How To Make Money In Real Estate In Lagos: 10 Sure Ways (2023)
Probably you have heard that people are making millions from real estate in Lagos Nigeria or you are wondering how you can start making millions from real estate in Lagos, Nigeria. I welcome you to this post where I will be sharing 10 sure fire ways for you to make money from Lagos real estate without getting burned or throwing your money into the wind.
Real Estate in Lagos Nigeria is big business and according to credible sources, over N204.5B of real estate transactions are carried out yearly in Lagos alone. It’s also important to know that real estate is Lagos oil, it is one of the sure ways the Lagos State Government generates revenue for the state.
How To Make Money In Real Estate In Lagos
If you are eager to tap into Lagos billion dollar real estate industry, and cashing out of the various opportunities that abound in the Lagos real estate space. Don’t look too far! In this blogpost,I will be covering 8 profitable ventures you can start earning from in real estate in Lagos Nigeria.
By the end of this blog post you would have a workable understanding of how these ventures work and which is most suitable for you to delve in according to your risk appetite and level of profit expected.
In this topic, we will be looking at
- Annual Rental Properties
- Short-term Rental Properties
- Real Estate Investment Fund (REIT)
- Refurbish and Resell
- Build and Sell
- Co-Working Spaces
- Co-Living Spaces
- Recreational Real Estate Ventures
- Real Estate Development
Now, lets dive into how you can make money from this sure fire ways listed above
Landbanking is a concept of purchasing a piece of plot(s) of land in a high growth area and hold for a period of time to resell.
This concept comes from when people will go save their money in the bank and while the bank uses such money for business and add interest as agreed then you can go withdraw your money and use whenever you want.
Landbanking follows this same concept. However, you would be buying this land in an area expected to experience high growth so your land price can increase and when you are okay with the new price, you can go sell and make your money back.
There have been successful stories of lands bought for less than N1m years ago in bushes that has turned cities, left over a period of 15 years and they sold for as high N30m in todays market.
That is the secret of landbanking.
But this doesn’t mean you can just go into anywhere and buy any land because you want to sell high in the future. NO!
There are some parameters you should consider when you want to delve into land banking.
Here Is What You Should Know
- Do your due diligence and make sure the land you intend to invest in for your landbanking project is totally free from any present or future government acquisition as this is a big problem in Lagos presentlty. A lot of people are investing in Land for landbanking nwithout doing a due diligence to ensure the land is free and they wont loose their hard earned money.
- Buy this land in an area that has been postulated to experience increase economic activity, huge migrations of people, and expected government development project.
- The government of any state always has plan for different areas of the state and this includes lagos -make sure you are well informed on the government markings of the area so you don’t go buy a supposed commercial plot in a residential area.
- Get all proper document and get allocated when your purchase is done, this will ensure you are able to sell the land when the increase is fine with you.
Annual Rental Income
This is another easy way to make money from real estate in Lagos although it comes with a little technique that I would be teaching in this post so you can make the best out of it.
The population in Lagos is increasing and people would continually need a place to rest their heads and raise their family as its not everyone who can build a house readily.
Now, the mistake most people make in the area of Annual Rental Income is to go buy a house first then set the rental income price.
NO!, the best way is to do a research and see how much people are willing to pay in rents in different area of your choice, then when you have found a good price that makes good income annually for you, then you go buy or build house there.
This way you are sure of getting your rental income without stress and you wont find it difficult getting tenants for your property.
There is a curious case of someone who went to build a 4 Bedroom House in Abijo GRA and was asking for 4m naira in annual rent when renters around the area won’t pay more than N2m for a 4 bedroom duplex. The house is still empty at the point of writing this post.
The major secret to renting is this – the house keeps increasing in value while you are getting income yearly from it and its very easy to manage and maintain.
There is also the troubling issue of bad tenants, in my experience managing rental properties for different clients – due diligence on the client renting the property has always worked 95%.
Short Term Rental Properties (Shortlet Homes or AirBNB)
This is a great money spinner if properly managed, consider where you are getting N50k per night for a 2 bedroom apartment and you are able to get it occupied for 25 days in a month, that a cool N1.25m cash.
There is no doubt about it, short term rentals is a booming business is Lagos. More people are beginning to want apartments that feels more like home than hotels and this is a huge market right now among the young and growning in Lagos Nigeria.
However, this business comes with its own peculiar challenges, which I will enumerate below if you are looking to make money from this real estate model
- Don’t try to create your own market, there is an existing market for this business in Lagos – go there and establish yours. Work with data
- Be mindful of your operational expenses like electricity and other utilities and most money made could disappear through this channels.
- Dont rent to start a shortlet business – you can either get a long lease or buy an apartment or if you can just build for purpose. Renting will eat deep into your income and places where this business are booming are very high in rent. There was also a situation where a landlord got wind that his tenant was using his property for a shortlet, he quit noticed the client and contnued the business thereby taking his business.
- Advertise! Advertise!! Advertise – starting a shortlet business and waiting for clients to come us like winking at a woman in the dark- she never going to see you. You must advertise to bring clients into your shortlet homes.
- Solid Management – Put a solid management in place and have different kinds of agreement for the client to sign so they dont misuse the shortlet space
Real Estate Investment Trust (REIT)
This concept operate just the same way you buy shares and get dividends – the banks or organisation you bought the shares from operate different business with your money and give you dividends at the end of each financial year.
