Are you a beginner investor looking to enter Nigeria’s real estate market? While there are many opportunities and benefits to investing in the real estate market, if the risks aren’t mitigated, mistakes could be costly.
See also real estate investment opportunities in Nigeria
In this short post, we will explore mistakes that others make when they start investing in property, to help you avoid making them as well.
1. FAILURE TO PLAN AND STICK WITH IT
We’ve seen several investors who go into buying landed assets because it’s cheap, their friend bought one or they like the agent who advertised the property to them. Allowing your emotions to control your decisions can be costly.
What’s your investment strategy? What are you looking to achieve with the property? Will the said land or house have the features to reach your goal? Are you looking for a short-term investment?
Determine if you are a long-term or short-term investor and base your decisions on your investment goals.
2. LACK OF PROPER RESEARCH
Don’t ever buy a property you don’t fully understand. Ask questions to get clarity before making a purchase.
Here is what you should look for to know if an estate is a great buy.
1. What is the town’s plan for the location of the land
2. What is the reason for the sale of the land or house
3. What is the current market value of estates in the area?
4. Is there any government presence to sour growth?
5. Is the area secured or prone to violence and communal crises?
6. What’s the topography of the land and surrounding neighborhood?
7. What is the title to the property?
Working with an experienced realtor and seeking the help of locals can give you the information you desire.
3. UNDERESTIMATING EXPENSES
Some beginner investors fall into this trap because of a lack of proper information and budgeting. Many estates have hidden fees that aren’t readily disclosed. These fees may include documentation fees, agency fees, and development fees. Make sure the investment budget covers all fees and see if, after the addition of fees, you can get a good ROI.
Before you buy any property, make a list of all the expenses that could be incurred in the process of buying and selling the property, and then add these expenses to your cost of purchase.
4. FAILURE TO SEEK PROFESSIONAL ADVICE
Facts show that investors who work with realtors, property lawyers, and financial accountants have better returns on investment than those who don’t. While you could be able to purchase your property yourself, you may need an expert to advise you on knowing when to sell or how to handle a complex deal.
They’ve been in the industry for years have worked with different clients and understand the market better than you do.
Some of these professionals offer their services on a percentage basis so you don’t need to spend money upfront to work with them.
5. LACK OF DIVERSIFICATION OF THE PORTFOLIO
While real estate investment may be a stable form of income, over-dependence could result in serious losses in the case of downtime in the market or economy. Instead of solely investing in one real estate business, many choose to invest in different real estate opportunities such as land banking, short lets, rental apartments, warehouses, commercial apartments, etc.
It’s even a more smarter choice to explore other investments in the real estate industry.
CONCLUSION
Real estate investment still remains one of the most profitable and stable sources of income in Nigeria. The headaches and losses experienced by many beginner investors could be dramatically reduced if they invested wisely and avoided some of the above common mistakes.
See also real estate investment opportunities in Nigeria
Need the help of a qualified realtor?