If one cuts through the buzz around real estate investment, you will see that it's not as all rosy as a lot of people make it seem. The scam rates are very high and you only learn from experience (usually a combination of yours and other peoples'). You buy a land and still need to keep your ear to the ground about government activities in the area you bought the land and also force yourself to build something on the land + fence it to avoid (part of) it being joined to someone else's land or turned to road. It's like a new part-time job you've got yourself. Too much unnecessary headache due to a system that is dysfunctional on multiple levels.
I have been considering investing in real estate investment trusts (REIT), a professionally managed real estate investment fund. The two I'm aware of in Nigeria, Union Homes and Skye Shelter, are performing terribly bad. It beats logic for me that while people have been tripling and ten-pling their investments in Lekki and Ajah properties in the last decade, the professional real estate investment managers have been losing money hand over fist.
But I really want to invest in real estate. My issue is that I don't want to have to worry about government or road encroachment or land grabbing activities. Just like my stock investment, I want peace of mind that comes with knowing I have all the variables well sorted out and I can go about my already consuming work.
Currently, I am settling for US REIT, specifically the Vanguard REIT ETF. I am not picking it because it's better than Nigerian real estate investment but just because I get peace of mind and beats by a factor of over 10, Union Homes and Skye Shelter.
I am still searching for a safe way to invest in our real estate. If you know any safe way, please share. Thanks!
Dear Michael,
ReplyDeleteLand investing in Nigeria cannot exist in a vacuum, the Nigerian state is lawless and brutal, even your investments on the Nigeria Capital market or your deposits in the banks are not as safe as you think they are. The catastrophic devaluation of the Nigerian currency makes a joke of everything.
Nigeria is a high risk investment/business environment, but all things considered, real estate is still one of the safest and profitable investments in Nigeria.
My approach is to properly dimension the risks and work out strategies to minimize them. All the risks you mention can be managed. From properly investigating the land, to ensuring you are dealing with all the relevant owners before parting with your funds, to properly taking possession, to ensuring the title documents are properly processed. All the while,the use of knowledgeable experts (Lawyers, surveyors etc.) might seem like a heavy burden initially but will shrink when the property value appreciates or you have to claim compensation from Government for acquiring your property.
Another major factor that greatly improves the chances of success is teaming up with other likeminded investors ( I would recommend experienced ones) or buying from operators with a track record and a reputation to protect.
Please get in touch with Bob Obirieze or me by e mail for further details.
It can be done very profitably, I personally have verifiable testimonials to give you.
Thanks a lot!
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