REITs use pooled funds to buy and operate real estate properties from commercial properties to malls to office complexes and other operational form of real estate. It is very important to note that this properties bought ad operated by the REIT must be income producing real estates.
REITs are easily liquidated because they are also traded on the floor of the NSE (Nigerian Stock Exchange). They are easily diversified, and ensure steady cash flow for investors.
Refurbish and Sell
This concept is a thriving concept now in the city of Lagos both of the mainland and on the Island. The concept is simple, go out there and look for titled (underline the word TITLED) built houses.
Buy cheap landed houses, distressed properties, do your due diligence to make sure the title on such properties are genuine.
You can either tear it down if you don’t like the current structure or you can improve if you like the current structure. The good thing about this is that it allows you to own land in developed areas. The trick here is, you are getting a good land in a great location.
The structure on it is just an added advantage. There are a lot of investors in Lagos who this concept is their business and they are making so much money from it.
Build and Sell (Development & JV)
The JV concept simply called Joint Venture is a way investors has been using to make money from real estate in Lagos. This concept doesnt only make money for the builder, it also makes money for the owner of the land or its equivalent.
To explain it simply, the concept of joint venture is a situation where a land owner had a land and would rather have the land developed than outrightly sold. So they seek out developers for this land. This means someone comes with a land and another person with know-how and finance to develop the land. An agreement is reached on the sharing formula for the property to be built.
The land is valued and the developer comes with the number of units of housing he would be able to build on the land and give the land owner some units as payment for the valued land.
If you are looking for this kind of opportunities –
Follow This Simple Guide
- Some land owners would ask for a premium which is an advance payment before such agreement is reached. Do not fall for such.
- Dont stick by what the land owner said his land is valued for, call in your own valuers and get the real value of the property.
- Get a law to help read through the contract because some land owners can be sneaky inserting clauses that could snatch the development from you in the nearest future.
- Have at least 50% of building funds ready so as to start the project on a strong foot and start selling offplan.
- Get a solid marketing team, engineering team in place to ensure a smooth sailing and selling of the project.
- Build what people are willing to buy.
Co Working Space
Work is changing, and even more so after covid 19 when a lot of companies adopted the work from home policy for their workers. However, quickly after people started working from home, they realised that the power bills went crazy, home was too comfortable to work in and they arent as productive as they would be if they were in an office space.
This created an opportunity for real estate investors to begin to create co-work spaces where people can come in, get a desk, uninterrupted power, office setting ambience, full wifi and just pay a small amount to use the space.
This wasnt only made available to work from home people, it was also made available to young tech entrepreneurs and business owners who need to space to represent their business without shelling out huge sums of money to rent an office space in Lagos. When properly managed, this is such a huge money spinner because everyone pays a small fee to use the space. You can go ahead to create mini offices to be used and paid monthly.
Co Working spaces is working in Lagos – people see it as a way to save cost of operation and renting huge office spaces.
Co Living Spaces
This is a concept that is gaining traction in the city of Lagos. The concept is very simple, as the name suggest,its a co living space which means, you wont have all the whole space in the house to yourself. The only space you would have to yourself is your own room, other spaces like kitchen, sitting room,laundry, lobby and backyard are going to be shared by all occupants of such rooms.
To make the most out of this real estate opportunity, the more the rooms the better because each of the occupant are going to be paying for their rooms. So Imagine having 10 rooms in a co-living space and each of the occupants are paying N1m per room. That’s N10m naira cool cash right there from one property.
You can go ahead to do this in 2 ways, you can either buy a space like 5 bedroom house, get the building approval, the architectural and structural drawing and go ahead to remodify this house into 8 or more rooms.
Better still, you can just get a land, and build for purpose up to 10 to 15 rooms depends on how smart your architect can be. They all share the same sitting room, same lobby, same kitchen. Make it accessible and spacious enough.
You dont really require massive supervision for this space – just hire a malam for the gate to ensure security and he can help with other things like putting on the generator and water for the house.
Recreational Real Estate Ventures
This is a upward trending way to make money from real estate in Lagos Nigeria although seriously capital intensive, as the population of Lagos gets bigger, there is the need to create more recreational centres and tourism ventures for the fun seeking populace of Lagos.
One of such recreational and tourism ventures in Lagos is the Giwa Gardens Water Park located in Sangotedo, Lagos also the Landmark Beach and other beaches on the Lagos shoreline. This ventures are bound to have frequent goers everyday and more of this are still needed around Lagos for the populace.
Becoming A Real Estate Consultant
Lastly, this is one easy way to make money through real estate – it simple means matching property investors to the right property that meet their needs either for living or for investment. And it can very financially rewarding as you get paid for bring people in touch with the right properties.
However, this can be a narrow and lonely road for new comers in the real estate consultancy space, this is why it is important you find like minded people who are doing what you want to do and learn from them so you can get result faster.
In conclusion, I think its safe to say you now have a plethora of ideas on how to make money from real estate in Lagos Nigeria. All you need to do now is pick the venture (way) that resonates with you the most and run with it. Go ahead and do more researchplus feasibillity study so as to avoid loosing money in any venture that you choose. There is so much money to be made from Lagos Real Estate space. Get involved now.
For more consultation on any of the sure fire ways mentioned above, you are in the right place. We manage a rental portfolio of over N750m naira for our clients both in Nigeria and diaspora and a land banking portfolio of over N1b combined at Korrect Homes. Click here to ask more questions and get more clarity
If you know more ways to make money from real estate in lagos nigeria, please drop them in the comment section so others can learn too.