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The best ways to start a real estate business in Nigeria

The best ways to start a real estate business in Nigeria
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Real estate investment is a big business in Nigeria. Many of the country’s richest men made their fortunes in this sector. Nigeria has a booming real estate market and attracts investors who want to enjoy the real estate sector bonanza.A growing economy, rising middle class, and migration from rural to urban areas are some of the factors that fuel growth in the real estate sector in Nigeria.

There are many ways you can enter the real estate business and test your luck.

With a little insight and business acumen you too can make a fortune in the Nigerian real estate market.

All it takes is to move smartly and take the right decision at the right time.

We will help you do just that, and hopefully, by the end of the article, you would have developed enough knowledge to start benefitting from the real estate sector and make your business plan of how to start your own real estate business.

What is real estate?

Real estate refers to land and property.

It consists of houses, shops, high-rise residential and commercial towers, markets, hotels, malls, plazas, etc.

So, in a nutshell, we can say that a piece of land and anything built on it is a real estate.

What is the real estate business?

Usually, the term real estate business refers to the buying, selling, developing and letting out the property according to your business plan.

Overview of real estate sector in Nigeria

Nigeria is expanding and growing.

It has overtaken South Africa as the largest economy of Africa.

Naturally, the land is hot in demand there.

As a matter of fact, in the commercial capital of Nigeria, Lagos, the price of land has gone up many times in the last few years.

Likewise, in some areas of Lagos, the rented property is costlier than New York or London.

The landlords there are asking for US$75,000 per annum of rent and 2 years of upfront payment.

The cost of a 2-3 bedrooms house in Lagos can be NGN 75 million, depending on the location.

These whopping figures tell us that real estate business is booming in Nigeria and it looks all set to continue its bullish run in the foreseeable future.

Real estate business in Nigeria, what to do?

So, to begin with exactly what can we do to earn handsomely from real estate?

Here we answer this question by providing you with a range of options that you can consider to start your real estate business.

Become a real estate agent:

The most basic and simple thing to do is to become a real estate agent or a realtor.

What is a real estate agent?

He is a person who helps broker a deal between a buyer and a seller of a property.

In addition to that, he can also get you, tenants, for your vacant property.

The agent earns commission which is usually 10 percent of the value of the deal.

Real estate agency is the most basic form of real estate business.

To become a successful real estate agent, you need the following;

Strong interpersonal communication:

You should have the gift of gab, as they say.

By all means, your talk should satisfy both the buyer and the seller, and they should trust you.

Market knowledge:

You should know about all the prime properties of the area where you operate.

You should know their rates and based on historical data and market trends, do future projections as well.

Indeed, you must also know the local and national laws.

Many regulations govern the operations of the real estate business.

You should be aware of them.

You must form a business plan keeping those in mind.

Become a real estate developer:

Real estate development means buying a piece of land or a rundown building and then developing on modern lines for housing, commercial, or recreational purposes.

This type of activity requires a lot of capital as development requires money.

If you have money on your own, then that’s great; otherwise, you can raise money for your venture.

You can attract investors who can invest in your project if you have conducted its feasibility and made a sound business plan for potential investors.You can raise money from;

  • Friends and family
  • Banks
  • Professional investors
  • Project financers

You will also need to develop a team of professionals like architects, engineers, planners, interior designers, technicians, etc.

If you can successfully carry out real estate development, the rewards are very lucrative.

They should be a part of your business plan.

Typically, you will get back twice as much as you invested.

Land flipping:

It means getting a piece of land with the sole purpose of selling it later at a premium.

Land flipping is out with a short or medium period in mind, which is around 2-5 years.

The land in question is also not very large.

If you are a novice in the field of real estate and also has limited capital, land flipping is the best type of real estate business for you.

Your success will depend on the location you choose for your land.

So, select a site with the potential to grow in price later.

You should also conduct a property survey and hire the services of a reputed real estate agent who can guide you in land acquisition.

If you want to do business in real estate in Lagos, you can invest in areas like Ogijo, Imota, Ijede, Igbogbo, Imowonla, Igberigbe, Igbolomu, Isawo, etc.

Similarly, Agbowa, Agbado, Epe, and Akute have potential too if you invest in real estate there.

It can jumpstart our real estate business in Lagos big time.

Real Estate consultant:

If you are well versed with the laws or have a law degree, then you can become a legal consult for real estate.

Acquiring, developing, and leasing real estate requires compliance with a lot of local and regional laws.

Not everyone is familiar with them.

This is where you can be helpful and offer your services and earn handsomely in the process.

Real Estate blogger:

Blogging has become a profitable activity in recent times.

With the proliferation of the internet and smartphones, people inadvertently look to their phones for help in every aspect.

Your blog can guide them in their property-related matters.

If your blog becomes successful, then you can reap enormous benefits.

This could be a great real estate business for you.

To develop a blog, you need to have some knowledge of designing a website and have good writing abilities.

You can always hire professionals who can happily do all this for you and charge nominal fees.

Just like a real estate agent, becoming a real estate blogger also does not require big amounts of money.

