Thursday, April 24, 2014

10 ways of investing in the Abuja Real Estate Market

Published:

Lawrence Ladokun

A must read that encourages one to venture into the real estate business.

Hello my dear friend. The time to invest in the Abuja Real Estate market is now. The opportunities are limitless. In fact I would like to say, “the land is green”! I am writing this article just for you. Presently, you may wonder how you can invest in the property market with what you earn at the moment. This article is written for two broad classes of people: (a) Those who have the money to invest but don’t know how and (b) Those who don’t have the money to invest and don’t know how. I will attempt to solve the puzzle and present the opportunities available to you so that you can explore. Smile, relax and happy reading.

Ideas for Real Estate investment in Abuja

There are various ways you can invest in real estate in Abuja. I will only mention the ways that would not generate controversies. There are some of those methods of real estate investment that would ordinarily raise eyebrows for some people and which would make other individuals shout with excitement. This is because we have different value systems. So, I will avoid the grey areas of real estate investment and talk about the more generally acceptable forms.

1. Purchase and sell an undervalued property

The property market is very interesting. I see it as a game and nothing more. The property market is filled with individuals who want to dispose off their properties in a jiffy. Some of them want to dispose because of various reasons and at lower prices because of the emergency involved. In other instances, people want to sell land, or landed properties, at a lower price because they bought it at a much lower price etc. For example, a client needed a Jahi plot recently and he was willing to offer 16million naira but could not get the required land size. This same parcel of land could have been purchased for 9 million in 2009. You know the popular saying “buy low, sell high”? It is always true. Look for a property that is undervalued, purchase it and sell at the current market price and you would have made your profit and solved the problems of the seller for which he required money.

2. Purchase a property renovate it and put it up for sale

This is very simple. I know individuals who practice this real estate investment principle for a living. I mean they don’t do anything else! The man looks for a property that is in a good location but dilapidated. He purchases it, repairs, renovates it and puts it up for sale. In certain instances he may decide to remodel the property before putting it back in the market for sale. He makes good profit from doing this. This is capital intensive, but it is good real estate business.

3. “Piece meal” sale of real estate

This can be done when a block of flats is bought and resold in units. Considering the fact that the cost of purchasing a block of flats is beyond the reach of many individuals, an investor could purchase the property and sell in units to individuals while making some good profits. So also, an individual may buy hectares of land in a good location, “fix” the lay out, and resell. (In whatever you do please check the legislation in force)

4. Cooperate investment in real estate

Having considered the first three options, it is important to talk about cooperative investment. This is a situation in which a couple of investors come together to invest in real estate. A group of individual or organizations could purchase a property and then decide to sell it to make profit from it. The idea is that funds could be pooled together for investment in real estate. The profits would be shared in accordance to the contribution or as agreed by the members prior to the investment.

5. The lease Option

With this option you may not be able to purchase a property because of the capital sum required. However, you can arrange a lease option with the owner of the property for a couple of years and then sub lease the property. Of course this is not yet very common in Nigeria. Please be informed that the sub-lease period should terminate before the lease expires. In this form of investment, the idea is that an individual could lease a property for as long as 5 to 10 years and then pays a lump sum for which the lessee then sub lets the property and makes his profit at the prevailing current rent obtainable from such property.

6. Buying and Holding Real Estate

This option is also a very common real estate investment practice where an individual builds or buys a property and then gives it out for rent. This is really a good investment but at the same time you would have to deal with repairs, liabilities, taxes, tenants etc. A simple way out is to give your property to a registered Estate Surveyor who can effectively manage your property and obtain current rent and keep the property in a good state of repairs. This has proved to be a good source of investment.

7. Religious Real Estate Investment

You can go to your pastor or the imam see if they could help their members’ pool funds together to invest in real estate to better the lives of their members. For example, if a particular religious organization purchased a plot of land in kagini Abuja early last year…and sold it this year, it would be making a difference of about N3 million naira profit or more per plot (depending on the size)! Imagine how many beggars, widows; etc the profit would take care of! Imagine what difference the extra profit would make in the lives of the investors, particularly in these economic times? Form a cooperative society in church or mosque, pool the resources together and invest in real estate for the benefit of the members and humanity as a whole!

8. Farm lands and undeveloped areas

A dear old woman gave me an idea about 12 years ago; at that time she was 88-years-old. She advised me to buy farm lands at a young age. She said “in the course of time development will spread and more often than not the land use could be changed to residential purposes, then you would make profit form foresight” Believe me that is exactly what she did and even at her age she was still a multi millionaire. You could purchase farmlands and give it out for rent. What is bad in farming in it anyway? So also you could purchase undeveloped areas and keep for the same purpose.

9. Invest in commercial properties

For example you can buy a shop. Have you ever played the monopoly game? I once heard a multi millionaire in America when he was being interviewed saying, that the game of monopoly taught him basically all he knew about real estate and investment. Try to buy the game and see if you can make something out of it. I feel it is an “MBA” on its own. If you purchase a commercial property, you can do all that has been mentioned so far but one notable advantage is that it has little or no repairs to be carried out on it. If the shop is in a good location, you will get a great value for it if you have to flip it (sell it).

10. If you have the finances, go into real estate development.

You don’t have to have 2 billion naira to do this. If all you can build is just a duplex or a bungalow in a good location, you can sell it and make your profit and repeat the same. After a while you would probably be able to build two properties at once, then five, then ten etc I know an individual who built a house and someone offered him about thrice the amount for it… that was how he got into real estate development and today has a massive estate in Abuja, I am sure you would know it if I mention the estate. If you don’t have all the finances, call a couple of investors and professionals and start nurturing the idea. Think big but start small… Think future but start now…no matter how small.

Bonus idea: Cooperative Financing.

I call it a bonus idea because I want to discuss briefly on this. Please take for example 10 people who have 1million naira each came together to buy a property that is 10million naira in an estate in one of the satellite areas. They hold the property for about a year and then sell for say, 13 million naira. They would have made a profit of 3 million naira in addition to the rent collected from that property. Imagine if these 10 people could pool 3 million naira together they could buy 3 of such properties and use them as collateral to obtain loan from the bank and buy two more. They could sell some to offset the interest charges and all other formalities. However, look at the third option of them pooling 30 million naira together and then rather than paying for 3 properties or flats in a satellite area, they opt for mortgage facilities to pay for a property of about 150 million in Wuse II (at least I know some very good properties for that price). They may get a good rent that would pay up the interest rate, while the property continues to appreciate in value. It is also a great advantage that they may sell off the property to pay up the mortgage and walk away with their profit. They may even decide to spread the payment plan for the mortgage over the years and repeat same investments over and again. The opportunities are limitless…

There are many more ideas on the various ways of investing in real estate particularly in Abuja, as the opportunities are still “fresh and green”. I would encourage you to work out a concrete plan on how you can get into real estate investment today. Plan towards it and work your plan. If you don’t have enough financial resources, look at ways in which you can pool funds together. Make that phone call and share the idea with a friend you can trust. Be sure to get professional help before you part with your money.

Have a beautiful day and don’t hesitate to call me if you have questions or objections. I will be waiting for your call today. Remember to put a smile on someone’s face today. Let the world be a better place because you are here. Give me a call so we can rub minds together…

Lawrence Ladokun Consulting Estate Surveyors and Valuers

lawrenceladokun@gmail.com

08064842068

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