₦airaland Forum

Valthegreat:
No

I have answered this before naa.
It is at Onipanu, the printing business area of Somolu.

unite4real:
I live in rented apartment paying N1 million per annum. Landlord sold the house for N69 million to a new owner who is now the new landlord and increased the rent by 50% to N1.5 million.

My wife was wondering why I didn't bother to buy the house even when I had the money. I told her if I decided to take the least risk at the time the house was sold, I would have bought an FGN bond at 20% and will be getting coupon of N12 million per year. Out of this I will pay the rent of N1.5 million and have enough cash of N10.5 million which I can compound in dividend paying stocks.

The landlord just spend about N500k to do some work in the house.

Streetinvestor2:
Does it mean that the company who is ready to collect 28 million for 15 yrs
Then return the property to the land owners equally in 15 yr.How much was used in construction of such property to warrant such rent.i see the property as lacking standard and should not earn such rent based on current cost of good building materials and finishing
Finishing here is interior and exterior. Walahi u go do maintainace taya.What I am saying is the cost for such 2 flat is cheap and cannot warrant such rent.And if na yeye standard u go do maintenance taya from 3yrs as per person way dey building and construction business

Valthegreat:
You need to understand the intricacies of lease development business to understand the answers to these questions. They usually need liquidity to develop the next property, so let's assume he spent #100m to develop this one deck of six flats (remember he didn't buy land) he is willing to sale some parts to raise block funds to develop his next property ( I learnt he cleared another plot 2days ago for redevelopment).
Should he rent the whole property out he should raise only approximately #16m but if he sale these two at #28m and rent the remaining 4 flats at #11m he will likely raise more funds to develop his next project instead of borrowing from bank at around 37%.

I believe that's the mathematics behind their decision to accept long term lease instead of collecting just annual rents.

emmanuelewumi:
Okay. Rent in high at Onipaanu, what you quoted is about the rent for a new or modern apartment

emmanuelewumi:
If na me, I will use the first coupon of N12.5 million to pay upfront rent for 8 years at N12 million.


The borrow N36 million against the N61 million worth of FGN bond to buy quality stocks.N36 million is equivalent to 3 years coupon, I should be able to liquidate the loan within 4 years and should be able to grow the stock bought to about N90 million in 5 years assuming a return of 20% per annum.

In about 10 year's the bonds and equities should be able to buy a primary residential property for me

crownprince2017:
I believed you will better off betting on Presco or okomu.

It's almost sure that presco will deliver 2m in dividend on that fund for 14 years and 1m for first year assuming you bought this month at 1400, no capital appreciation or re reinvestment of dividend. You will get 29m with your capital intact and this is what I believed is the worst case scenario provided presco did not run into natural disaster or serious insecurity issues.

ojeysky:
100m would have bought 1 million units of each of those stocks kai! Looking for a currently cheap stock that has potential to deliver similar result in next 5 to 10 years. TIP, Chams, Tantalizer, Aradel are on my consideration list

mikeapollo:
From your analysis, your rental income should be a minimum of N4.7m per year (excluding expenses like maintenance, repairs, insurance etc.). That is about 17% ROI and 6 years to recoup your capital. It is also possible to rake in higher rental income with time.

With N28m, you need to consider the units you could buy at the current prices of GT, NAHCO, Presco, Okomu etc. Then consider the current dividend per share and possibility of growth in the payout amount in future. Can you buy enough units right now that would give you dividend of N4.7m p.a. after deducting WHT?

In my Opinion:
If you are more interested in preservation of capital and consistent cash flow, then real estate in a very attractive location (i.e. rental income) and fixed income securities (interest on bonds, CP, TB) are the best bets. . Real estate also appreciates in value with time, generally.

If you are more interested in return on investment (ROI), and willing to take risk with your capital, then you can buy some of the stocks you listed. But the higher returns come with higher risks.

Valthegreat:
You need to understand the intricacies of lease development business to understand the answers to these questions. They usually need liquidity to develop the next property, so let's assume he spent #100m to develop this one deck of six flats (remember he didn't buy land) he is willing to sale some parts to raise block funds to develop his next property ( I learnt he cleared another plot 2days ago for redevelopment).
Should he rent the whole property out he should raise only approximately #16m but if he sale these two at #28m and rent the remaining 4 flats at #11m he will likely raise more funds to develop his next project instead of borrowing from bank at around 37%.

I believe that's the mathematics behind their decision to accept long term lease instead of collecting just annual rents.

In other words his long term profit is still intact via the remaining 4flats as well as the opportunity to develop more properties.

