Chizitara: Dear Spyder, Great job there and thanks for the objective analysis. Going by our budget and of course those objective analysis, I will opt for Enugu at least for the start. As quite significant of us (would-be investors) are not favorably disposed to raising more than NGN500k baseline investment capital, it would be unrealistic to consider Lagos. The most important thing to me is to ensure timely completion of the project and then disposing it off and perhaps, with the expected mark-up, we can then think about replicating the investment in other attractive locations like Lagos and PH.

As an interested investor and considering all the exogeneous factors and macro-economic trend in Nigeria, I will readily go for Enugu for a start.

spyder880: Ladies and gentlemen, we have been exploring ways and means in the last 6 pages or so, brainstorming on the best possible ways to benefit from the Nigerian property market while following all the rules which will make the venture both pleasurable and profitable. But like people that are desirous of success through the ways of hard work and playing by the rules, I had made inquiries from professionals who should know about the venture we want to undertake.

I spoke with a familiar Barrister at law, with enough experience in land and property related matters to throw more light on this partnership, with the aim of understanding his views about the possibility of doing this business with minimum exposure to problems. He spoke like a seasoned professional that he is, and in the end made me understand some of the hidden mines we may not have seen now, but which might present serious problems mid way into the partnership.

Most of what he talked about is the possibility or otherwise of managing the expectations of people, especially when there will be up to 10 or more. He asked questions like if we had agreed on a particular profit margin, he explained that if Mr A is comfortable with 30% profit, will Mr B also agree or will he complain that the profit is too small. Mr C may even want you to sell at 10% profit because he has need for his money and wants to cash out. We should understand the implications of this, an example is when a house is finished and somebody wants to buy, some members may agree to a sale while others may want to wait for a better offer.

Managing expectations also implies that in a situation where sales are not automatic after the building, (we know this is not sachet water we are going to sell, this is a full building) What happens when selling does not happen as fast as we planned? Supposing it takes a year or more to sell the house? Will everybody be equally patient and wait it out? And if there are reasons that will make it impossible to complete the house on the budgeted amount, will every member agree to come up with additional money to continue the project?

Its not as if I don't know all these before, but we need to prepare our minds for these kinds of situations. In fact, he told me the fewer members the better, like 2 or 3 members coming together to register a company instead of a full partnership. This is because experiences vary, and many more people may mean many more demands/requests.

Of course I got tired and decided to take an afternoon sleep after talking with him. We all also need to re evaluate these points, its not just a question of collecting money and starting off a building, but making sure my reputation remains intact after the whole business is done. Once again, I thank you all.

FLORIDACAR: @Spider880, It's a good thing that u consulted a lawyer to open this up. Maybe about time we look into it from our not so professional way of doing things . I.e ( pure risk takers business man...lol) I like you to pls answer some of these questions. So as to help wanna be investors to know exactly what they are getting into. Question#1.. How much u expect to turn in as a profit on #10million from first property base on your experience ? Maybe selling it for 12 or 12.5 , 12million maybe?
Question#2, what's projected duration on this investment from day of investor contribution to property selling date? 8,9, 10 months year maybe? Please i expect your answer then we go from there. ...Let me make-it clear here that I am very interested in this investment & I think about time we do it like a business.

spyder880:

My target profit is about 20% (sell for N12m)
My target selling duration is 6 months.


But those are just market plans and have nothing to do with real live situations. I have sold a house even before it was completed, and sometimes I have seen houses staying for one year without buyers. But the trick is that it keeps appreciating, especially in Nigeria.

FLORIDACAR: @Spider880, It's a good thing that u consulted a lawyer to open this up. Maybe about time we look into it from our not so professional way of doing things . I.e ( pure risk takers business man...lol) I like you to pls answer some of these questions. So as to help wanna be investors to know exactly what they are getting into. Question#1.. How much u expect to turn in as a profit on #10million from first property base on your experience ? Maybe selling it for 12 or 12.5 , 12million maybe?
Question#2, what's projected duration on this investment from day of investor contribution to property selling date? 8,9, 10 months year maybe? Please i expect your answer then we go from there. ...Let me make-it clear here that I am very interested in this investment & I think about time we do it like a business.

spyder880:

My target profit is about 20% (sell for N12m)
My target selling duration is 6 months.

