domack99:
Building a house is more of security than investment. As someone mentioned earlier, is for people who want to play safe and that the category most Nigeria fall into.

Housing infrastructure should have been more of government liability.

No I don't agree with that. There's no where in the world where government engage in mortgage biz. I think it should be more of private sector with good portfolio with government plan and standard. Government don't build.however, they set standard.

reflx:
nothing beats land and property in my opinion though.
less stress in the long term, first solving my own housing problem then creating housing solutions for others.
you can buy and build, or simply buy and hold to resell.
i know someone who bought a land in port harcourt for 900k like six years ago and sold it last year for over 20M.
no sweat, no headaches, or supervision etc. our population keeps growing and so communities will keep expanding, development improving and land costs in or near the center still increasing. though it is speculated to plateau at some point, real estate for now is a long term wealth spinner while you focus on your day job and still get paid.
except you have a passion for solving the food problem...again as our population increases we have more hungry mouths.
my 2 kobo

The UN reported that the housing deficit in Nigeria is up to $20 billion

seunt4ut:


No I don't agree with that. There's no where in the world where government engage in mortgage biz. I think it should be more of private sector with good portfolio with government plan and standard. Government don't build.however, they set standard.

This is misleading.they actually do.check what the UK govt is doing regarding housing. Where do you think the term council housing came from? Government here are building new and affordable homes

Investing in commercial properties such as building a block of lock-up shops in a CBD or even an office block guarantees faster return on investment compared to residential properties.

Elijahrona2:


What's the gain in it? 15 good years

It depends on how much you ha e to invest. 3.5. For a land won't give you high returns .you need min 5M worth of land. Cost of building the house would still be same from Lagos to Bayelsa.

hotmas911:
@ Yak, we can always learn from eachother.

An example of worthy investment is cashew
plantation. Check what
4.5million will yield in 16 years on a rental
property compared to
cashew plantation in the same period
A) Building a 3-bedroom apartment in a low-
cost area
Building cost--Approx. 4.5million naira
Average yield per year---250,000naira
Time of cost recovery----16years
Returns in 16 years----1 old apartment and
4million naira
B) Investment in Cashew
Land + cultivation------Approx. 181,000 naira per
acre
i.e. 4.5million will guarantee minimum 24 acres of cashew plantation.

***Starting from the first 4months, returns will start coming in through intercropping with short term crops like grains, vegetables or some selected tuber.***

cashew itself starts fruiting in 3years
1 acre of cashew will yield average of 600kg per
acre annually i.e.
14,400kg in 24 acres
Therefore in 16 years, it will yield 14,400kg * 13
which is 187,200kg
(approx. 187tons)
At the average price of 240,000naira per ton-----
187tons in 16 years means 44,880,000naira
So tell me a rental property of 4.5million that will
yield over
44million in 16 years i.e. over 2.8million annually
as returns.

Note: This yield is aside from the short term crops of the first two years.

I see your point. But let me also say.you forgot to put in the actual overhead cost.
Risk factor
Anxiety
Environmental factors
Buyers.
Sturdies have proven land never depriciate in Nigeria

czarboy:
. I agree with hotmas911, I don't have to be on the farm to supervise, I can have a farm manager that will give me report on a daily basis(that means am a boss) and I can inter crop with other short time crop that will take care of farm expenses, salary etc and still have leftover

Then you have to pay the manager. Extra to ur overheads

very educating. guys are so loaded wit info that am so enjoying varying aspects of it. thank u all

But again olumide4Christ...
Your assumption about cost of land and rental price are not in sync.

The higher the rent you can charge, then much more higher is the cost of the land in such locality.
The cost of land in a place where you can rent up to 900K will not be less than 15Million.
Building cost in such area will also be far higher...

This is a very educative trade..keep it coming, you guys...

olumide4christ:


[b]Sorry hotmas911,

Your analysis of the investment in 3-bedroom bungalow is wrong.

1. No STANDARD 3-bedroom bungalow with toilets, car park, fence, soakaway, electrical and plumbing works can be built FOR N4.5 million; it would surely cost more than that, unless the owner/builder decides to cut corners, which many of them do and after a few years, the structure begins to have issues. A standard 3-bedroom bungalow would cost nothing less than N7,000,000 and above, depending on the location.

2. As far as rent is concerned - take Lagos & Abuja as a case study, you can only find a 3-bedroom flat for N250,000 per year in the outskirts of the city e.g. inner parts of Ikorodu, Mowe, Ibafo, etc. A 3-bedroom flat in main city of Lagos (whether standard or sub-standard) ranges from N400,000 - N1.5 million; in the area of Abuja (off the airport road) where I have my personal project, rent for 2-bedroom goes for between N750,000-N850,000. I presently pay N350,000 per year for the 2-bedroom flat where I live somewhere in Lagos, which is quite cheap when compared with going rates. The 3-bedroom flats in the area where I live are going for N700,000 - N1,000,000 per year.

