₦airaland Forum

The patrons of the commercial property have to reside somewhere, and that somewhere sometimes need to be somewhere nearby.

CoronaVirusPro:
The most unprofitable business is building a house for profit.

Why spend 300m on a house you will have to wait for years to get to profit while maintenance keeps going on.

At 15 years, the house itself is already depreciating and only the land it sits on is appreciating, that’s even when you build in the right location.

Just sit that 300m in a money market account and start reaping profit instantly.

I don’t know who sold false narratives to people that building a house for rent purposes is profitable.

Is it not a good thing that people build houses to provide shelter for others? Or have you forgotten so soon your elementary science that humans need three basic things to survive - food, clothing and shelter? Must everything be about profit? If you can build house and provide shelter for people to stay in, please do. All we are asking for is a roof over our heads please. It should not be seen as a profit making venture. Rather as a chance to advance the course of humanity......

Looking at building a house just from the perspective of rent is rather myopic. Yes tenants may turn out to be problematic. While taking nothing away from building for commercial purposes, a house is a house whether for tenant purposes or commercial.

Instead of keeping the money in the bank, money expended in property is money that doesn't depreciate. The land the property sits on keeps increasing in value and possibly even the building itself.

If velocity of money is what you are looking at then a commercial property may be more ideal.

openMind0:
That is the cause of the dilapidating houses in Nigeria. The landlords don't bother to fix the house, since they know the talents are unwilling to pay the premium rent rate.

All in all it seems not to be a very profitable venture in the long run.

I have been wondering if I should start a Youtube Channel on Building to Rent. During Covid-19, I went into the same thing we do in the West...Buy and Renovate. It cost less and the ROI is greater than 10%. Then I put systems in place. Fastforward almost 5yrs, I am still bold to say that I have 100% rent payment and manage them from outside of Nigeria...and no, they are not in Lekki or Abuja, all in Ibadan with over 30+ tenants. I am always shocked when I hear tenants are staying for 1yr without paying. Commercial Buildings also come with its own expense and obligation...Event Centers need security and huge capital investment. Shops that give good ROI must be in sort after areas which can be way pricey than N25m you quoted.

I may have to start sharing some of my systems and advising people. If you plan the end from the beginning, you will be doing what highly effective people do. It is not about pouring money into thing...People first, then Money, then Things -- Suze Orman.

Dpsychologist:
💬 Let’s talk — Are you still building flats in this economy, or have you switched gears?

Drop your thoughts. Let’s learn from each other. 👇🏽

CoronaVirusPro:
The most unprofitable business is building a house for profit.

Why spend 300m on a house you will have to wait for years to get to profit while maintenance keeps going on.

At 15 years, the house itself is already depreciating and only the land it sits on is appreciating, that’s even when you build in the right location.

Just sit that 300m in a money market account and start reaping profit instantly.

I don’t know who sold false narratives to people that building a house for rent purposes is profitable.

What happens when inflation drops and mmf interest is lower than 5%. Just curious 🤔

Citizen10:
Is it not a good thing that people build houses to provide shelter for others? Or have you forgotten so soon your elementary science that humans need three basic things to survive - food, clothing and shelter? Must everything be about profit? If you can build house and provide shelter for people to stay in, please do. All we are asking for is a roof over our heads please. It should not be seen as a profit making venture. Rather as a chance to advance the course of humanity......

Did I mention about charity. Seems you have a problem with English language.

I stated for profit reasons.

[quote author=CoronaVirusPro post=135821220]Yeah I dont think you are totally right,when you build houses,say for tenants and you spent 100 million and it is built in a viable place,you rent it out to tenants and in 5yrs time,you could recoup 20million naira and because properties rightly situated appreciate astronomically,as a good businessman,we build to resale.
In 5yrs time,you may be able to sale it for #200million or far more than that,plus the initial 20million naira you made from tenants.

Also dont forget that some people build as a form of legacy while some others see it as an inheritance for their kids,just incase things goes financially wrong later in life.