But those are just market plans and have nothing to do with real live situations. I have sold a house even before it was completed, and sometimes I have seen houses staying for one year without buyers. But the trick is that it keeps appreciating, especially in Nigeria.

Fhemmmy:

My Chairman, i remain loyal oh . . . And i am sure you know i am humbled, but have you been able to talk to any of those that were not able to sell their homes for that long to know why they were in the market for that long? cos if you know why, you would be able to prevent that in your own deals, life is a plain ground of learning . . .

spyder880: Let me start by expressing my heartfelt gratitude to all my friends here online. The support and encouragement you have shown me since I started my building business online is tremendous, I still dont know how to show you how I feel for your suggestions and ideas shared with me which has resulted in making me a better builder and businessman.

Over the years, we have come to appreciate each other as we move from state to state, from building to building, pulling every obstacle that might stop us from realizing our objectives of building decent properties at the lowest prices possible. I have built houses in about 6 states of the country, including the assistance which I sometimes provide from a distance for sites I cannot move to physically.

It has not always been a complete success story, but there is a greater percentage of success in the works we have done compared to the small problems we have encountered.

Once again, I thank you for all your support.

Humanbeans: spyder, since our first target is 10M, and we have 15 investors, im of the opinion that you should find out if that money can be raised among them, time is of the essence, if we can get the project underway in the next two months, the progress could attract other investors for the next project. pls work on this ASAP (as soon as possible), while we are working on the other aspect of the partnership

spyder880: Let me start by expressing my heartfelt gratitude to all my friends here online. The support and encouragement you have shown me since I started my building business online is tremendous, I still dont know how to show you how I feel for your suggestions and ideas shared with me which has resulted in making me a better builder and businessman.

Over the years, we have come to appreciate each other as we move from state to state, from building to building, pulling every obstacle that might stop us from realizing our objectives of building decent properties at the lowest prices possible. I have built houses in about 6 states of the country, including the assistance which I sometimes provide from a distance for sites I cannot move to physically.

It has not always been a complete success story, but there is a greater percentage of success in the works we have done compared to the small problems we have encountered.

Once again, I thank you for all your support.

spyder880: ^^^^ Thank you lawyer, you really know your work. After talking with you, I realized there is more to this than just building a house.

lawyer: Who is this familiar Barrister_at_Law that is seasoned, smart and experienced? . . . hmmm let me think! Ah it's me! Lol

Anyway let me just give you my 2 cents briefly and show you how it can be done legally to avoid pitfalls.

1. Anyhow you look at it, its a business to make profit, so you must guard yourselves against any unforeseen liabilities or issues that will crop up.

2. Be very realistic and don't compare yourself with other real estate developers that have done this or that. You neither know how they obtained funds to build theirs and how they intend to offset their debts. All that glitters is not gold.

3. Going back to point 2 above, set your expectations and budget to the barest estimate so you don't over shoot your income mid way and be stuck with a still born project and every other subscriber will be calling you a fraudster for no fault of yours.


4. Give yourself a detailed calculations for the essential things and follow it judiciously. I saw your above calculations and i know from my experience that it is some million Naira short because you didn't take into account so many things e.g:

1. Cost of land, 2. Agency Fees 3. Legal Fees 4. Omonile Signing fees + their youth development and all the idiotic side fees they collect 5. Survey fees 6. Foundation and Roofing fees 7. Buying of block from them and other materials plus community laborers 8. Omonile fees so that they wont disturb you when your building 9. Perfection of the Documents which could cost up to a million Naira depending on the area and the time frame to get it when you factor Alausa bottle necks and 10. Cost and time of Getting the Approved building plan.

The above 10 costs has nothing to do with even building the property and all the attendant costs and i make no pretense that am an expert there so i leave that to you to provide a proper estimate in building your property.

