How to Buy a Property to Rent in Lagos, 2020

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  • Posted by Sebastine Nnaji
image showing mutiple houses a guide to buying a property to rent in lagos 2020

Guide to Buying an Investment Property to Rent In Lagos

Real estate has always been a go to place for those who seek to grow and preserve their wealth portfolio. To provide in time when the hands become old and weak to work like in the days of youth. The beauty of buying a property to rent is that you will join many others on the road to retirement savings, generational wealth fund & meeting your financial goals.

Now that you are here, let’s get down to business. 

I am going to share a few things so that beginners won’t feel lost. Here are a few things that you must know before forging on.
 
Know Your End Goal:
 
With a goal in front of you, you can make smart decisions on what properties are a good fit for your investments. This goal must be realistic and based on your financial capabilities.
 
Write down your answers on paper when I ask:
  1. When do you plan on retiring?
  2. How much money do you plan on investing in buying a rental property?
  3. Do you need an immediate cash flow?
  4. Will you need to diversify your portfolio to reduce risk?
  5. How much will you need to cover all expenses?

These questions help you define what you need to meet your target. And what the goal actually is while considering your first property.

Seek Advice from Other Landlords or Management Agents
 
Speaking to other landlords might feel uneasy because you aren’t comfortable with the idea. But the aim is to learn about their experiences, and how they overcame obstacles.
 
If this is a problem you can talk to contact us for advice. We are available to assist you any day, any time.
 
Research Indicators of Different Rental Opportunities
 
You can never research too much.
 
Good real estate opportunities abound, and the indicators of a strong investment market. Here are some things to consider:
 
  • Job Growth – is a strong sign of the potential for real estate investments. For instance, Dangote’s refinery is in Ibeju Lekki, which means it will create jobs for more than 2000 people. Other small to medium businesses will set up shop to capture a part of the market.
  • Population Growth – Lagos has always been a place people flock to for job opportunities. To be part of the “national cake”. In simple terms, an increase in population, there is a huge market for land sellers and landlords. This suggests that places like Lagos, Abuja, Port-Harcourt, are good targets for investors.
Take a look at some of our developing estates around Ibeju-Lekki.
 
Do Your Due Diligence.
 
Don’t rely on a property manager or real estate agency. These are the tenets of a good market for rental properties.
 
LOCATION
 
The choice of a location is and always has been an indicator of one who has done their research – a smart investor. The location defines the tenants you attract and the level of profit you will make or lose in short and long terms.
 
Rental property in Lekki will attract different tenants of income level than a property in Aguda, Surulere. Also, the vacancy rate will definitely different because of rental rates.
 
These questions should have answers before you start making payments for a property. You can consider these questions as part of your investment strategy.
 
Is the rental property close to a good or popular school district?
 
  • How many rental properties are within the area?
  • What is the growth rate of the area?
  • What is the area’s proximity to the market?
  • Is the crime rate low?
  • What is the average household income for the neighborhood?
PROPERTY TYPES
 
  • For a family-sized unit, ensure you have properties to accommodate families and not bachelors. The quality of local educational facilities in the area also needs to look at. If a property is good, but the nearby schools are poor or non-existent, it can affect the value of your investment.
  • Another instance is knowing the kind of property to buy for a student populated area. Though you will have irregular vacancies as regards new sessions which in turn affects your income. You don’t want to run a loss by having to repair damages every now and then with your profits.
SOCIAL AMENITIES
 
The benefits of an environment with gyms, malls, parks, public transport hubs are incentives to lure high-income earners. Places with such amenities mean a low vacancy rate. And this, in most cases means an increase in rent.
A place where people can socialize with is a place with very little vacancy rates. This is also a good start on how to determine a good rental property.

SECURITY

No one will stay in place with high crime rates. A place filled with fear is not a good sign to invest in. Do some research about the crime rates, to know more but as you know not everything is on Google’s books. So it is always best to visit a nearby police station to get the statistics of the crime rate. Even better get to know the residents of the area can give a clear a picture about the safety of the area. You might also want to ask about the frequency of a police presence in your neighborhood. VACANCY RATES When vacancy rates are high, it could mean one or more things.
 
  • Is it that people are leaving the area or
  • Is it a new place with the potentials for future growth?
  • How do I cover for seasonal fluctuations?
Vacancy rates are very vital when it comes to rental properties. High vacancy rates force landlords to lower rents to attract tenants. This means short income at the end of the tenancy renewals. In turn, low vacancy rates allow landlords to raise rental rates. Speak to a Property Manager It is vital that you speak with a property manager to know what you need to do and round up on your discovery.
 
Ask these questions:
 
  • How much will it cost to rent a [your description of your desired property?
  • What is the average rent in the area?
Once you have all the answers to the questions above, you can proceed to start saving for the end goal. That’s it about the guide. Setting up a real estate portfolio is easy.
 
If you need help setting up a real estate portfolio then don’t hesitate to contact us.

 

image Sebastine Nnaji

He is a creative digital marketer who has worked with a good number of businesses and has recorded success. While not working he is reading books on behavourial economics.

Seb. Nnaji

Team Lead - Digital Marketing, Vafiero


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