Sheuns:
It’s only in Nigeria that value of property keeps going higher. A house built in the 90s and abandoned would be selling for hundreds of millions. Ask them why it’s so, they’ll tell you you’re buying land.

This is the case in virtually every vibrant country in the world. Assests including houses and land appreciate.

Dogalmighty17:
Looking at building a house just from the perspective of rent is rather myopic. Yes tenants may turn out to be problematic. While taking nothing away from building for commercial purposes, a house is a house whether for tenant purposes or commercial.

Instead of keeping the money in the bank, money expended in property is money that doesn't depreciate. The land the property sits on keeps increasing in value and possibly even the building itself.

If velocity of money is what you are looking at then a commercial property may be more ideal.

At the end we end up having the same conclusion that it is only the land that appreciates.

Its better to buid and sell the property or rather give it to a company or business that to rent it out to tenants.

javijabor:
What happens when inflation drops and mmf interest is lower than 5%. Just curious 🤔

Hello, Their numerous businesses you can put money into that will generate better profit, than waiting for 20 years to get to profit, while the house itself is depreciating.

CoronaVirusPro:
I think it’s just that people are bad with mathematics. Cos simple maths can show that it does not have a good ROI.

Build a house for 100M then wait for 20 years to reach profit! Common, many things you can do to keep the money working and finance any lifestyle you want to live.

It’s a false narrative that has been imbibed for years.

But the house still belongs to the owner.... u use 50m to build...collect 5m rent for 10years ... then sell it for 150m.... that's 150m profit in 10 years ....

jedisco:
This is the case in virtually every vibrant country in the world. Assests including houses and land appreciate.

A dilapidated house doesn’t appreciate in value.

Although the post is very correct, I see building as a way of keeping money you don't immediately need. And of course, commercial building is very selective in terms of the location.

Absolutely 100% facts, with the kind of money coming in daily/monthly from money market right now, it'll be very unwise to invest that capital in residential building for tenancy purposes.

With money market, you'll have quick access to your capital, returns and most importantly your peace of mind. No maintenance cost, tenant wahala etc, I see a lot people trying to sell off their residential tenancy houses lately!...

CoronaVirusPro:
The most unprofitable business is building a house for profit.

Why spend 300m on a house you will have to wait for years to get to profit while maintenance keeps going on.

At 15 years, the house itself is already depreciating and only the land it sits on is appreciating, that’s even when you build in the right location.

Just sit that 300m in a money market account and start reaping profit instantly.

I don’t know who sold false narratives to people that building a house for rent purposes is profitable.

CoronaVirusPro:
The most unprofitable business is building a house for profit.

Why spend 300m on a house you will have to wait for years to get to profit while maintenance keeps going on.

At 15 years, the house itself is already depreciating and only the land it sits on is appreciating, that’s even when you build in the right location.

Just sit that 300m in a money market account and start reaping profit instantly.

I don’t know who sold false narratives to people that building a house for rent purposes is profitable.

Good point.
But you also need to factor in the capital appreciation of the property/land to get the real ROI.

With property, the capital appreciation plays a much higher role in the eventual ROI than rent.

You came late.
Came very very late.

Old understanding.

MasterTeeUSA:
I have been wondering if I should start a Youtube Channel on Building to Rent. During Covid-19, I went into the same thing we do in the West...Buy and Renovate. It cost less and the ROI is greater than 10%. Then I put systems in place. Fastforward almost 5yrs, I am still bold to say that I have 100% rent payment and manage them from outside of Nigeria...and no, they are not in Lekki or Abuja, all in Ibadan with over 30+ tenants. I am always shocked when I hear tenants are staying for 1yr without paying. Commercial Buildings also come with its own expense and obligation...Event Centers need security and huge capital investment. Shops that give good ROI must be in sort after areas which can be way pricey than N25m you quoted.

