For most Nigerians who have lived in face me I slap you scenarios the answer would seem obvious

But let us try and think from a rich person's perspective

Of course "RICH" is relative but for this thread let us set the bar at $1 million in Nigeria assuming an exchange rate of 700.

Most Nigerians or many anyway would suggest the first thing you should do is buy a house or build a house.

You would find the same mentality with a lot of politicians who steal mony owning 20 ,30 40 houses/

So I want to analyse this from a purely business perspective

The starting point is the type of legal rental agreement . Tenants want security of their tenure and not subject to landlord waking one day and shifting the goalposts. It is possible to get a binding legal agreement so you can plan your life for the next 5-10 years without disturbance from your landlord. Now I am talking in the rental space of the guy with $1 million

He can rent very decent property for 1 million a year and that works out at 10 million for 10 years.
The argument against this would be you are putting money in the landlords pocket.

The reality is everyone has to live somewhere and even if it is your house it still has a COST

OPPORTUNITY COST of what you would have earned if you owned the house and rented it out .

That same house may cost you 100 million to build and if you live in it for 20 years it does not generate one kobo. Your only hope therefore is that the property appreciates in value but then even if it appreciates in value you still have to live somewhere

So that 100million is just tied down NOT WORKING

On the other hand if you had rented for 10 million and invested the 90 million in the stock market it is likely to have double over the 10 year period

Let us assume that the property doubles in price if you were living in it. You cannot sell it because you have to live somewhere

So there is a case to be made for even buying a 100 million house and continuing to live in rented accommodation

e,g you may be a Landlord in Lekki whilst living in Ketu or Shomolu

The summary is owning property should be based on calculations

How much will it cost and how much is rent in the area

If you buy property for 100million in a 1 million a year rental market that is foolish and even more foolish is to then live in that house unless you are wealthy

$1 million dollar net worth is not wealthy you are just starting to hustle,

Any 100million property that does not generate 7 million rent a year is bad market

The other fear a lot of people have is if I do not tie something down(house) I will spend the money. This is a genuine and legitimate concern and there are solutions we can suggest investment strategies but we have seen people sell houses when calamities of life strike

The key thing to think about when putting your money anywhere is

how much will it generate each year

If you are clear in your mind about that you are on the right path. If you buy a house without addressing that question
Hmm

None is cheap when properly calculated.





.

The idea is not about CHEAP

The idea is which puts more money in your pocket
That is the essence of analysis or investment decision appraisal
You have to choose one of two options
How do you analyze?

My ideal is to build a house that I can easily rent out. Then go rent a house in any location I prefer with the money I get from tenants.
That way I have the freedom to live anywhere instead of being confined to just one location.

Tickles001:
My ideal is to build a house that I can easily rent out. Then go rent a house in any location I prefer with the money I get from tenants.
That way I have the freedom to live anywhere instead of being confined to just one location.

Buy more of lands
And try to have like 4-5 rental properties

Weirdcamila:


Buy more of lands
And try to have like 4-5 rental properties

What is the purpose of buying land? Why buy land? To me buying land is speculation .Not investment. Unless maybe you are a farmer the land will not generate any income so your hope is that it will appreciate. That may happen but NOT at a time of your choosing. Also it costs money to secure land in Nigeria
When you say try to have rental property? Give facts and figures? How much will the property cost and how much rent will it generate?

Tickles001:
My ideal is to build a house that I can easily rent out. Then go rent a house in any location I prefer with the money I get from tenants.
That way I have the freedom to live anywhere instead of being confined to just one location.

The problem I have with this is its vagueness
Nothing wrong in having a house you can easily rent out but facts and figures

e.g if you bought a house for 100 million in Lekki, Port Hacourt, Abuja or Kaduna today

what is the best rent income? Any data?
Also Must YOU build it ? Why can't you buy it

A lot of people forget that building a house is work and time which they never pay themselves for

The way to analyse this seems straight forward
How much rental income can you get from 100million Naira investment in Nigeria

Where are the best cities to invest

1
2
3
4

What alternatives can you put that 100 million in in Nigeria e.g Treasury bills and what is the yield

How do the options compare in terms of risk?

Let us use Lekki phase 1 as an example

How much would it cost to buy a 3 or 4 bedroom duplex

How much would it cost to rent the same duplex?

omonnakoda:
The problem I have with this is its vagueness
Nothing wrong in having a house you can easily rent out but facts and figures

e.g if you bought a house for 100 million in Lekki, Port Hacourt, Abuja or Kaduna today

what is the best rent income? Any data?
Also Must YOU build it ? Why can't you buy it

A lot of people forget that building a house is work and time which they never pay themselves for

You have a point with the bolded. You know this is Nigeria so nothing is guaranteed. Even when you back your projections with solid data, there's still high probability that things won't go as planned. Competition and depreciation must play their role.

As for buying vs building. I'd really like to be there in the making of my house. I can't trust some gain-over-safety real estate developer that we have out there.
You can actually complete your building in 3months if you have complete money. That's not too long to wait if you ask me.

Weirdcamila:


Buy more of lands
And try to have like 4-5 rental properties

I'm not really a fan of having multiple landed properties. I don't consider it as a good investment in this age.
Have three is enough so you won't have to pay rent anymore. I know some landlords that wish they invested in bonds instead of building that rental property.

Tickles001:


You have a point with the bolded. You know this is Nigeria so nothing is guaranteed. Even when you back your projections with solid data, there's still high probability that things won't go as planned. Competition and depreciation must play their role.

