STARTING REAL ESTATE AND PROPERTY DEVELOPMENT COMPANY IN NIGERIA
Today, real estate is without a doubt one of Nigeria’s most profitable and growing industries; as an agent or an investor, you can make a lot of money. This is due to the fact that Nigerians are always in need of residential apartments, office buildings, and commercial outlets, and they look to either buy or rent properties and reconstruct to their specifications, and they may need to consult a real estate agent or expert before making their decisions.
What is Real Estate?
The real estate market is well-established, with various vendors vying for attention. As a result, starting your own real estate business is a viable career option, albeit one that is fraught with obstacles and hurdles. A real estate investment trust (REIT) can help you acquire a house, a rental property, or another piece of real estate wholly or partly.
A real estate business is a company that specializes in buying, selling, managing, or investing in real estate. Individuals, businesses, and investors use real estate agents to buy and sell a range of properties.
Real estate, on the other hand, employs millions of people in a wide range of industries, including sales, appraisals, property management, financing, construction, development, counselling, and education. Accountants, architects, banks, title insurance agencies, surveyors, and lawyers are among the people and companies who work in the real estate market.
Nigerian Real Estate Laws and Regulations
Real estate is governed by a number of laws in Nigeria. Real estate is governed by laws such as the Land Use Act of 1978 and state Land Use Laws, among others.
Nigeria’s primary law governing real estate ownership is the Land Use Act of 1978. Under the Act’s provisions, the State Governor has the authority to manage and administer all land within a geographical area of a state for the benefit of its residents.
The Governor is responsible for granting individuals and businesses a limited-term right of ownership over the land, as evidenced by the issuance of a Certificate of Occupancy or Governor’s Consent.
Types of Real Estate
The real estate industry has variety of sellers competing for customers’ attention. For this, starting your own real estate company is a feasible career option, but one filled with challenges and stumbling blocks.
There are different forms of real estate in Nigeria that you can choose from and this can sometimes depend on your financial capacity and environment
Real Estate Agents
A real estate agent, often known as a Real Estate Broker or Realtor, is a key actor as a middleman between customers and retailers of real estate. Buyers and sellers are brought together by real estate brokers. When a sale is made, the agent is compensated with a commission for accomplishing the deal.
This is the most prevalent type of real estate business, where you buy land/property for a low price and then resell it for a profit. To begin, this strategy demands a respectable amount of money as well as extraordinary efforts. All you need is some cash and some study expertise to get your own plot of land.
This method is easy but costly: all you have to do is acquire a property in a good location, convert it into commercial structures or luxury apartments, and then sell for more than you paid for it.
This business requires much more cash than other forms of real estate businesses, but it may provide significantly larger profits.
Purchasing property and leasing or renting it is an excellent strategy to generate money in real estate. It’s critical to buy a building in a desirable area so that you don’t have trouble finding renters. The tenants will pay you monthly or annually, and you will still be able to sell the property at a better price whenever you choose.
Taking on a Property Owner’s Debt
Accepting to pay off a property owner’s debt in exchange for the property is another approach to own a property with no money on hand.
In this case, a debtor who has no one wanting to buy his or her property at a specific rate at a specific time may elect to give his or her property to anyone willing to pay off his or her obligation.
A mortgage can be utilized to launch a real estate company. Here, only a fraction of the whole cost is paid up front, with the rest spread out over time when the property is given over to you.
A mortgage bank is contacted the bulk of the time. If the borrower does not pay the mortgage, the bank has the authority to foreclose. Mortgages are often referred to as “real estate claims.”
Steps on how to start a Real Estate business in Nigeria
So, here are some suggestions for starting a real estate business in Nigeria.
Step 1 – Choose your real estate niche
Before registering the real estate business, every investors need to be sure of which aspects of the business to choose.
Real Estate Developer
From site purchase through architecture, landscaping, and building construction, developers manage all aspects of estate development. Real estate development businesses, on the other hand, are not the same as construction corporations. There is, nevertheless, some overlap.
Furthermore, while developers face the most hazard in the real estate industry, they also stand to benefit the most.
In conclusion, as a real estate developer, you must:
- Acquire or get land.
- Engaging a contractor and an architect to develop the construction project and architectural style.
- Obtain the required building permits and funds.
- Supervise the construction of the structures.
- Create a marketing plan for the property.
- The property can be rented, managed, or sold.
Real Estate Agent
Real estate agents serve as representatives and act as intermediaries, finding customers who need to purchase and connecting them with sellers who want to sell. They are paid a commission for each sale they make, or the money is divided if they work with a team of other agents.
Most agents in Nigeria get a commission of up to 10% of the entire earnings from the sale, purchase, or rental of the property.
Setting up a real estate agent can also require some of the following guide before operation:
- Use the internet, leaflets, billboards, or newspaper advertising to advertise the property for sale.
- Place signs on the property that say “For Sale” or “For Lease,” as well as your contact information.
- Use social media, Google advertising, and fliers to promote the property.
- During a visit or inspection, be present to answer any questions the buyers may have regarding the property and to tour them around.
- On behalf of the seller, negotiate the highest and most fair price.
- Perform background investigations on potential purchasers to ensure they are financially qualified to purchase the property.
