Top 4 Real Estate Investment Strategies for Nigeria

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Most people have some inner desire to be rich, and wealthy, or at least to be financially independent.

Having to depend on another person or company to earn a living can be very stressful, and can leave people feeling vulnerable, inadequate, and at the mercy of another person’s actions, or a company’s decision.

That is why people dream of being rich, hustle to make money, and sometimes this deep desire drives them wander into illegal activities to gain wealth.

We are constantly bombarded with images of luxury and fine living – the fancy cars, jewelry, mansions and private jets to name a few, and when we fall short of achieving these items, we feel like failures or not worthy.

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Usually, people take the easy road, or the familiar path – get an education, then get a job, work the way up the ranks, and hopefully, that will put them in a position to live a comfortable life.

Is Real Estate the Answer?

Some folks do not have the patience or time to work for years and years just to barely get by. They want to move up the socio-economic ladder fast, and they need a vehicle to get there. Real estate tends to be the vehicle in which the rich acquire, obtain and retain wealth.

The reasons are many and as we discussed in our recent article about investing in real estate, they are valid and verifiable. So that is why we agree that real estate is the best answer for the “common man” to level the playing field and have the opportunity to increase their net worth.

4 Strategies to Invest in Nigerian Real Estate

Buy and Hold

This is a common and basic strategy where most people start when they invest in real estate in Nigeria. It is the most simple and straightforward method. You find a piece of property or land, purchase it, then hold onto it for a period of time and wait for the property to increase in value or appreciate.

After the property gains value, you can sell for a profit and cash out. This can even be your personal home. That is the easiest way to begin. Buy your own home, live in it, wait for it to appreciate in price then sell for a profit – you are a real estate investor.

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The cons with this strategy are of course having the capital or funds to purchase the property. That can limit the type of property or location where you can buy real estate. This means you will have to save up a lot of money before you can purchase an investment property.

Nigeria is not like abroad where you can obtain a mortgage easily and only have to put up 3-10% down payment on a property to purchase it. In Nigeria, the mortgage industry is in its infancy and we are yet to see the enormous benefits of this style of investing.

Flipping

House or land flipping is another simple strategy to employ. Similar to buy and hold, in flipping you purchase the property and then quickly re-sell for a profit.

This means that you will have to find a property at a good bargain, then purchase it, wait a few months the re-sell (flip) to someone else.

This strategy is good in hot markets where houses are selling fast, which enables you the investor to buy and quickly flip for a profit.

The cons to this strategy are that you still need the money upfront to purchase the property and if the market turns and cools down, it may be more difficult to find and flip real estate.

Become a Landlord

Landlords in Nigeria have a reputation of being ruthless and callous in their approach to tenants. Some increase rents and neglect their properties and put a lot of the burden on the tenants. You do not have to be like this though. You can be fair, and provide a safe and clean environment for your tenants.

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In this approach, you may still have to buy a property, or you may already have one that you can rent out, or you can rent out your boy’s quarters or other structures. The pros of being a landlord are that you will tend to get a full year of rent upfront, and you can put the maintenance and repair (sometimes) on the shoulders of the tenant.

The cons to being a landlord is having to deal with rowdy, messy tenants. They may leave your house in disarray and destroy items. It also may be difficult to evict them if they overstay their welcome.

Short Term Rentals

This is a hot strategy at the moment. The rise of sites like Airbnb, VRBO, and others have changed the real estate investing game in Nigeria. This strategy involves renting out homes or rooms for short periods of time. Think of it as a hotel situation.

Guests book a stay for a few days or few weeks then they check out. Then you repeat this process through out the month and profit from the guests and renters that occupy your property. This is very convenient for guests and they have adopted and adapted to this new style of renting quickly.

It allows the travelers more options than the standard hotel rooms that are available. In a short term rental you can potentially rent an entire house and share the costs with friend.

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Pros of this strategy include more profits per month since you can charge a daily, weekly rate that can fluctuate according to demand.

Cons include dealing with slow periods and also cleaning and maintaining the units after each check out. There is also a rating system usually within the rental software platform, so users and guests get to rate the accommodations and facilities – so you better ensure that they are having a good experience.

What is Best for You?

We listed only 4 strategies, but there are many more. The right approach for you as a real estate investor in Nigeria is completely dependent on you and your aptitude, determination and what level of risk you are willing to take.

Do not be fooled by people online or in person that tell you that real estate investing is easy or can guarantee you profits overnight. This is not likely to happen. Real estate investing typically is a long term approach and when done smart and with good information and knowledge, can indeed make you very wealthy.

The key is to be smart, take your time, but take action. Do not wait too long, since property will not wait for you, other investors will be circling like sharks to buy. So get in the game and be on the look out for more info and in-depth teachings on how to step by step, find, purchase and invest in real estate in Nigeria.

Roman Kingsley

Journalist based in the United States and Nigeria, focusing on Real Estate Development and the stories emerging in and around the built environment.

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