Beginners Guide to Investing in Real Estate Properties

Beginners Guide to Investing in Real Estate Properties

Nigeria is experiencing a huge entrepreneurial and economic revolution. New and future businesses are springing up by the numbers daily.  In real estate and as an investor, you need to understand how and why you are being offered a certain opportunity to be invested in, if you do not understand this then you will rarely opt-in to the opportunity and would very likely sign up to the lesser deal. To help mitigate the risks as much as possible, you need to do your homework by doing extensive research and hiring professionals where needed to ensure you’re making the right decisions for you.
 

Here are some of our tips to get you started on this journey.

 

1. Know where the property is and Ensure the property is in a very good location. No matter how many times we say this, it will never be enough. Location is key to the value of any property. Ask to schedule an inspection of the property before you make a commitment – inspections are generally free of charge and officially hold on every day of the week except on Sundays unless on special concession. If you cannot do this, then get pictures/images in real time – someone who went there more recently or a recorded video showing the area whilst they are there would have been better than not going at all – get a lawyer or a trusted person to go. When on inspection, evaluate the physical location of the land, distance and travelling time from major landmarks and how far or close to other developments that it is.

 

2. Ensure you know the governmental laws and developmental plans concerning the area and Verify the documentation you have been presented at the local Land Authorities.
So many people have fallen victim of this: bought premium lands with high expectations only to find out later that they cannot build some structures there due to one regulation or the other. Please, have all the facts before putting your money where your mouth is. Your property as is to be acquired must be ‘Free from Government Acquisition’.
Examples of such legal and perfected titles include;
▪ Gazette
▪ Excision
▪ Certificate of Occupancy
▪ Deed of Conveyance
▪ Court Judgment
▪ Right of Occupancy
For any land to have any of the above titles, a registered survey must exist which shows the legal boundaries, shape and type of land that is being described.
3. Assess the value proposition for the property being offered to you.
Calculate your expected cash flow/profit based on facts and historical records. Understand the trends for urbanization, commercialization and increasing migrations if any, calculated correctly, these can make for very clear and viable opportunities for investment in which case, your return on investment can even be increased or maximized such that you also can either resell to other interested investors at some point down the line or develop a mass impact project. Ask questions; what do other buildings around also charge? What’s the tenancy/occupancy rate for similar buildings in the area? How much will maintenance cost? Cover all angles before jumping into the waters.
4. Use professionals:
There’s a simple saying “Pennywise…Pound foolish”. This aptly describes the situation many investors/developers find themselves after trying to cut costs. While ensuring that you make judicious use of money as much as possible, please use professionals where necessary. If you do not, and you end up making wrong choices, you could find yourself spending more money at the end of the day. Other components of a due diligence would and should include a confirmation that the property is not under any form of litigation between parties or being held in escrow for an existing credit line. You Contact us at MoneyEstate, let know your Real Estate investment plans and needs, we will be happy to be your trusted real estate agent guiding you through your journey into real estate investing.
5. Take Ownership:
Once your checks tick all these boxes and the property has been purchased by you, it is imperative that you take legal possession by registering the acquired property in your name by way of a registered survey for your expanse as well as an executed Deed of Assignment from the company thereby signing off ownership to you. Another way to take ownership of your landed property is to fence and gate it. This way you don’t have wanderers creeping and encroaching on your property. By the time someone wants to develop across the boundaries of what is supposed to have been your land, it won’t be as easy to just break down your fence and start building.
In our experience, we find that once a buyer has taken ownership by way of fencing and gating off their property they are more attuned or interested in filing the paperwork for the documented titles to be registered in their names. This is where the question about Certificate of Occupancy most certainly comes in because they might be better equipped to get a Governors Consent instead.

Top 3 Types of Real Estate Property

The vast majority of real estate agents and brokers work with three major property types accounting for most of the real estate ownership transfers. They include:

Vacant Land
Land does not only increase in value as it ages; it is also what drives real estate appreciation. When the population and economic activities of a metropolis is constantly increasing, more people will come into the area and will need shelter thus more and more properties will be built, land becomes more and more expensive. The opportunity forgone on real estate appreciation is getting higher by the day as prices have continued to rise during the past several years.
Residential Properties
Residential property is by far the most popular real estate properties. Residential Properties can be further broken down to include new construction, condominiums, separate homes, duplexes, rental properties, Real Estate Owned properties (REOS) which are properties generally owned by a bank, lender, government agency or loan insurer as result of foreclosure and failure to sell at foreclosure auction) or high value homes, vacations homes, etc. There’s plenty to go around.
Commercial Properties
Commercial property can be empty land zoned for commercial use, or an existing business building. Commercial property valuation requires a more complex accounting method including income potential of the property, historical revenue, cash flow with owner perks removed and much more. They include office buildings, supermarkets, shopping malls, industrial, gas stations and other commercial property types. Sub-niches, such as strip malls and shopping centers are also common.

 

culled from;
MAKING REAL ESTATE WORK FOR YOU: LIFE IN THE KITCHEN. LERATO LEKENA-OKORO
Beginners Guide to Investing in Commercial Real Estate
www.lvg.com.ng

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