Real estate is booming in Nigeria and aside from a large number of locals, visitors and foreigners are starting to invest in the sector in a rental property. Of course, becoming a landlord in Nigeria at the moment would be a smart move; however, it is important to understand what the commitment entails.
While it may sound like an easy way to make money, becoming a landlord is certainly not something you should do with your eyes closed. It requires a lot of research and consideration, as it can be a costly undertaking that requires a lot of time. To assist those looking to become landlords in Nigeria, the giant of Africa, Jovago.com, Africa’s No.1 online hotel booking portal shares 5 key things to consider.
Buying or building a house for rent out to tenants is not an easy task, especially in Nigeria where the bureaucracy can be a huge bottleneck. It is important that you have enough capital as well as opportunities to raise extra funds in the case of emergency before you delve into it. As from the cost or raw materials, the possible cost of paying contractors and workers legal fees, as well as administrative charges (costs related to interviewing potential tenants, running their credit histories and checking references), there are a lot of hidden costs to tackle. In addition to personal savings, you could consider taking a loan from the bank or seeking out investors. Bottom line; evaluate your finances and ensure you have enough financial resources necessary to complete the project.
Before you decide to become a landlord; you need to decide on the sort of tenants you are aiming for. Are you looking for the upper class, middle class or are you looking to build something for those on a low budget? The type of tenants you are aiming for will help you know the kind of property you will be building in the first place, and it will help you know the kind of marketing plan you may need to adopt. For instance, if your target tenants are dignitaries and people of high class, the rental property has to locate in a high-brow area and must be built and decorated with high-end equipment, so they can attract quality tenants.
State and local laws
Nigeria is a large country and while there are national laws, certain parts of the country have their specific state and local laws which either directly or remotely affects real estate as they regulate tenants’ and landlords’ rights and responsibilities and dictate the things that must be covered in your rental agreement. Ensure you know every important detail listed in the local and state laws and guidelines. Some areas require that you pay special fees or taxes for building rental properties. Thanks to technology, you can get all the information you need online.
Before you even start the process of building or buying a rental property, you need to first decide on how the property will be managed. The property will require repairs/maintenance at intervals, the tenants will require a point of call and a system will have to be in place for rent collection. You can either decide to manage the property on your own (if you are certain you have time to dedicate to the role) or you could consider using an agent or hiring a property management company to manage it for you. If you chose any of the latter, ensure you put them on a contract and ensure you peruse the term of the contract carefully.
The importance of buying insurance for your property cannot be overstated. From buildings and contents cover to liability insurance, loss of rent protection, and even home emergency cover, it essential that you protect yourself and your property with this insurance.