From the above, if you spend N7,000,000 constructing a bungalow & spend N4,000,000 for land (cost of land could vary higher or lower), making a total investment of N11,000,000, if you rent out such property at N900,000 per year, you will make N11,700,000 after 13 years i.e. breakeven. Also note that it could be much earlier than this since rent increases after every 2-3 years, depending on the landlord.

This does not negate your claim that investment in cashew has a higher yield; I am just setting the records straight, as a construction professional.[/b]

erico2k2:

This is misleading.they actually do.check what the UK govt is doing regarding housing. Where do you think the term council housing came from? Government here are building new and affordable homes

I never heard of that before but I I just google it and I will like you to read through this below text.

Public housing in the United Kingdom provided the largest proportion of rented accommodation. Houses built for public or social housing use were built by local authorities and collectively known as council houses. Before 1885 housing for the poor was provided solely by the private sector. Council houses were built on council estates, where frequently other amenities like schools and shops were provided. From the 1950's blocks of flats and four storey maisonnettes were built, often in mixed estates of flats and houses.
Council homes were built to supply uncrowded, well-built homes on secure tenancies at reasonable rents to primarily working-class people. Council housing development in the mid-20th century included many large suburban "council estates"[1] and numerous urban developments featuring tower blocks. Many of these developments did not live up to the hopes of their supporters, and now suffer from urban blight.
Since 1979, the management of council housing has seen changes. Housing stock has been sold off through Right to Buy legislation, and new social housing is developed and managed by housing associations. An estimated 17% of the UK population still lives in council housing. Approximately 55% of the country’s social housing stock is owned by local authorities (of which 15% is managed on a day-to-day basis by arms-length management organisations, rather than the authority), and 45% by housing associations.[2] In Scotland, council estates are known as schemes.

czarboy:
. I agree with hotmas911, I don't have to be on the farm to supervise, I can have a farm manager that will give me report on a daily basis(that means am a boss) and I can inter crop with other short time crop that will take care of farm expenses, salary etc and still have leftover

When you're not so financially buoyant, you can't finance the weeding, staff salaries, pest control, harvesting and other activities in the farm.

Love the idea anyways.

If your target is short term, you can build a commercial property, give it a nice finish with essential services and sell it out to a long term investor.

Say the building of a 2 unit of three bedroom flats cost #20 million in three months and you were able to sell it out at the price of #25 million.

I guess that's a smart move cos that will enable you to move to the next project and the profit margin can even be more.

Secondly, if you are more buoyant financially, you can build a nice office space in a good commercial location and put it up for lease for some while before you later sell it out.

Thirdly if you have a good team of building expert, you can invest in some old buildings that have been put up for sale, check it structural integrity, perform some modifications and sell it after. I have seen people make fortune through this, some buildings only need some new rendering, plumbing service and new coat to look great again.


I am very passionate about real estate business and looking forward to invest in that very soon.

olumide4christ:


[b]Sorry hotmas911,

Your analysis of the investment in 3-bedroom bungalow is wrong.

1. No STANDARD 3-bedroom bungalow with toilets, car park, fence, soakaway, electrical and plumbing works can be built FOR N4.5 million; it would surely cost more than that, unless the owner/builder decides to cut corners, which many of them do and after a few years, the structure begins to have issues. A standard 3-bedroom bungalow would cost nothing less than N7,000,000 and above, depending on the location.

2. As far as rent is concerned - take Lagos & Abuja as a case study, you can only find a 3-bedroom flat for N250,000 per year in the outskirts of the city e.g. inner parts of Ikorodu, Mowe, Ibafo, etc. A 3-bedroom flat in main city of Lagos (whether standard or sub-standard) ranges from N400,000 - N1.5 million; in the area of Abuja (off the airport road) where I have my personal project, rent for 2-bedroom goes for between N750,000-N850,000. I presently pay N350,000 per year for the 2-bedroom flat where I live somewhere in Lagos, which is quite cheap when compared with going rates. The 3-bedroom flats in the area where I live are going for N700,000 - N1,000,000 per year.

From the above, if you spend N7,000,000 constructing a bungalow & spend N4,000,000 for land (cost of land could vary higher or lower), making a total investment of N11,000,000, if you rent out such property at N900,000 per year, you will make N11,700,000 after 13 years i.e. breakeven. Also note that it could be much earlier than this since rent increases after every 2-3 years, depending on the landlord.

