Real estate business in Nigeria: How to start, make money and invest in it

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Real estate is one of the discrete business in Nigeria, people hardly think about real estate.” where will I see fund’ this is typical response from entrepreneur in Nigeria when ask to invest in real estate business, and that is exactly what rich people want to you think, they don’t want people to know that you can do real estate with little or no money.

I sound like a motivational speaker right? I will soon get to the section where I will lay it all out to you.

What is real estate and how does it work

Real estate is the business of selling, buying, developing, managing, brokering or renting land, building and any other properties.

Real estate is not a rocket science, in simplest form it is just buying and selling properties; you as an entrepreneur go out and buy properties at a less price and sell it at a higher price but that’s not all, instead of buying it with your money you can pass it to a rich man and receive commission on it.

Real state is a broad business that has many niches which will be explain below

1) Real estate agent or broker
This is the best and most common for entrepreneur who have little or no money. You don’t need a lot of money here; your job is to act as middle man between buyer and seller while you receive your own commission usually between 10% and 15%.

The different between broker and agent is that real estate agent work under broker for a commission on any sale made while broker are firm, they employ agent and pay them commission.

How to become real estate agent or broker in Nigeria

Look for people that want to sell their property and setup a contract or deal with them

Ask about the details of the properties and survey it yourself

Value it and give the seller the expected price

List the properties online with your contact details

Give information about the properties to buyer when they make enquiry

Sell the properties and give the money to the seller after removing your commission

To have more sell create brand around your business

2) Real estate Developer

Real estate developing is where the big boys dwell, it is capital intensive but very lucrative, if you chose this niche your job is to buy land and build a demand structure on it and sell, lease or rent it.

Though you can get fund from bank but it is not advisable to take loan because of uncertainty that surround building business.

How to become real estate developer in Nigeria

  1. Source or buy land
  2. Do the design and architectural design
  3. Collect the necessary document
  4. Erect a building on the land
  5. Create an advertisement campaign
  6. Rent, lease or sell the building
  7. You can choose to supervise the building or contract it out to building company

3) Rent or leases property
In this niche, you don’t need to build any building your job is to buy property and rent or lease it out.

If you chose this niche it will take time before you can get your capital not to talk of profit what you can do is to set a time when you will eventually sell the property.

It would have appreciate in value and you will also collect rentage or lease money for some time.

How it works
Source for property with less price and buy it
Rent it out for some time and sell it

The secret in this niche it to buy cheap property, don’t outsource the sourcing to real estate agent if you do you will make less profit if not noting.

4) Land flipping
Here you deal only with land, your job is to buy land at cheap price and sell it at higher price.

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It is easy to start once you know how to source for cheap land but becareful of “omo onile” and make sure you collect all the land document before you give out your money.

How it works

  1. Source for cheap land
  2. Conduct a research about the land and buy it
  3. Look for buyer and answer any query on the land
  4. Sell it immediately or wait for some time for the land to appreciate in value

5) Real estate investment
This is for those that can’t do all of the above work but want to have a leg in real estate business.

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There are different investment scheme in Nigeria that let you and others pool resource together while they help you manage your property.

In this niche two or more people can own a building and sell it when the organizer of the scheme sees that it will be profitable.

How to become real estate investor in Nigeria

You give out fund to real estate investment group

They will buy property that your money worth

You notify them when you want to sell

If you own property together with someone, they will decide for you when to sell

For every buy and sell they take their own commission.

How to start real estate business in Nigeria

1) Learn from a professional

No doubt this article highlight every ting you need to have successful real estate business in Nigeria but you need to seek professional who are already making money with the business.

Don’t go to consultant they will only milk you dry. Professional will tell you do and don’ts of real estate business such that you will not make the same mistake again, also you can leverage their networks to grow quickly, but all this will surely come at a cost.

Borne the cost and grow your business quickly remember there are only three way to acquire knowledge; by trial and error, by reading books and through mentor. Choose the later because it is the fastest.

2) Choose your niche

Your niche will determine the type of real sate professional you will look for. Let the niche go along with your life goals for instance if you are already engaged with a business you will not be able to go for real estate agent because it is a full time work, what will work for you is buy and hold, you can’t even flip land.

Check your self well before you chose niche, do you want to do it full time (entrepreneur) or side investment (investor).

3) Business plan and strategy

Once you gathered knowledge and know your niche the next thing is to write a business plan and strategy that will guide you on how to buy and sell.

Do you want to buy residential building office or other structures? Write it down and stated your reason it will prevent you from making bad investment in the future, help you to know when to buy and sell, to whom to buy from and sell to and I’m sure you can’t get all this data until you make thorough research.

On the issue of business plan, you need to make it concise and simple for easy reading by bankers and investors. If you will be operating as a real estate developer, business plan is compulsory for you since you will need fund to build structure so make sure your data and figure is valid.

Bank and investor look more into your financial analysis because this is where they will know if your real estate business will make profit or not and If you inflate the figure they will know; before bank or investor will grant approval they will send your business plan to professors and industry professional to cross check it if you maneuvered your way this is where you cover will blow.