Streetinvestor2:
On a different note.Who really had time to look at stock market during covid
If you they watch foreign media dey see how people take dey die walahi nothing go concern u with stock investment. If not on strong personal resolve I would have participated.Do u know the number of unhealthy things people whr subjected to do as prevention even educated ones . I remember when everyone in my house lost the sense of smell/taste. My wife nearly finished us with garlic, ginger etc concoction. I stood my ground that nobody will take the vaccine after pressure from doctor friends. So I don't really see the prices than as opportunity lost...lol

deathwing:
At any point in time, I can quickly withdraw my money and put into another higher yielding investment or stock or crypto while it’s still compounding at 13%. For me, I very much like flexibility with my money. Landed property will be for my own private use, or just to sell off later as a way to holding money (esp as the exchange rate is now stable), but never for have tenants or renters. No, thank you.

ojeysky:
Looks like whoever is pushing JP waits towards the end of MKD to mop up the floor. Maybe Christmas is going to be an attractive red after all.

Valthegreat:
If I didn't raise this topic today perhaps I wouldn't have known that informed investors are this averse to real estate (rental income) investment. But all investment books are always talking about cash flow of which rent is among the most strongly recommended?

emmanuelewumi:
He should just buy solid stocks. Look for dividend paying stocks that the expected dividends in the next 8 years or less will give him N28 million.

A yahoo boy bought a block of 4 flats (2 bedroom) for N80 million in 2020 during the lockdown. The rent per apartment was 750k per annum and total return of N3 million, the property should have a current market price of about N150 million but rent is now N1 million per apartment or N4 million for the property.


Just imagine if had bought GTB at N12, Presco at N50, Nahco at N2.50, Zenith at N10 during the lockdown.

Dividends earned from 2020; to date would have paid back the amount invested

crownprince2017:
28m planted in presco or okomu today for 15 years, you will be surprised with the magician called compounding.

SonofElElyonRet:
Since we are talking real estate, I am a referral agent for a highly reputable real estate company in UK that has tenanted apartments for sale under a social housing contract wherein the government guarantees rent for 25 years. No mortgage provided. Payment is one off. Buyer does nothing, just collects rent. No additional expenses. Total package. Rental income is currently between 10% - 12% p.a subject to structured review. What I do is refer prospects directly to the UK real estate company but I have to do the introduction so they know the subscribers that I introduced. There are detailed materials available for enlightenment.. prices are between £125,000 -£313,000
You do your due diligence of course. Very few units available .

emmanuelewumi:
If na me, I will use the first coupon of N12.5 million to pay upfront rent for 8 years at N12 million.


Then borrow N36 million against the N61 million worth of FGN bond to buy quality stocks. N36 million is equivalent to 3 years coupon, I should be able to liquidate the loan within 4 years and should be able to grow the stock bought to about N90 million in 5 years assuming a return of 20% per annum.

In about 10 year's the bonds and equities should be able to buy a primary residential property for me

awesomeJ:
The beauty of bonds is that once you lock in, the coupon rates are fixed.


I think there's a June 2038 bond with a 15.4% coupon.

If you're able to buy it at par or a little premium (maybe N1020 per unit), you have the 15.4% locked in, even if yields later crash to 5%.

You get N4.3m tax free if I'm not mistaken.

Whereas your N4.7m rental income would be liable to 15-23% tax meaning you might get below N4m. When you discount maintenance, rent loss to vacancy, tenant default, it might be below N3.5m or below N3m in some cases.


Plus like others have said, you're not getting the N28m back after 15 years.

From experience, rental yields are super low, what makes it better is the capital appreciation if you own the building.

deathwing:
At any point in time, I can quickly withdraw my money and put into another higher yielding investment or stock or crypto while it’s still compounding at 13%. For me, I very much like flexibility with my money. Landed property will be for my own private use, or just to sell off later as a way to holding money (esp as the exchange rate is now stable), but never for have tenants or renters. No, thank you.

Valthegreat:
If I didn't raise this topic today perhaps I wouldn't have known that informed investors are this averse to real estate (rental income) investment. But all investment books are always talking about cash flow of which rent is among the most strongly recommended?

Mpeace:
So na like so we Dangfoods take enter voice mail. Na wa oh

Odunharry:
Yes you are correct. Bond is tax free

nosa2:
The performance of palm oil stocks over the past decade is not going to be mirrored over the next decade

KarlTom:
True.
It will DOUBLE...

emmaodet:
How did you do bolded?
I enquired from many banks in my area and they told me I can't borrow with FG bond because it is an investment not with them.

Raider76:
Dangote offers dollar dividends to lure investors to refinery IPO

https://businessday.ng/news/article/dangote-offers-dollar-dividends-to-lure-investors-to-refinery-ipo/

nosa2:
He could have also bought Oando at N200 over a decade ago