Estate
Residential Real Estates are properties majorly designed for people to live in. They include:
- Simple Family Home
- Multiple Family Home
- Vacation home
B. Industrial Real Estate
Industrial Real Estates are properties used in places where industrial activities such as refining, manufacturing, or production take happen. They include:
C. Commercial Real Estate (CRE)
CRE is a common type of real estate property. They are mainly properties that can generate income, hence the name commercial. For example,
- Shopping Mall
The land is a piece of undeveloped or developed surface. For example,
E. Special Use
Special use properties are properties that are for a unique purpose. They are not necessarily for commercial gain or industrial work. For example,
- Religious centres
Methods of Investing in Real Estate in Nigeria
Build and Rent/ Lease:
This method entails the construction of buildings on a piece of land to be rented or leased out after completion. An investor who would like to employ this method must complete an accurate survey before commencing construction activities. This will enable you to understand the housing needs of a particular area and its inhabitants properly.
A traditional method of real estate investment involves acquiring real estate properties by oneself, for example, land, single-family home, apartment, commercial storage, dependent on the available capital. It is essential to have a broker or real estate agent to help manage your deals to improve efficiency. (What to Do Before Putting Your Properties on Sale – Casacito) Referrals also work effectively in this system.
Crowdfunding Real Estate/ Online Crowdfunding:
Real estate crowdfunding is a method that involves having a network of like minds in real estate, the pooling of resources together, to acquire a property or properties. This method allows all investors to diversify their portfolios and generate tangible equity in the long run.
This is a type of crowdfunding, but it is more intimate than real estate crowdfunding. It consists of a smaller group of investors who join resources together to purchase real estate properties.
Property flipping is another method that involves the acquisition of property from Investor A at a particular price and selling higher to Investor B later on. This method allows a real estate dealer to amass a huge cash flow within a short period. However, an investor must pay close attention to the market scene to arrive at accurate speculations that could lead to sales.
Real Estate Partnership:
Partnering is another method in real estate investing. This form of partnership is where knowledge and finance are combined to become one. There exists an Active Partner and a Funding Partner. The active partner is in charge of market research, finding deals, rehabilitation of properties, lease of properties, selling homes and overall management; taxes & increasing portfolios while the funding partner provides funds and makes strategic decisions.
Real estate companies sometimes operate investment platforms where the general public is called upon to invest in a proposed project.
There is always an agreed percentage received as an investor from the real estate company.
Real Estate Development:
Real estate development is a method that involves the development of vacant land or poorly developed structures. Before you embark on RED, it is advisable to have an available buyer. This is to avoid running into debts and also, to enable you to have enough resources for project implementation. This method is simple- A person requests, you develop.
How to Acquire Real Estate Property in Nigeria
Getting properties in Nigeria can be done using these 3 methods.
Land Owner ( Omo Onile)
These are the original landowners, also called “omo onile”
They get these properties through inheritance by being related to a particular family or community.
“Omo onile” were the first agent in the land transfer process, as they have existed before the government and real estate agencies came into the system.
The government in a state can also handle or supervise the acquisition of real estate properties by people. The parastatals involved in a city like Lagos include: New Town Development Authority (NTDA)
Physical Planning and Urban Development State Ministry
Real Estate Companies
Real estate companies are companies set up with the primary aim of offering real estate services such as buying and selling properties.
It is the best method of real estate acquisition, as they generally have better knowledge about the sector and are better organized and credible in their dealings.
Key Terminologies in Real Estate
Real estate has its terminologies, just like any other sector. They include:
- Assessment: Value attached to a piece of real estate by an appraiser
- Breach of Contract: A shift from an earlier agreement between a seller and buyer
- Cash Flow: Total amount of profit made from real estate deals after a month
- Depreciation: A fall in the value of a property either due to environmental or economic factors
- Real Estate Developer: A person in real estate that is responsible for the construction or renovation of properties
- Real Estate Agent: A professional in real estate deals who represents a buyer or seller
- Foreclosure: A takeover of ownership by lenders in situations where borrowers fail to pay
- Realtor: A realtor is another name for a real estate agent. They also perform the same
- tasks of buying and selling properties.
- Listing: Making a property approved for sale to the public through a real estate agent
- Closing: The final stage in any real estate deal, where the buyer transfer money and the seller transfers documents, and properties.
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