Important Factors For Real Estate Investing In Lagos

6 Important Factors For Real Estate Investing In Lagos, Nigeria.

What should you be on the lookout for when buying real estate? Although location is always important, there are many other aspects that can influence whether an investment is good for you. 

Below are a few of the most crucial factors to take into account if you intend to engage in the real estate market.

1. Location

The maxim “location, location, location” remains true and is still the most crucial element in real estate investing success. Residential property assessments heavily consider the status of the community, green space, scenic vistas, and proximity to amenities. When valuing commercial real estate, accessibility to markets, warehouses, transportation hubs, highways, and tax-exempt regions is crucial.

What to consider:

When choosing a location for a property, it’s important to take a mid-to-long-term perspective on how the neighborhood is anticipated to change during the investment time. For instance, the quiet open space behind a house now might one day be transformed into a busy manufacturing plant, lowering its value. Examine the ownership and intended use of the immediate locations where you propose to make your investment in great detail.

Getting in touch with the local authorities or other government organizations in charge of zoning and urban planning is one approach to learning more about the prospects for the area around the property you are contemplating. You can then decide whether the long-term planning in the region is advantageous or unfavorable to your own strategy for the property.

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2. Property Valuation

Real estate valuation is crucial for financing the purchase as well as the listing price, investment research, insurance, and taxation—all of which rely on it.

What to Consider:

Typical techniques for valuing real estate include:

  • Sales comparison approach: Recent sales of properties with comparable features—most frequent and appropriate for both new and existing properties.
  • Cost approach: appropriate for new construction, the cost of the land, and the building less depreciation.
  • Income approach: Rentable depending on anticipated cash inflows

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3. Investment Objectives and Future Prospects

Lack of clarity regarding objectives may result in unanticipated outcomes, including financial distress—especially if the investment is mortgaged—given the low liquidity and high value of the real estate.

What to Consider:

Determine which of the major categories listed below best fits your objectives, and then make plans in that direction:

  • Purchase and use: You can profit from self-utilization, rent savings, and value appreciation in this location.
  • Purchase and lease: This provides consistent income and long-term value growth. To manage renters, do repairs, handle potential conflicts and legal concerns, etc., a landlord must have the right temperament.
  • Purchase and sell (short term): The average property is under construction and will typically be sold at a profit when it is finished. This is usually done for a rapid, small to medium profit.
  • Purchase and sell (long term): This is typically concentrated on significant long-term inherent value appreciation. This provides possibilities to support long-term objectives, like retirement

Recommend Reading: Check out this property for sale in Abraham Adesanya

3. Anticipated Cashflow

Cash flow is the amount of money that remains after expenses. A positive rate of return on an investment property depends on having a positive cash flow.

What to Consider:

Create predictions for the upcoming profit and expense modes

  • Expected rental income cash flow (property owners benefit from the increase in the price of commodities; inflation)
  • The projected rise in inherent value is a result of sustained price growth
  • Gains from depreciation
  • Analysis of the costs and benefits of remodeling before selling to acquire a higher price

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4. New Buildings vs Existing Properties

Modern amenities, appealing pricing, and the ability for customization are typical features of new construction. Delays, higher prices, and the unknowns of a freshly constructed area are all risks. Existing properties come with benefits such as ease of access, established improvements (such as utilities and landscaping), and frequently reduced prices.

What to consider:

When choosing between a new building or an existing property, the following are some important factors to consider:

  • For new investments, look over previous projects and investigate the reputation of the construction company.
  • For existing properties, look over the estate deeds, recent surveys, and assessment reports.
  • Think about your monthly maintenance expenses, unpaid fees, and taxes. These kinds of expenses can negatively affect your cash flow.
  • Find out whether the property is rent-controlled, rent-stabilized, or free market before investing in leased real estate. Is the lease set to end soon? Are rent renewals friendly to the lessee? Who is the furniture’s owner?
  • If furniture, fixtures, or equipment is going to be sold, be sure everything is in good condition.

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5. Real Estate Market as a Whole

Similar to other investment strategies, buying low and selling high is a solid strategy. Real estate markets change, so staying on top of trends is beneficial. Additionally, it’s critical to monitor mortgage rates in order to, if at all possible, reduce your financing charges. 

What to consider:

Be informed about trends and statistics for:

  • New property developments
  • Building Inventory
  • Home prices and home sales (in your desired area and entire market)
  • Foreclosures
  • Mortgage rates
  • Flipping activity (the rate at which buildings are refurbished and sold)

In conclusion,

you may diversify your portfolio with real estate. Real estate typically has a poor correlation with other significant asset classes, meaning that when stocks are declining, real estate is frequently rising. Real estate can also offer consistent cash flow, significant appreciation, tax benefits, and competitive risk-adjusted returns that make it a worthy means of investment.

The Lekki Pride II is a fast-selling residential estate and allows you to buy property off-plan in the city of Lagos. The estate is developed by Zylus Homes and the company boasts several other top-notch estates developed by the organization. 

Currently regarded as the best and most profitable real estate company that has provisions for off-plan property purchase/sales in Lagos, and other cities across Nigeria. For more information on off-plan property purchases or sales, kindly call us on +234 9166988692

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