Real Estate: A Definitive Beginner’s Guide [2020]

Last Updated on July 30, 2020 by Henry Ibeleme

Real Estate: 2020 Beginner's Guide

Real estate in Nigeria is a virgin island, untapped, crude, and ready to be mined by risk-takers who know what it means to create wealth.

Just like Franklin Roosevelt said,

Real estate cannot be lost; neither can it be stolen nor carried away. It is a keystone of wealth.”

When I read ‘Rich Dad Poor Dad’ five years ago, my perception of the real estate market changed. To date, Robert Kiyosaki remains a role model I respect so much.

The book was like nothing I have ever read, and it one of my most priceless possession I don’t give away. If you have the finance to pursue this investment, rest assured you will not lack anything money can buy.

You can become a millionaire by delving into this lucrative investment that neither die nor depreciate. When I told my dad about the real estate and how he will never have to work for the government again, his stare nearly condemned me to hell.

He has enough capital in the bank, but he’d instead save it for retirement than dabble into a goldmine. Anyone can invest in real estate in Nigeria, irrespective of finance.

That is because the market is broad and able to accommodate all and sundry. The problem is often learning the ropes and terminologies, which many often perceive as a turn-off.

In this article, I am going to educate you on how to start real estate in Nigeria. Even if you’re a six-year-old, I am confident you will grasp the concept, it isn’t rocket science.


1. Become A Real Estate Student

Become A Real Estate Student

The religion that fascinates me a lot is Buddhism. They believe that life is a school, and every day is a lesson.

An attitude of learning is the first key to playing in the real estate market. As they say, if you’re not growing, you’re dying. The more you learn, the more you earn!

When I talk about being a student, I wasn’t implying enrolling in traditional education.

The fact is, the school system will never teach you the subject of money, talk of real estate.

About 90% of what I know today is from reading self-development and investment books. YouTube is an excellent place of learning that you might prefer if you don’t like reading.

Being a student entails learning from trusted sources like Bloghomies since they are factual and provable. If there is someone you know who’s living your dream, you can learn from them too.

A common mistake I see people make often is entering the Nigerian real estate market without knowledge of how the market works. As expected, they fail and blame the investment.

It is like a farmer going to the farm without tools. No doubt, his goal will never translate to reality. I attended a seminar last week, and it exposed me to things I never knew.

Through such avenues, you’re able to learn and equip yourself with knowledge. As you might have already known, the thin line between the rich and the poor lies on what they know.

When it comes to real estate in Nigeria, the rule still applies. Without knowledge of how the market works, you will be like the farmer who went to farm without his farming tools.

I believe the urge to learn compelled you to click this article. If so, you’re on the right path.


2. First-Hand Experience

First-Hand Experience

I want to start this section with a quote from Mahatma Gandhi, which purports that knowledge that comes with experience is far more useful than bookish knowledge.

If you want to understand how real estate in Nigeria works, there is a need to experience it firsthand.

This advice is for those who are pretty new to this investment, as it gives them confidence and morale to start.

Buy or build a property to live in first. It is imperative because it gives you a front-row to how things work in the real estate market. Also, it is an excellent way to build your portfolio.

The fact is, you can never know or be confident until you have got the real experience. Without this vital tool, you might find yourself struggling.

After living in this new home for a couple of years, you can move to a new house while keeping the original for rent. That is how you transit to become a real estate tycoon.

It is a journey, not something that happens overnight. But if you’ve enough money lying around, one of the best investment advice will be investing in lands.

Based on the appreciation rate of land, #500,000 worth of property will be four times high in less than three years. If you buy land today, that land will worth four times your initial investment.

The more you buy, the wealthier you become. This model is best for individuals who have millions in the bank. Instead of leaving your money ideal for banks, put it to work.

That is how the rich get richer by putting their money to work.


3. Register And Adhere To The Law

Register And Adhere To The Law

If you want to make it big in real estate in Nigeria, then there is a need to register your business with the corporate affairs commission. That way, your investment becomes a separate entity from you.

The benefit that comes with registering your real estate business is tremendous. The fact is, it opens lots of doors. A registered business makes you eligible to seek for loans or grants.

Most times, the government can offer you incentives since you’re helping them build housing for the citizens.

Registering your business doesn’t have to cost you a hand and a leg. At the time of writing this article, it cost only #10,000 to register your business with the CAC. Also, there are some real estate bodies you need to know.

By identifying with these bodies, you ensure you’re not operating against the law. Some of them include the Real Estate Developers Association of Nigeria, Association of Estate Agents in Nigeria and Nigerian Institution of Estate Surveyors and Valuers.


4. The Right Advisors

The Right Real Estate Advisors

You cannot survive in the real estate world if you’re fond of taking advice from folks who know nothing about real estate.

I see many people make this mistake over and over again. Just because someone is book smart doesn’t make him right. In this business, you deal with only those with experience.

Take advice from co-investors, a broker, or even a banker. Run from anyone whose field has nothing to do with real estate, as the information they offer can cause havoc.

One of the signals I look for before taking advice is to know if they are successful at what they do.

If they aren’t, that means there will always be a flaw in their advice. Real estate in Nigeria is a goldmine, but one mistake can cost you a lot.

There are lots of ridiculous advice and guides out there, especially by our so-called Nigerian bloggers.

Many of them know nothing about real estate, nor do they have any real estate investment. But they have published tons of articles on the subject, intending to amass traffic.

