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Questions To Ask Before Buying A Commercial Property In Nigeria

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Either you are searching online or walking through the streets of Lagos, when you see that sign that says “For Sale” you might believe you’ve found the commercial property of your dreams and you might have. But before you write that check take a moment and consider somethings.

Commercial investing is kind of like residential investing on steroids. The sale of commercial properties in Nigeria is a lot more complicated than residential homes, the wins are much bigger and so are the losses. The deals require more capital and can get a lot messy if one is not careful. To get started in commercial investing, you’ll need both knowledge and confidence in what you are doing so before you sign the dotted lines here are questions to ask the commercial real estate agent.

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1. Is the location of the property ideal?

In real estate generally, location is very important. But when it comes to commercial real estate this is slightly different, here is why. Even in a city like Lagos, where real estate is highly demanded, some areas in the city ideal for residential investments might not be profitable for commercial endeavours.

The use of the real estate is quite important.  Industrial or warehouse sites are attractive if they are easy to get to and have access to main transportation arteries. The strength of the local economy and employment are also important when considering areas to invest and/or locate.

2. Is there sustained demand?

Demand is important but for a commercial property, sustained demand is crucial to ensure that your investment remains attractive long term. If the property in consideration is a residential one, You’ll want to consider whether the property is able to attract high occupancy and whether there is a sustained demand for tenancy. High sustained demand will ensure your property maintains yield and also improves capital growth potential.

CHECK OUT: LAND FOR SALE IN LAGOS

3. What will the expenses be?

Just like a residential property, it is important you have an idea how much you’ll be spending on the building. These expenses will include anything you will have to pay in order to maintain the building. It will also include common expenses like electricity, trash removal, maintenance of the park lot and grounds, and a repair budget. It will also include the net operating income. You should total up the expenses and the income of the property to make sure it is profitable before buying the property. You can ask the estate agent for a pro forma, so you’ll have something to how your accountant so he/she can calculate the possible return on your investment (ROI).

4. Does it fit my objectives?

You as an investor must not overlook these two key elements, that is How well an investment suits their own objectives? What place will it take up within an existing portfolio? An investment in a part of Nigeria might suit one and not suit the another. Diversity is important, and the commercial property offers a great opportunity to achieve this without investing a fortune.

5. What are the risks?

You should be able to mitigate risk for your investment to be successful. You should ensure the contract is robust and asset-based It is always a good idea to consider the worst possible scenario. What impact will this have and what security is in place for you to protect you against it?

CHECK OUT: LAND FOR SALE IN ABUJA

Despite considering the above questions to ask when buying an investment property in ascertaining whether a commercial property is right for you and your business you still need to talk to a professional. A professional consultant in Nigeria will be able to answer a question you might have regardless of how silly it may seem to you. One of the most crucial aspects of security in any investment is your own understanding – and even if this takes 100 questions, so be it.

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Jemimah Abimbola

A creative bibliophile, a lover of words, a tennis guru and a foodie.

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