You can do it with a small capital quite easily.

Land leasing:

If you want to do real estate investment in Nigeria land leasing can be a good option too.

Here’s how it works; you own a piece of land which has a prime location you can still earn from it without developing it into a hotel or house or commercial building.

You can lease it to interested parties who can develop makeshift or temporary shops on it and pay you for using your land.

Additionally, you can also lease land for the parking facility, car wash, car workshop, etc.

The possibilities are endless.

It depends on the location of your land.

However, you need to look into its legal aspect too.

The law must allow you to use your land for commercial purpose.

If it is illegal, then it’s not worth all the hassle.

Real estate partnership:

If you own a decrepit house or building that requires huge sums for renovation, and you also do not wish to sell it, you can still use it to make money.

The answer lies in a partnership or joint venture.

You can enter into a partnership with a real estate developer who will invest in your property and revamp it.

Once it is ready, you can use it for rent or sale as agreed between both of you.

This is a win-win situation for all and a legit form of real estate business.

Rental income:

Rental income is not difficult to understand and is used worldwide as a popular source of passive income.

The income is fair and substantial, and you get to keep the ownership of your property too.

Depending on the location and the nature of the property, rental income can bring in big numbers for you.

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How to start a real estate business in Nigeria?

Now that we have already shed light on what you can do in terms of real estate business in Nigeria, let us now tell you how to go about it.

So, let’s with a basic,

Business plan:

Every business begins with a business plan, and you need to develop one before you embark on it—your real estate business is no exception.

Your real estate business plan should spell out your priorities, your goals, and how to achieve them in short to medium run.

It is a blueprint on which the edifice of your business will set up.

Marketing strategy:

The next thing is to devise a comprehensive and effective marketing strategy.

It should be part of your business plan.

No business can survive without proper marketing.

You need to have yourself heard and recognized.

As you are well aware, we all live in technologically advanced times, so the importance of digital marketing cannot be ruled out.

Advertise yourself on social media platforms and use SEO tools to maximize your reach.

Your marketing strategy should be the cornerstone of your real estate business.

Be a legal entity:

You must get yourself registered according to Nigerian laws.

The government has a specified list of regulations that real estate players need to adhere to.

You should be aware of all such laws and get yourself registered with relevant government departments to avoid any trouble in the future.

Remember, your real estate business should be a legal one.

Be tech-savvy:

More and more people are using smartphones in Nigeria nowadays.

To reach them, you must create your website and smartphone app.

It should describe who you are and what kind of services you provide.

Brand yourself in a way that resonates with your target market.

Market know-how:

To be a success, you need to have a thorough knowledge of all the aspects of your trade.

You should know the current happenings in the real estate sector of Nigeria and what lies ahead for it.

Your client should be impressed with your knowledge, and he will respect you for that.

Trust is everything for the real estate business.

Set up an office:

What is seen, sells.

You cannot rely on virtual presence only.

You will need to set up an office with some staff as well.

The clients would like to visit you to discuss business matters and close deals.

A nicely-furnished office will impress them and enhance your credibility in their eyes.

Do not underestimate the importance of a physical space for your office.

A real estate business needs it.

Look for investors:

As a savvy real estate businessman, you should always look for potential investors to invest in your business.

Real estate business is a pricey business.

No matter how much you have, it is never going to be enough.

So, always hunt for investors looking to invest in profitable ventures.

It will also be a part of your business plan.

It will help you clinch big deals and make fat profits.

Risk factors in real estate business in Nigeria

The real estate business is not averse to risks like the rest of the businesses.

Here are some of the factors you need to be wary of while doing real estate business in Nigeria;

Bureaucratic delays:

Nigeria has a lethargic and largely incompetent bureaucracy like most of the developing world.

A simple process of land registration can take weeks which can frustrate the real estate investor and hurt your real estate business.

High costs:

Property development has become so expensive in Nigeria.

Land prices, construction materials, labour costs are all very expensive.

They are higher than many neighbouring and developing countries.

All these factors are affecting the growth of the real estate business.

Accidents:

Accidents happening at building construction sites have become an issue in Nigeria.

Usually, they occur due to a negligent attitude towards safety measures.

The poor quality of materials and building also result in accidents bringing a bad name to the real estate business.

Corruption:

Get through the bureaucratic red tape, many palms have to be grease.

Nigeria is notorious for bribery and corruption.

Your refusal to do the officials’ bidding can result in delays and useless objections.

Undue taxations:

The real estate sector in Nigeria is subject to heavy taxation.

This is hampering its development.

There are too many government departments and too many taxes.

There is a dire need to rationalize the taxation system in Nigeria so that the real estate business prospers.

Real estate business in Nigeria conclusion

The real estate sector is a profitable and attractive sector to make money.

But how to invest in it?

The world of real estate business should explore with care and foresight.

One wrong move can make you lose your fortunes.

However, if you play your cards well and remain patient, this sector offers you a lot.

You just need to be focused, wait for the right time, and strike when the opportunity arises.

If you follow these guidelines, then your real estate business in Nigeria is going to reach for the stars.