hotmas911:
Commercial property investment like residential apartments is for those who choose to play safe. It is a game for those who value security over freedom. There are better ways to invest in real estate than just building apartments for rent. But if done through a good mortgage plan it might be a good investment.
I love getting more with less. There are other real estates plans with the potential of generating invested amount as yearly return. For example you can invest 3.5 millions like the OP said and be making about 3.5 million annually from same or be making 200k like the in rental property. It's a case of thinking outside the box. Which do you want security or freedom.

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.

yak:


am really loving this.
on d other hand, if u build a house, u can remove your eyes from it, visit once in a while. but d cashew plantation would need ur physical presence and employment of hands. I have tot abt palm plantation but I dnt av d time to giv to it cos am in a full time job

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.

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]

yak:
I appreciate all views so far! but isn't eleven yrs so long a tym to break even in investment?

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.

yak:
Fellow Nairalanders, av bn thinking this in my mind and I decided to throw it open to the public: does building a commercial house especially residential a competitive investment judging by what u spend building the apartment and what u eventually get as rent.
for example, u spend say 3.5m to build a 2bedroom Bungalow. on a rent of 200k, it wil take 15years or so to recoup meanwhile I estimated that rent may go up every 5yrs. So, lets look at it 2geda

TruthHurts1:
In places like Lagos, Abuja and Port Harcourt it is an investment that can make you very rich.

hotmas911:
Commercial property investment like residential apartments is for those who choose to play safe. It is a game for those who value security over freedom. There are better ways to invest in real estate than just building apartments for rent. But if done through a good mortgage plan it might be a good investment.
I love getting more with less. There are other real estates plans with the potential of generating invested amount as yearly return. For example you can invest 3.5 millions like the OP said and be making about 3.5 million annually from same or be making 200k like the in rental property. It's a case of thinking outside the box. Which do you want security or freedom.

Elijahrona2:
It's not a business. It's just a lifetime (unending) investment

erico2k2:

It is if you approach it with a business minded individual's attitude