Follow the below steps when writing your business plan

  • Executive summary
  • Company bio or description (including your team or staff)
  • Competitive analysis (SWOT analysis)
  • Marketing analysis (strategy)
  • Financial analysis (take it serious)
  • Appendix

To read more on how to write business plan click here

4) Register your business

To avoid government confrontation you need to register your business with appropriate authority also it will make people to trust your business, in fact people will not do business with you if you don’t register your business.

For those that want to buy two or three property and sell at the later date, you might not register it but if it is more than that, you can register a business name.

Below are the real estate regulatory authorities in Nigeria

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CAC (Corporate Affairs Commission)

AEAN (Association of Estate Agent in Nigeria)

REDAN (Real Estate Developer Associations of Nigeria)

NIESV (Nigeria institution of Estate Surveyors and Valuers)

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5) Funding your business

Most people think you need to have huge amount of money to start a real estate business though you might do in some cases but not all.

There are many ways entrepreneur can take to fund their real estate business with little or no money.

With no money?

Yes it is possible and I will list the methods below.

How to start real estate business in Nigeria with little or no money

As the Yoruba saying “we do not need to go to heaven to seek knowledge when it is already here on earth”. Most of the methods are what you know, it has already been working in other industry, we just adapt it to real estate industry

1) Partnership

As you know partnership is the association of two or more individual or organization, real estate partnership is a symbiotic relationship such that one partner bring a fund while the other source for the property and as usual the funder will have higher percentage than ”sourcer” but all in all they will both get money in their pocket.

How to source for partners
When choosing partners, it should be done with care and patient you don’t want partners that will ran away with your money.

Most time where you find your partner will determine how your relationship will go.

Friends and family (they are the best because you already know what they can do and not do)

Industry meeting
During conversation in industry meeting you can set up a partnership with someone but don’t go there with the mind of looking for partners chances are you will chose wrongly if you do this.

Social media
Join forum or group that talks about real estate and be responsible, very soon people will contact you or you will notice some one.

Joint ventures
You need some capital here, but you don’t need to buy land. If you see a land or property that need a retouch you can speak with the owner and set up a deal to refurbished the house and sell it or rent it.

The fund will come from your pocket but if you are a great negotiator you can convince the owner to use the structure as collateral for loan.

Taking owners debt or debt financing

You don’t need to have huge amount of money for this, but you will need to work because it is hard to see someone that will exchange is property for dept.

look for structure that bank will soon take over, negotiate with the owner and offer to buy their debt if they accept, negotiate with bank and offer to pay monthly or quarterly and voila!The property will be yours.

The bank may tell you to make a little down payment, do it quickly. Once you find buyer to sell the structure to at a higher price, you are off, pay the bank and get your profit.

Mortgage
This look like a debt financing. But you are not taking over any debt, if you find a property you like you can contact mortgage bank who will give you loan to pay the owner and you will pay the bank back every month with interest but if you default they will sell the property.

It is not advisable because of the interest rate of banks, well business is all about gut, go for it if you have.

Service for property
Do you have skill and knowledge require in real estate industry, skill and knowledge like property lawyer, builder, and architecture etc.

Instead of collecting money you can negotiate and have some part of the building like programmers do. Small by small you will soon find yourself owing many properties.

6) Marketing

There is no business that does not require marketing, if fund is the petrol of business marketing is the oil.

You need to set up your marketing strategy, before you launch your business you should know the strategy to adopt if you do your research well.

All the niches of real estate have different marketing strategy and target market so find your own.

Below are the most common advertising medium for real estate in Nigeria

Create a website
Website is one of the best advertising medium, it is a two edged sword, it will serve as a portfolio and landing page for your business.

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If you create any online advert this is where they will land to. Make sure you have a top notch portfolio on the website; your portfolio should include recent review and sold property, this will tell them your business is still in town.

To increase the number of people visiting your website creates SEO content that will drive traffic from google and other search engine.

To create real estate business and content that will drive traffic to it, you can contact us.

Social media page and ad
In addition with website set up social media page where you will take query from potential customer, also you can use social media ad to boost traffic

T.V and Radio
Since most of your audience are adult create a jingle on radio and T.V though it is costly you will surly see return on your ad.

Flyers
Do not neglect this; it will also help in creating awareness for your business

Referral
Referral marketing is also one of the best. You can turn people to your advertiser by giving out percentage of the cost if they bring customer.

Word of mouth
This thrives on quality product and services. If you sell quality structure or building to people and end it with a top notch services people will refer you to their friends and family. If you do otherwise you will see negative effect of word of mouth.

Did I tell you it is free, you don’t need to give a dime before your customer will become your worker.

Note
You need to set up location where your customer can find you; you can’t rely only on social media.

Let your location be motor able and your office have a great design because most of those that buy property are well to do if your office is bad they will relate it to your business.

Cost of starting real estate business in Nigeria

It depend on the niche you are going and your target location

For land flipping you will need about #2 million to #5 million

For house developing you will need up to #50 million naira

For real estate agent you will need thousands of naira for sourcing

For real estate investment, it is according to what you can invest

Profitability of real estate business

Real estate is very profitable you can have x2 of your cost. I know someone that bought a land for #400,000 naira and later sold it at #1,000,000 after 2 years.

Real estate business deal with time, it profitability depend on the amount of time you leave for the property to appreciate in value, it also deal with negotiation skill, you can buy land in #500,000 now and sell immediately at #1,000,0000.

 

 

 

 

 

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