5. Also look at the place you intend to buy a land because nobody will buy a property that has no accessibility, no life, up and coming area or a place they generally don't feel comfortable.

6. Are you going to sell a property that has no proper government documentation? What if you finish building the property and the C/O or Governor's consent isn't yet out? What exactly would you be transferring? NO DOCUMENT!!!

7. What about contribution and the members they your soliciting to join you? How many members are you looking at? What is the share ratio each member is to drop? If the whole project is to cost N 25MILLION, How many people do you need to make up the N 25Million? 25 people at N 1Million each? Are they all going to pay at the same time and date? What if 16 pays on time according to your deadline date and the remaining 9 stagger their payments along the line and out of the 9 who promised to pay,2 rescind in their promises to redeem their N1 million each, how do you coerce them to fulfill their promise? Any contractual obligation drawn out to hold them liable and if they still choose not to pay up, are you ready to sue them for specific performance? Are you going to take out of the 16 Million Naira to pay legal fees for a case that could take 5 Years or more to decide?

Are you going to tell the subscribers to pay more money as time comes to fulfill the project because some members defaulted in their pledges or the instalmental payment cannot finish the job on time? What if an act of God occurs? Rain, Storms, Flood, Arson, Omonile fight and the structure is demolished half way or poor materials etc, what happens? Who pays who and what?

The above is not meant to sound like a dooms day scenario but actual legal cases i have handled or handing based on simple things people neglect when planning a project this big. To most of you its one house so nothing catastrophic should happen and all should go well. Well, if it doesn't go well, what next? Who is responsible for fees and money spent? Besides if all goes well and some people pay money as investors with different amounts and you end up not selling it quickly as envisaged, how do you contain the uproar and how do you share profits without wahala of fraudulent complains?

These are the reasons you hear of so many developers abandoning their projects or collecting money instalmentally and not delivering the property to the buyer. Greed, lack of planning, lack of proper budgeting, high unrealistic expectations and mostly lack of experience in this field leads to the above problems enunciated.

The Solution to this to make your project very feasible and realistic is as follows:

1. Register a real estate company that deals with construction of properties for buyers. With that,as individuals you are covered from any liability and people can only sue you as a company and not individually except 1 person chopped the money and they will lift the veil of incorporation.

2. The Company will specify the share ratio of each director and will spell out how many percentage they should all contribute to make this business work. The bigger the share ratio, the more that director or shareholder will pay out to complete this job.

3. If you plan for N 25Million, please raise almost N 30Million cash before you embark on anything. The moment you receive N7 Million and say ' Lets start with this or do something, the rest will come', is just the beginning of problems for you. Its not your private project for your family that you can use 20 years to build brick by brick. Don't do it or be tempted to. Police or EFCC will carry you guys for fraudulent misrepresentation.

4. Finally engage professionals, such as lawyers, accountants, architects, builders etc, let them give you an exact quote and estimate for the next 1 year so that you know whether its a feasible thing to do or not. Houses are not built on the pages of Nairaland.

5. Continue having your meetings, get your subscribers on Nairaland who are ready to invest, let them know the pros and cons of this project, build the crowd and amount. Meet them, discuss with them, raise the right amount needed and the rest is a piece of cake.

Cheers

ocman: I suggest we digress into buying of lands and fencing it. This will take care of those members trying to opt out. But this should be purely for those who can wait for like 5 to 10yrs. Why do I say this? If we are able to get 20plots of land now at locations like ibeagwa nike at 600k per plot now, by 7yrs to come. We would be talking about not less than 7million per plot. A frnd of mine bought 15plots at New GRA at 200k per plot some 9yrs ago. Now he sold just 5plots at 9mill each. He is in money. Pls if we can do this for long time sake, I would prefer it. Let's think of this business in the line of getting something down for our kids and for our futuree too as fathes. It will help us a lot. The longer the time, the most relevant the assest.I dnt need quick hit a jackpot now-kinda investment that will fetch just 2mill for 10peeps to share. If we throw in 8yrs and wanna sell our investment. We will be balling. So let's do it a long time stuff and agree on it, this expunges the opt-out tendency. That is my take on this