As the Nigerian economy improves, the real estate sector is also thriving and welcoming new investors by the minute. Investing in commercial property might seem the path to take but every commercial real estate deal starts with a promise of high returns, the truth is, it’s rare for a deal to follow the path of its pro forma.
Most real estate managers in Nigeria build models and make projections, with good intentions. There is a problem with just relying on their projections to make investment decisions as any deal can look amazing by just changing one or two variables. So you as an investor in Nigeria might find it hard to pick out with investment will meet or exceed expectations or become a learning experience for you.
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But before we continue, let’s understand what investment properties are? An investment property is real estate property that has been purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property or both.
The real estate investment option in Nigeria are many, but the property business is risky but with high returns. if you’re interested in investment real estate in Nigeria, what questions should you ask your Estate agent irrespective of the city or state in Nigeria?
Below are 7 questions you should ask before you drop the capital.
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How many investment properties do you own?
This question will help you determine whether the real estate manager has first-hand experience at investing in the Nigerian property market. Experience is important but not 100% necessary. The experience will give an agent a huge amount of insight into the realities of real estate investing.
How much of your money are you investing?
If a real estate manager is trying to get you to invest your money in a property, he too should be investing a significant amount of his or her own capital (not capital funded by others) right along with you. You want your manager you win when you win and lose when you do also, alignment is everything.
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What is the demand for local listings?
In so many areas in Nigeria, like Lagos state, the demand for rental homes is strong, powered in part by a growing population and an expanding economy. In some areas it is really low, asking this gives you an idea of what the rental demand of your proposed property will be.
How is local pricing trends?
Home values in some parts of Nigeria have risen and in some area, the value of properties have actually declined. Discussing local pricing trends with the estate agent is quite important so you know what you are getting into.
How many investors have you worked with and who?
Having an idea of the number of investors your agent has worked with is a good thing as a good investor recognizes that not all good agents are investors themselves. But the agent should be able to provide references to at least show that they know and understand the investor mindset and some of the strategies.
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Can I speak with a financial adviser before I commit?
No real estate manager in Nigeria will stop you from speaking to a financial adviser before you invest in a property. It is wise you talk with your financial adviser, lawyer and every professional you can and ask as many questions you can ask before you drop your money. It will also be nice to get other people opinion about the commercial property you are about to put your money on.
What is included in your fees?
Make sure you make enquiries about the agent’s fees throughout the structure. This question often makes managers uncomfortable. Is the deal a fee frenzy, or is it reasonable? Don’t commit your hard-earned capital without taking the time to get to know a manager on a personal level. Most importantly, don’t fall in love with a deal and then justify the manager. That’s the tail wagging the dog. Any deal can look great on paper.