I may have to start sharing some of my systems and advising people. If you plan the end from the beginning, you will be doing what highly effective people do. It is not about pouring money into thing...People first, then Money, then Things -- Suze Orman.

Let us know when you Kickstart the channel.

Real estate is something that requires being very smart.

cr7lomo:
But the house still belongs to the owner.... u use 50m to build...collect 5m rent for 10years ... then sell it for 150m.... that's 150m profit in 10 years ....

Your narrative is what has led many astray.

Which house do you want build for 50 million that will generate 5 million? 😂😂😂😂

Dpsychologist:
💬 Let’s talk — Are you still building flats in this economy, or have you switched gears?

Drop your thoughts. Let’s learn from each other. 👇🏽

It depends on where the land is located.

jedisco:
Good point.
But you also need to factor in the capital appreciation of the property/land to get the real ROI.

With property, the capital appreciation plays a much higher role in the eventual ROI than rent.

Real estate also takes time to appreciate while cost of maintenance keeps going. Why would I want to that. When I keep money working without doing anything.

[quote author=AustineE1 post=135822655][/quote]That's what most of these fake financial analysts don't understand... . Just imagine a landlord telling a tenant that building materials are expensive, and that's why they are charging high rent ... as if the tenant is the one buying the property.... that's how dumb these people are ....

If u build a house and its abandoned without being used , it even depreciates faster... so for those that want to resell in a decade or 2 for higher gains or profit, they need tenants .... rent is not meant to be expensive... as long as it isn't a luxury apartment

Citizen10:
Is it not a good thing that people build houses to provide shelter for others? Or have you forgotten so soon your elementary science that humans need three basic things to survive - food, clothing and shelter? Must everything be about profit? If you can build house and provide shelter for people to stay in, please do. All we are asking for is a roof over our heads please. It should not be seen as a profit making venture. Rather as a chance to advance the course of humanity......

I get your point on humanity aspect but hope you know the land lords need rent to feed their family too, its not a charity organization either.

CoronaVirusPro:
Real estate also takes time to appreciate while cost of maintenance keeps going. Why would I want to that. When I keep money working without doing anything.

Not advocating for either here. Just saying that one needs to consider all variables when calculating 'ROI'

May Allah have mercy upon you, for downgrading tenants. Every house own now was once a tenant somehow before owning a property. Even some landlords are demons to tenants.

jedisco:
Not advocating for either here. Just saying that one needs to consider all variables when calculating 'ROI'

Got you! You still made a valid point..

Sheuns:
A dilapidated house doesn’t appreciate in value.

A properly built and maintained house wouldn't get dilapidated. It's stand for hundred years and over.

Moreso, with real estate, the house is not manytimes whats driving value- it's the land it sits on. A dilapidated house in cental Abuja would still sell for hundreds of millions

Most see it as a way of escaping inflation. Especially in this part of the world that have government policies looking for your downfall.

This thread is highly informative. Nice one!!

Laslas people go begin live inside their shops

openMind0:
That is the cause of the dilapidating houses in Nigeria. The landlords don't bother to fix the house, since they know the talents are unwilling to pay the premium rent rate.

The OP mentioned something about leaking pipes. Whose job is it to fix in-wall leaking pipes? The tenant? Landlord go old. The building is the Landlord’s asset. If he has built nonsense, he should not expect the tenant to come rebuild for him. I’m currently suffering wall dampness in my rented accommodation and landlord doesn’t want to fix it. I dey laugh am. The wall will decay and rot, I will pack out, and he will spend a huge sum to fix it. I’d rather buy a dehumidifier than fix a landlords wet wall

Sheuns:
It’s only in Nigeria that value of property keeps going higher. A house built in the 90s and abandoned would be selling for hundreds of millions. Ask them why it’s so, they’ll tell you you’re buying land.

No this is wrong.
Not only Nigeria.
World wide. Value of property goes up with time everywhere.
Have you not heard of "cost of living crisis" that is hitting the UK in recent times? Or people sleeping in their cars in US?