This does not negate your claim that investment in cashew has a higher yield; I am just setting the records straight, as a construction professional.[/b]

This is a great professional input.
However, the word "standard bungalow" as used here is relative and varies with taste and location.
A standard "commercial bungalow" can efficiently be constructed with less than 6M except in swampy locations where raft and even pile foundations are needed.

I equally doubt if u can get a plot of land for as low as 4M in a location that rent cost bw 700k-900k not forgetting the cost of maintenance of the structure over time.

From experience,research and expertise, the break even point of building investment is a minimum of 15years.

building is not an asset and anything that's not an asset is a liability I wish I have time to explain this.

mmm

I have been thinking about this. Reason I'm yet to develop a plot of land I have somewhere and I invested the money.

Pls take out some time to explain. I want to learn. This is a great thread.

nwosu1988:
building is not an asset and anything that's not an asset is a liability I wish I have time to explain this.

Following

it's one of the best form of investment, the property won't only serve u, but ur generation unborn, secondly with d property intact, u can use it as collateral for bank loan to invest on something else

olumide4christ:


Well, real estate is a long term investment, not short-term, reason being that it is capital-intensive to start with. I can't think of any real estate investment where the breakeven period is 5 years or even 10 years. Thats the reason why in cases where people give their properties to developers (either local or established, if you know what I mean) to develop, the period during which the developers would use the property to recoup their investments and make a profit before handing over the property to the owners is usually between 20-30 years.

What if you're a developer that built flats and sold them upon completion for a profit. Let's say 6 months to a year.

Isn't this short term real estate investment?

Buying and selling of lands within lagos is one of the best investments out there , depending on ur financial status and location I advice u buy lands at scattered locations within lagos(ibeju lekki - ajah area) in just 3-5yrs time the amount u would gain from reselling just 2 plots would be enough to finish whatever building project u want to do . This is what my mum does and she has Been very successful at it , remember land business in lagos is tough and not for the faint hearted. And I also advice u to get a dry land for the one u would be using for ur own residential housing project.

erico2k2:

The UN reported that the housing deficit in Nigeria is up to $20 billion

great news then, shows investments are worth making. although we hope economic growth makes such investments viable.

erico2k2:

Then you have to pay the manager. Extra to ur overheads

well if you say so but you can reach an agreement with the manager and pay him/her from the short term crop. Like potato will take 3months and there are other crops like that.

This is a very good topic. A big thank you to the person that brought the topic, am learning a lot as a young dude.

olumide4christ:


Well, real estate is a long term investment, not short-term, reason being that it is capital-intensive to start with. I can't think of any real estate investment where the breakeven period is 5 years or even 10 years. Thats the reason why in cases where people give their properties to developers (either local or established, if you know what I mean) to develop, the period during which the developers would use the property to recoup their investments and make a profit before handing over the property to the owners is usually between 20-30 years.



You can break even in 8yrs,it depends on location/cost of land and type of residential apartments u want to build.Those inner parts of ikorodu,mowe,ibafo u mentioned in ur first post,what is the cost of a room and parlour self contained?dont build 3 bedroom or 2 bedroom in those locations and never make it a storey building, just bungalow of like 8 eight apartments of room and parlour self contained
on a plot of land

hotmas911:
@ Yak, we can always learn from eachother.

An example of worthy investment is cashew
plantation. Check what
4.5million will yield in 16 years on a rental
property compared to
cashew plantation in the same period
A) Building a 3-bedroom apartment in a low-
cost area
Building cost--Approx. 4.5million naira
Average yield per year---250,000naira
Time of cost recovery----16years
Returns in 16 years----1 old apartment and
4million naira
B) Investment in Cashew
Land + cultivation------Approx. 181,000 naira per
acre
i.e. 4.5million will guarantee minimum 24 acres of cashew plantation.

***Starting from the first 4months, returns will start coming in through intercropping with short term crops like grains, vegetables or some selected tuber.***

cashew itself starts fruiting in 3years
1 acre of cashew will yield average of 600kg per
acre annually i.e.
14,400kg in 24 acres
Therefore in 16 years, it will yield 14,400kg * 13
which is 187,200kg
(approx. 187tons)
At the average price of 240,000naira per ton-----
187tons in 16 years means 44,880,000naira
So tell me a rental property of 4.5million that will
yield over
44million in 16 years i.e. over 2.8million annually
as returns.

Note: This yield is aside from the short term crops of the first two years.

