If you’re thinking of investing in real estate in Nigeria in 2022, there are a lot of factors to consider. Prices for property can vary by neighborhood, type of building, and even the quality of the floor plan. In addition, there are several different types of investment properties that can help diversify your portfolio or supplement income every month. But before you plunk down thousands (or even millions) on a home, be sure to do your research first! Here are five steps I recommend taking before making any purchase:
Know the property market you want to invest in
Knowing the property market you want to invest in is vital. If you’re investing in Lekki lagos, for example, you need to know that houses are selling at a premium and apartments are not. So if your plan is to buy an apartment and rent it out for a good return on investment (ROI), then you might be in for a rude awakening when you find out how much more expensive it would be than buying a house.
If there’s one thing I learned from my experience as a real estate developer in Lagos, it’s that all markets go up eventually but not all markets go down equally fast either!
The best way to navigate this knowledge gap is by doing research on what kind of properties are currently being sold and what areas they’re being sold at so that we can make informed decisions before jumping into any new project or investment opportunity with both feet.
Pick a property at a reasonable price
The easiest way to determine whether a property is a right investment for you is by looking at the monthly mortgage repayment.
You should be able to comfortably afford the mortgage repayments, and any repairs that may arise, and still have money left over for council tax, insurance, and other expenses. If this isn’t feasible, it’s time to look at cheaper properties in your area.
Choose the right location
Location is an investment’s most important factor. A Location will always be the most important aspect of any property purchase, but it’s not everything.
If you’re a first-time investor, then location should be your primary consideration because this gives you more flexibility in terms of what type of property and how much risk you want to take on as an investor. If you’re a buy-and-hold investor looking for stable high yields over time, then location isn’t as vital – but still incredibly important – because it determines whether or not your rental properties will turn into money machines or steady streams of income that barely keep their heads above water. And finally, if you plan to rent out your property yourself (or through a management company) then location plays no role whatsoever; all that matters is whether or not there are enough willing tenants within walking distance from each other so that they can form neighborhoods around them instead of being forced into car-dependent lifestyles by landlords who don’t care about them or their safety because they’re just another Naira sign showing up every month like clockwork!
Research the level of demand and rental yield
The rental yield is the percentage return on investment, and it can be calculated by dividing the annual rent by the price of the property. If you’re buying an N50,000,000 house with tenants already in place paying N300,000 per month, your monthly net income from this property would be N300,000 x 12 = N3,600,000 annually. If there is no tenant or mortgage payment due to your purchase being all-cash, then your annual net income would actually be higher.
So how do you know what kind of rental yields are available in an area? Well firstly let’s look at some figures for median price versus median rent for Lagos cities:
- Median Rent (2020): N146,600 monthly with exception of short let rentals which can carry from N70,000 per night up to N350,000 per night.
- Median Home Value (2020): 1/2% =N21,000,000
This means that if rents stayed constant from 2020 until now while home values rose by 50%, then one could expect to see their property increase over time by 100% (2 x 51%) based purely on appreciation alone!
Read the fine print when buying an off-the-plan property
Reading the fine print is important when you buy an off-the-plan property. The fine print is the contract, terms, and conditions, conditions of sale, contract of sale, and contract of purchase.
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Be sure to do your research!
- As an investor, it is important to know what you are getting into.
- You should also know the market, as well as the location and property of the property that you are about to buy.
- Keep in mind that there is a level of demand for properties in your area. The higher the demand, then the more expensive it will be to purchase a property!
We hope these tips will help you make an informed decision when choosing your next investment property. Remember, it’s important to do your research, as well as consider the location and price of the property. Make sure that it has a good rental yield so that you can earn some money off of it once it’s rented out! And remember: when buying an off-the-plan property, read through all the fine print before signing anything or parting with your money.