As for buying vs building. I'd really like to be there in the making of my house. I can't trust some gain-over-safety real estate developer that we have out there.
You can actually complete your building in 3months if you have complete money. That's not too long to wait if you ask me.

If you ask me you are not making hard headed business decision but sentiment.
Yes nothing is guaranteed but there must be some basis for analysis.
The question is still hanging

Why is it a good business decision to build a house? Why?
Are you an engineer or architect? People have been building houses for ever . So what is it that you will bring to the house building that cannot be paid for?
That is where the problem lies

People do not approach this issue in a cold blooded business way but bring in all manner of sentiments.
When you buy a car will you build that too?

The question is if you have 100 million is building a house with it a good decision and how much would you expect as income annually?

omonnakoda:
If you ask me you are not making hard headed business decision but sentiment.
Yes nothing is guaranteed but there must be some basis for analysis.
The question is still hanging

Why is it a good business decision to build a house? Why?
Are you an engineer or architect? People have been building houses for ever . So what is it that you will bring to the house building that cannot be paid for?
That is where the problem lies

People do not approach this issue in a cold blooded business way but bring in all manner of sentiments.
When you buy a car will you build that too?

The question is if you have 100 million is building a house with it a good decision and how much would you expect as income annually?

Answering your question. I wouldn't considered building houses as good investment option if I have that kind of money. Especially when that's all the money I have.

On the average you should expect 18% of your investment annually. This judgement is from some house owners that claimed they recoup within 6years

Tickles001:


Answering your question. I wouldn't considered building houses as good investment option if I have that kind of money. Especially when that's all the money I have.

On the average you should expect 18% of your investment annually. This judgement is from some house owners that claimed they recoup within 6years

18% does not seem realistic in any market and definitely not the Nigerian market
Who will pay 18 million a year as rent in Nigeria on a 100 million property or 90 million on a 500 million house?

So if you have that kind of money would you rent instead?

The fact still remains that if you want to live in a good area you have to pay and I think it favours renters especially at the top end of the market. There are many empty propeties bought by politicians with stolen money that will never generate 18%
I am hoping that contributors will give figures e.g in Lekki Phase 1, Ikeja Opebi /Allen area or Yaba

Cost of property/ rental income

Or Places like Port Harcourt Abuja

Essentially what I am trying to do here is get people to think about the reality of building/buying houses as an investment decision

very interesting...

omonnakoda:

For most Nigerians who have lived in face me I slap you scenarios the answer would seem obvious

But let us try and think from a rich person's perspective

Of course "RICH" is relative but for this thread let us set the bar at $1 million in Nigeria assuming an exchange rate of 700.

Most Nigerians or many anyway would suggest the first thing you should do is buy a house or build a house.

You would find the same mentality with a lot of politicians who steal mony owning 20 ,30 40 houses/

So I want to analyse this from a purely business perspective

The starting point is the type of legal rental agreement . Tenants want security of their tenure and not subject to landlord waking one day and shifting the goalposts. It is possible to get a binding legal agreement so you can plan your life for the next 5-10 years without disturbance from your landlord. Now I am talking in the rental space of the guy with $1 million

He can rent very decent property for 1 million a year and that works out at 10 million for 10 years.
The argument against this would be you are putting money in the landlords pocket.

The reality is everyone has to live somewhere and even if it is your house it still has a COST

OPPORTUNITY COST of what you would have earned if you owned the house and rented it out .

That same house may cost you 100 million to build and if you live in it for 20 years it does not generate one kobo. Your only hope therefore is that the property appreciates in value but then even if it appreciates in value you still have to live somewhere

So that 100million is just tied down NOT WORKING

On the other hand if you had rented for 10 million and invested the 90 million in the stock market it is likely to have double over the 10 year period

Let us assume that the property doubles in price if you were living in it. You cannot sell it because you have to live somewhere

So there is a case to be made for even buying a 100 million house and continuing to live in rented accommodation e,g you may be a Landlord in Lekki whilst living in Ketu or Shomolu

The summary is owning property should be based on calculations

How much will it cost and how much is rent in the area

If you buy property for 100million in a 1 million a year rental market that is foolish and even more foolish is to then live in that house unless you are wealthy

$1 million dollar net worth is not wealthy you are just starting to hustle,

Any 100million property that does not generate 7 million rent a year is bad market

The other fear a lot of people have is if I do not tie something down (house) I will spend the money. This is a genuine and legitimate concern and there are solutions we can suggest investment strategies but we have seen people sell houses when calamities of life strike

The key thing to think about when putting your money anywhere is

how much will it generate each year

If you are clear in your mind about that you are on the right path. If you buy a house without addressing that question
Hmm

An impressive topic.

A new home owner can start off with building a well-designed 4-bedroom (all rooms ensuite) bungalow and then invest the rest in the financial markets, i.e., buy stocks of top FMG companies where you can get dividends or go for mutual funds, etc.

Then when more income flows in from those investments, build a duplex, triplex, mansion, whatever you desire.

It makes no sense to build your house, then head on to live in a rented house in the same city.

Konquest:



It makes no sense to build your house, then head on to live in a rented house in the same city.

Thanks
It depends on the math and priorities
Makes plenty of sense to me
It all comes down to the prevailing facts
The fact that you own a house does not mean you should live in it
Often we make emotional decisions believing we are rational.
I will have no problem living in a rented house on the Mainland and renting mine in Ikoyi out if it gives me a net balance