You didn't take into consideration the fact that property investment has an hedge against inflation unlike cashew plantation. Rent won't remain stagnant and rental increments are a lot higher than that of agric produce

Interesting. I would say building to rent is a longgggg term investment where you would sow and mainly your children and generations to come would reap. If you need to regain your capital and make a profit in the short term then you need to build and sell. Location is most important since that would determine the rent or sale value. But in renting one should take the cost of repairs into consideration and that can be wayyy beyond your estimation if you got a tenant from hell.

It's a good investment if you are lucky to live up to 100years. Personally ,I would never tie my money down for so long. Property business is something you should invest in with real idle money. I mean money you don't know what to do with. That's why banks are the biggest investors in real estate.

@Olumide4christ; the cost of land at those places where the rent is 400k to 900k for a 3 bedroom bungalow is in the neigbourhood of 15 to 20million. So by the end of the day, you are back to square 1.

seunt4ut:


I never heard of that before but I I just google it and I will like you to read through this below text.

Public housing in the United Kingdom provided the largest proportion of rented accommodation. Houses built for public or social housing use were built by local authorities and collectively known as council houses. Before 1885 housing for the poor was provided solely by the private sector. Council houses were built on council estates, where frequently other amenities like schools and shops were provided. From the 1950's blocks of flats and four storey maisonnettes were built, often in mixed estates of flats and houses.
Council homes were built to supply uncrowded, well-built homes on secure tenancies at reasonable rents to primarily working-class people. Council housing development in the mid-20th century included many large suburban "council estates"[1] and numerous urban developments featuring tower blocks. Many of these developments did not live up to the hopes of their supporters, and now suffer from urban blight.
Since 1979, the management of council housing has seen changes. Housing stock has been sold off through Right to Buy legislation, and new social housing is developed and managed by housing associations. An estimated 17% of the UK population still lives in council housing. Approximately 55% of the country’s social housing stock is owned by local authorities (of which 15% is managed on a day-to-day basis by arms-length management organisations, rather than the authority), and 45% by housing associations.[2] In Scotland, council estates are known as schemes.

Noted I live in England so I know what I was talking about. You actually have the right to buy a council flat or house if you have lived in one for more than 3 years.

olumide4christ:


[b]Sorry hotmas911,

Your analysis of the investment in 3-bedroom bungalow is wrong.

1. No STANDARD 3-bedroom bungalow with toilets, car park, fence, soakaway, electrical and plumbing works can be built FOR N4.5 million; it would surely cost more than that, unless the owner/builder decides to cut corners, which many of them do and after a few years, the structure begins to have issues. A standard 3-bedroom bungalow would cost nothing less than N7,000,000 and above, depending on the location.

2. As far as rent is concerned - take Lagos & Abuja as a case study, you can only find a 3-bedroom flat for N250,000 per year in the outskirts of the city e.g. inner parts of Ikorodu, Mowe, Ibafo, etc. A 3-bedroom flat in main city of Lagos (whether standard or sub-standard) ranges from N400,000 - N1.5 million; in the area of Abuja (off the airport road) where I have my personal project, rent for 2-bedroom goes for between N750,000-N850,000. I presently pay N350,000 per year for the 2-bedroom flat where I live somewhere in Lagos, which is quite cheap when compared with going rates. The 3-bedroom flats in the area where I live are going for N700,000 - N1,000,000 per year.

From the above, if you spend N7,000,000 constructing a bungalow & spend N4,000,000 for land (cost of land could vary higher or lower), making a total investment of N11,000,000, if you rent out such property at N900,000 per year, you will make N11,700,000 after 13 years i.e. breakeven. Also note that it could be much earlier than this since rent increases after every 2-3 years, depending on the landlord.

This does not negate your claim that investment in cashew has a higher yield; I am just setting the records straight, as a construction professional.[/b]

Aside any other thing u said. Why are we always over pricing things in nigeria?

That 3.5 million can't get a decent 3bedroom flat?

Bros, maybe u are part of the people that spends money anyhow.

I might not have built my own house, but I have handled others, believe u me, I know better. A 3bedroom double flat fit for people to live in, I know 5million did that comfortably. So, why can't 3.5 do a single flat?

Chinom:
It's a good investment if you are lucky to live up to 100years. Personally ,I would never tie my money down for so long. Property business is something you should invest in with real idle money. I mean money you don't know what to do with. That's why banks are the biggest investors in real estate.

@Olumide4christ; the cost of land at those places where the rent is 400k to 900k for a 3 bedroom bungalow is in the neigbourhood of 15 to 20million. So by the end of the day, you are back to square 1.

To your 2nd paragraph. I would say wrong cos in PH you can get N4M land and still charge that much.mine is that range

Coming ...