By Anita Mba
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Investing in real estate is a lucrative and brilliant strategy for growing wealth. The market is diverse and investing is available to all at levels of financial capabilities.
There are various ways to make huge returns in real estate and if you are contemplating whether or not to become an investor, the answer is a strong yes and I’ll tell you why.
Generally speaking, to invest in Real Estate, you have to determine how much money you want to spend and choose the option that best aligns with your resources and goals. Â
There will be challenges just like any other venture, so be prepared and conduct adequate research, as well as reserve some extra cash for any excesses that would possibly surface, to cushion the effects of any setbacks.
In the Nigerian market, a prospective investor is usually first introduced to buying and selling properties, as it is most common. There are, however, a few other Real Estate investment tools to choose from as a rookie.
It is quite simple when you understand and appreciate the dynamics of real estate investing. Though not as simple as merely buying, selling or generating rent. If not properly executed, you may find yourself living a nightmare.
Let’s explore a few of them:
1.   Rental property – This requires buying or building a property for the purpose of leasing to tenants for an agreed period of time in exchange for a rental fee. These are either residential or commercial properties. The beauty of rental as a form of real estate investment is that it allows for steady generation of cash flow income.
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2.   Landed property – This is attractive for real estate appreciation and capital growth, i.e. where the value of the property incubates and increases over time. This depends heavily on the location of the land. Ensure that it is a sought after location, with prospects for development. As the location gets busier, it becomes higher in demand and scarce thus increasing its value. Investing in landed property for real estate appreciation can be tricky because sometimes the market can become volatile, and predicting is not always easy as it is affected by external forces.
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3.   Property development – It is a process that includes buying, building, or renovating properties for the purpose of developing attractive, desirable and modernised structures to be resold or leased as residential or commercial properties. The prices for most luxury developments however usually go through the roof primarily because it requires substantial capital. This investment option is very common within the Lagos environs.
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4.   Real estate flipping – Simply put, is buying low and selling high. It could also be achieved by acquiring property, renovating to standard and selling for a profit.  Investors who adopt this strategy generate profit through appreciation of property in fast rising market and improvements from renovations.
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5.   Real estate investment trusts (REIT) – REITs are modelled after mutual funds in the sense that funds are pooled from different investors and are used to finance the acquisition of income-producing real estate. REITs are traded on major stock exchanges. Just like a trustee and beneficiary relationship, interests are held, managed and maximised for investors. The beauty of REITs, as an investment strategy, is that it is available to investors of all types of income streams. Anyone can invest in large scale portfolios, without the traditional method of hiring a realtor or having to go and purchase property. They’re liquid, very diverse and transparent. REITs unfortunately have not gained much momentum in the Nigerian market as it has in other climes.
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Tip – Investors generally prefer not to buy in their own name for risk management. Consider buying under a separate legal entity, i.e. a limited liability company. That way, if the market becomes epileptic or starts experiencing uncertainty, if anything goes wrong with your investment, you can go to sleep knowing your personal assets are safe. Please consult with a legal professional.Â
The Nigerian real estate market has a lot of potential with various opportunities, these are but a few ways rookie real estate investors can begin their journey. The goal is to spot and seize them. As an investor, you should be confident enough to say you have covered all incurred expenses and/or realised profit.