- Complete the transaction.
Step 2 – Research on the niche of real estate business in Nigeria
As with any other type of business, you’ll need to conduct extensive study on how Nigeria’s real estate market operates.
You should be aware of the dangers involved, as well as the decision-makers in the sector, the regulations that govern real estate operations, and how much it will cost to establish such a firm, among other things.
Conducting extensive study about the real estate industry will help you succeed in the long term since you will be prepared for any setbacks you may encounter while starting your own firm.
Step 3 – Prepare a Business Plan
Preparation of good business plan is a way to overcome the market and before coming up with any ideas on how to start a real estate firm, it’s crucial to assess and prioritize your personal and financial goals for the future.
Make certain that the company you’re about to start is aligned in a way that will help you reach your business goals and objectives.
Your business plan should also entail the minimum amount that will be required to start up or you outsource for fund because of the capital intensive nature of the business depending on the scale to begin.
Because of the uncertainties that can arise when starting a business, it is recommended that you do not take out a loan to start a real estate business.
Step 4 – Seek investment or partnership
The real estate industry is a capital-intensive sector that requires a substantial quantity of cash. It’s important to seek out investors if you don’t have enough.
You could look for equity investors who can give you enough leverage to get your company off the ground and grow quickly.
Though starting a real estate business with borrowed funds is not recommended. But, a serious minded individual can start a property business and have access to a free loan with a very low interest rate by borrowing money and invest in a completed property, paying it off over time.
Step 5 – Make your Real Estate business legitimate and recognized
The need of business registration is very important in the real estate market.
You must first register with the CAC (Corporate Affairs Commission) and get a certificate before you may operate as a business. Additional groups and organizations regulate real estate transactions in Nigeria.
You can also join an association for real estate developers, such as the Nigerian Real Estate Developers Association
Step 6 – Draft a strategic Marketing Plan
One of the most common mistakes made by expanding real estate businesses is to sit back and relax once the referrals start coming in.
The one thing you should know about marketing is that it’s the one aspect of your business that never sleeps. Whether you’re trying to build a brand, attract clients, or close real estate deals, real estate marketing entails promoting your unique value proposition to the rest of the world.
Train yourself to think strategically about what’s going on in your market and to be ready to provide value to your customers, regardless of where they come from. You may also find out more about real estate development.
Step 7 – Develop a business website
Regardless matter how much local marketing you do, you need a web presence to attract and engage internet traffic to your business.
Every successful real estate firm is built on a solid foundation of SEO on the website that allows you to direct traffic and potential customers right to you.
A solid use of SEO on the website that allows you to usher those traffic and prospective clients right to you is a crucial foundation of every successful real estate business.
It may cost a little money at first, but a solid use of SEO on the website that allows you to usher those traffic and prospective clients right to you is a crucial foundation of every successful real estate business.
The website should be efficient and flexible. This will allow prospective customers submit questions, view photos, and watch videos of various property options as they become available or are expected to become available in the future.
Once you’ve done that, you can start working on a continuous promotion campaign, such as content production and social media strategy, to generate more leads for business expansion and development.
Step 8 – Create branded items
You should make it known to the real estate demand market that you are open for business and plan to stay in it. To announce your presence in the real estate market, you can use handbills, newspapers, real estate journals, radio, television, and as much promotion as your budget permits.
What is property development?
Although many developers oversee the construction process or engage in home building, real estate development is distinct from construction or house building. Property development is the process of increasing the value of a building or piece of land. Real estate development is another term for property development.
Property development does not always need the demolition of an old structure or building to make way for a new one. It also includes buying large tracts of land and turning them into a residential or mixed-use neighborhood. Once the marketing idea is well executed, the developer may be able to generate sufficient interest on off-plan sales.
- Property development is a diverse industry that might include any of the following:
- Purchasing land and constructing a structure on it
- Adding value to a home by renovating, expanding, or enhancing it
Conversion of a property from one usage type to another. Property developers are persons who operate in the real estate sector as entrepreneurs. A developer increases the value of a piece of land or a structure.
Property development does not necessarily necessitate the demolition of an existing structure in order to construct a new one. It also entails purchasing vast swaths of land and turning them into residential or mixed-use developments.
What does developer do?
A developer may benefit from the property development by adding value which is one of the primary (but not exclusive) goals of real estate development. The notion of developing property to its greatest and best use value is essential to the property development process. And, this has a substantial advantage of preserving and expanding real estate wealth, such as property investing. It is believed that where profit are earned, danger is always there. The development of real estate is no exception.
Many individuals will tell you that real estate development is difficult and dangerous. Indeed, it may be without the proper information, skills, or preparation, and as a result, developers frequently strive to minimize risk in as many ways as possible.
One of the most important forms of investment that has helped Nigeria’s financial industry is real estate investment. However, issues such as land grabbing, breach of contract, and sale of government-owned land has continue to plague the Nigerian real estate market. It is now very wise that any investor should be sure legitimacy before hand.
Adebiyi Adesewa wields a degree in Accounting and has helped startups and small businesses navigate starting our business. Her specialty includes How to guides, articles, small business tips, sharing insights on what matters to the small business.
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