Investing in real estate in Nigeria and in other parts of the world is one of the lucrative business that every investor go into.
As a real estate investor, been knowledgeable on the various ways to participate in real estate is one of the pros that guarantee your quick success in the investment.
This article will share an insight that would shift your attention from only narrowly investing in a single aspect of real estate to having a additional knowledge and understanding on other ways to participate in real estate with greater opportunities that worth your money, time and resources. This fact is what some people are not aware of.
Now basically there are two ways to participate in real estate as an investor in Nigeria which are same in other parts of the world. It includes the direct and the indirect way.
Direct way:
This involves the direct purchase of land and landed properties which can be used by the investor for various purpose.
The following are categorised to be under this;
- Fix and Flip Properties:
This is for real estate investors who at looking for short term investment to quickly make money. You simply adopt a plan and go into buying fix and flip properties.
Fix and Flip Properties investment involves buying an old, dilapidated property and renovate it to a standard as compared to similar property in the market and then sell it off. But sometimes selling the property may not be as easy as it seems and may take longer than expected after in has been valued. So for Cities like Abuja, Lagos, Port Harcourt, Enugu and Owerri in Nigeria, with high demand for properties to buy, a real estate investor can look into any of these cities to get fix and Flip properties sold off quickly.
- Land Flip:
This is also for investors looking for short term investment to make fast money. You can go into land flipping. It involves buying land in a particular place of choice and reselling the land after a period of time ranging from 8 months and above when the land by then must have appreciated in value. Also selling the land fast would equally depend on the city the land is purchased, the marketing and advertising plan and the price couple with other unforseen factors.
- Real Estate Development:
This aspect is for real estate investors who are interested in investing and benefitting from long term investment.This invloves developing structure(s) on the acquired land which can be put up for letting in the property market or sold off to property buyers. Structures that are developed on it can be for residential like self contain rooms, block of flats, duplex, detached and semi detached buildings. Commercial like 3 bedroom office space, open hall and garage. Agricultural like farmyard, store houses and barn. Industrial like warehouse, industrial buildings. Special like museum, cinema hall, art gallery.
To obtain maximum returns from your real estate development project, ensure to adopt proper plan and strategy and consider social, economic, and political factors and location.
- Rent to Own:
This is also a good way to partcipate in real estate. Its involves paying a fixed sum as rent for a property as agreed by the tenant after which the complete ownership of the property is transferred to the tenant over a period of time after completing the required payment. There are some real estate development companies that are involved in direct rent to own scheme but ensure to conduct proper research and understand their terms and condition before accepting it.
Indirect way:
The indirect way of participating in real estate is different from the direct way. And most people in Nigeria do not have proper understanding. Therefore decide not to go into it which is good since you don't have an understand. And bad because it is easier and give you other benefit of property ownership.
The indirect way is categorised to be under Real Estate Mutual Fund and Real Estate Investment Trust ( REITs).
- Real Estate Mutual Funds:
This are professionally managed pooled investments that invest in variety of vehicle like stocks, bonds, REITs and publicly traded real estate related companies.
Investors purchase mutual fund share or units which are bought or redeemed at the funds current net asset value (NAV). NAVs are calculated once a day and are based on the closing prices of the securities in the fund portfolio.
- Real Estate Investment Trust(REITs).
This are corporations or trust that uses the pooled capital of many investors to purchase and manage income properties and or mortgage loans. REITs are traded on Nigerian Stock Exchange which can be bought or sold through a stock broker with other investment like shares.
They are of different types:
Equity REITs that deals with the purchase, hold and management of commercial and rental properties. The revenues are generated primarilyfromrents receive from this properties.
Mortgage REITs deals mortgages on real estate properties. Unlike the equity REITs, the revenue for this is generated from interest earned from the mortgage loan.
Hybrid REITs as the name implies deals with the combination of Equity and Mortgage REITs.
An example of Real Estate Mutual Fund and REITs companies in Nigeria are SkyshelterFund, Abbey Mortgage Bank Plc, Infinity Trust Mortgage Bank, UACN property development company and few others.
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