Before you start implementing some advice you got off from a blog, try as much as possible to fact check them with an expert.

Take advice only from people who have succeeded in real estate. That they are successful in their respective careers doesn’t mean they know the magic formula to real estate in Nigeria.


5. Start Small, But Don’t Think Small

Start Small, But Don't Think Small

I talked to one of my readers a week ago, and he had no experience but was ready to invest #50 million.

Although he had me as a guide, it wasn’t enough. I do not make financial decisions for people; instead, I educate them so they can choose.

To hit success in real estate, you need to start small. That, however, doesn’t mean you should think little.

Start with a two-bedroom apartment, and monitor how this investment spans out. At this point, you might feel so tiny, like you’re crawling at a slow pace.

Be patient! Know that this is part of the process if you must know the ropes and succeed. Some things are better experienced than taught.

As you start small, think big. If possible, break this big dream into more modest goals and reach them one after the other.

As your experience and confidence grow, you will be able to invest big without fear. Mark Zuckerberg said that ideas don’t come out fully formed; they only become clear as you work on them.

As you work on that little investment, you will be surprised how everything will turn up.


Types Of Real Estate In Nigeria

Types Of Real Estate In Nigeria

1. Residential Real Estate

This type of real estate is the most common in Nigeria. It entails the construction and resale of homes, with the most common being single-family homes.

There are also duplexes, story buildings, and vacation homes. The type you delve into depends on your capital, but I always advise starting with a family home.

Building a two-bedroom flat will cost a total of #1,500,000, depending on your location. If you already have a land, the capital needed will reduce.


2. Commercial Real Estate

There is gold in real estate in Nigeria, but only a few have discovered it. In commercial real estate, the type of investment includes shopping centers, hotels, medical, and offices.


3. Industrial Real Estate

This type of real estate includes deals mainly on manufacturing complex or properties used primarily in production, distribution, research, storage, etc.

This type of real estate is lucrative, mainly when situated in a good location that makes business operation easier.


4. Land

When we talk about real estate in Nigeria, not mentioning land property is an anomaly. This type of real estate includes vacant properties, ranches, and working farms.

Investing in land is an investment you will never regret, as the return is almost four times your initial investment in about five years.

In other words, it is called Land Flipping – an investment model where you buy land and quickly resell for profit.


How Real Estate In Nigeria Works

How Real Estate In Nigeria Works

Real estate entails producing, selling, or buying of real estate. It is a huge industry worth billions of naira.

Many perceive it as an investment for the rich, but anyone can delve into real estate investment and succeed.

You can handle the aspect of constructing new buildings or property development. Before you forge ahead with this business idea, you must understand some agents’ functions in the real estate market.


Real Estate Agents

As a real estate investor, you will need a real estate agent’s services to buy or sell all types of properties.

I always advise hiring specialists that focus on one type, so you’re sure you’re in good hands.

A real estate agent will be in charge of helping you buy properties, especially if you don’t want to build from scratch.


Sellers’ Agents

When you buy a property, and you’re ready to sell, that is where these agents come in. You can only make high returns in real estate in Nigeria when you deal with a great agent.

This agent’s work is to help spruce up your property, so it looks appealing to potential buyers.

They also assist in the negotiation and ensuring that you get the best deal possible. If you’re not good at negotiating, you don’t need to worry, since there are people whose job is to handle that aspect.


Success Tips In Real Estate In Nigeria

Success Tips In Real Estate In Nigeria

Patient Is Key

To succeed in real estate, you need to master the art of patience. Focus on the long term whenever you’re thinking of investing in this profitable investment. That is because the more you wait, the more the value of your property rises.

The same applies when you’re about to buy your first property. If the deal sounds too good to be true, perhaps it is. Never be in haste to nab your first investment, so as not to make any mistake.


Don’t Allow The Numbers To Freak You

Many people are scared of numbers, including me. It seems to control virtually every aspect of our life. Nevertheless, don’t allow numbers to freak you out.

As long as you can add, subtract, multiply, and divide, numbers will be your newfound friend in this path.

Numbers mean nothing when they stand alone. But when associated with a property, you have to take them as clues.

You need to master how to read the three financial statements, like cash flow, income statement, and balance sheet.

Like previously said, they are clues that help you make a good investment. In case you are not exceptional at that angle, you can always learn from specialists, like an accountant.


Bury Your Emotions

Another mistake new real estate investors make is allowing their feelings to lead. That is a mistake you must never make, as it will be your doom.

Do away with greed or fear, and focus only on the numbers. Before you invest, conduct your research and find out the cost of the investment opportunity.

When doing your research, inspect factors like the cost of vacancy, maintenance charges, and also the risk profile of your prospective tenants.

If the deal isn’t going in your way, dumb it! Never allow emotions to get the best of you.


Conclusion

Real Estate in Nigeria is booming, and there is no sign of it going down anytime soon. If you have the required finance, strive to make this investment.

Remember the rules, start small, but think big. You must not know all the nooks and crannies before you begin. Just start, and you’ll be surprised how fast you become a real estate tycoon.

In the coming days, I will be publishing lots of real estate articles that will help you immensely. If you don’t want to miss it, ensure you subscribe to this blog. That way, you get notifications of new posts when they drop.

If you have any questions regarding properties in Nigeria or real estate investment, please use the comment box, and I will guide you.

In that light, I wish you success!

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