Start Real Estate Business In Nigeria – Real estate business is one particular business that people hardly venture into in Nigeria because they believed that the business involves risks and is not meant for those who cannot take risks.
But the truth of the matter is starting real estate business can turn you to an overnight millionaire. Make no mistake by holding on to the risk perceptions, there are lots of money to be made in different aspect of real estate investment in Nigeria.
Real Estate Business has a very wide branches. In our first article on this topic, we explore the complete types of real estate business and their various career opportunities.
Now, How can you start real estate business investment in Nigeria? To answer this question without missing out anything, We have list out all you need to know Step By Steps To Start Real Estate Business in Nigeria.
What Is Real Estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this an item of real property, buildings or housing in general.
What Is Real Estate Business?
A real estate business is a business entity that deals with the buying, selling, management or investment of real estate properties. A real estate is “the property, land, buildings, air rights above the land and underground rights below the land.
Starting a real estate business may not be easy, but with the right preparation, it will be well worth the work. Best of all, there are several resources on small business systems that can make the learning process easier and more efficient.
Steps By Steps To Start Real Estate Business In Nigeria
Below are useful steps by steps on how to start your own real estate business in Nigeria
Step 1
– Choose Your Category
To pick a category of operation in the real estate business, you’ll need to do some research. In the previous section, we gave concise descriptions of the different niches in the real estate industry.
On your part, you must go further to discover exactly what is best suited for your preferred lifestyle and your professional goals.
For example, some of the most profitable occupations in the real estate industry are real estate developer and real estate agent.
1. Real Estate Developer
Developers co-ordinate all the activities involved in estate development, from land acquisition to architectural design, landscaping, and building construction. Note, however, that real estate development companies are different from building construction companies. Although, there is some overlap.
Furthermore, while developers are vulnerable to most risk in the real estate business, they have the most to gain.
In summary, as a real estate developer you:
- Purchase or source for land.
- Develop the building program and architectural design: employing a contractor and architect.
- Obtain the necessary building licenses and capital
- Supervise erecting the buildings
- Develop a marketing strategy for the property
- Rent out, manage or sell the property
As we mentioned before, this niche is very capital intensive, but as we’ll see in the next few steps, there are several ways to obtain the necessary funding.
2. Real Estate Agent
Real estate agents act as representatives during real estate negotiations. Essentially, they find buyers who need to buy and connect them with sellers who plan to sell, serving as middlemen. They receive a commission for every sale they make, or if working with a team of other agents, split the commission.
In Nigeria, most agents receive a commission of up to 10% of the total proceeds of the sale, purchase price, or rental value of the property. If you close a deal of N100 million, you earn N10 million.
Operating As a Real Estate Agent
Once you’ve signed a listing contract with someone looking to sell a piece of real estate, you start looking for people looking to buy at the highest purchasing price and with the best terms for the seller. This is a typical operation for a real estate agent:
- Make a listing that the property is for sale using the internet, fliers, billboards, or newspaper ads.
- Place “For Sale” or “For Lease” signs on the property along with your contact information.
- Advertise the property using social media, Google ads, and fliers.
- Be available to answer any questions the buyers have about the property and to show them around during a visit or inspection.
- Negotiate the highest and most reasonable price on behalf of the seller.
- Carry out background checks on the buyers and make sure that they are financially qualified to buy the property.
- Close the deal.
Before settling on a niche, you must know the answers to these questions:
- How does the sector work?
- What does a job well-done look like?
- Who are some of the big players?
- What laws and licensing regulate the real estate business in my state/city of choice?
Step 2
– Register Your Business
The first step to structuring your business is to register it with the Corporate Affairs Commission (CAC) and get a certificate of incorporation.
This is especially important in the real estate business. One benefit of registering your business is that you will be able to open a corporate account into which customers can make payments. Additionally, it will make you appear more reputable to both buyers and sellers alike.
Run a name search on CAC’s portal to begin the process. This is to make sure that your chosen company name has not been registered by another person. Afterward, you can begin the registration process. With basic information like a valid ID card, passport photographs, personal documentation, and a signature, you are all set
Additionally, register with real estate associations like the Association of Estate Agents in Nigeria (AEAN), Real Estate Developers Associations of Nigeria (REDAN), and the Nigerian Institution of Estate Surveyors and Valuers (NIESV).
Step 3
– Create a Strong Business Plan
Next, create a strong business plan. A business plan details the long and short-term objectives of your business and how these objectives can be achieved.
While writing your business plan, carry out a thorough feasibility study, and do some market research to understand the nature of the business. Learn about the competition, consumer trends, demand and supply patterns, prevailing prices, and what target audience to focus on.
Take note of following information in your plan:
- Executive Summary
- Company Description
- Team
- SWOT Analysis
- Market Analysis
- Financial Analysis
- Marketing Strategies
- Competitive Analysis
- Appendix
Step 4
– Finance Your Real Estate Business
Depending on what area you decide to go into in the real estate business, start-up capital can range from little money to billions of naira.
How To Finance Your Real Estate Business
There are several ways to fund your real estate business:
1. Fund it from your personal savings.
2. Seek out investors or venture capitalists with your business plan, marketing strategy, and growth proposal. These venture capitalists might be interested in sponsoring your business for a percentage of the profit or company equity.
3. Mortgage Strategy – Especially in real estate development, the mortgaging method is a pretty useful option. However, high-interest rates can make this method unattractive to developers.
In the mortgage method you pay a small percentage of the total purchase price for a property. The rest of the price is paid overtime with interest. Usually, a mortgage bank becomes involved.
4. Partnership – Partnership is very common in this sector and is extremely beneficial to all parties. what one investor lacks, the other can make up for.
Many partnerships will entail one partner finding a distressed property at a discounted price, while the other one uses their credit score and working capital to finance it; just make sure everyone is bringing something to the table.”
Joint Ventures are another aspect of partnership. Here, a landowner provides her/his land as equity and a developer brings in funding from her/his own pocket or from a third-party sponsor.
Rather than pay the owner for their land, the investor finances the construction of a project they have all agreed upon. This could be luxury apartments, a resort, units of houses, and so on.
Upon completion of the project, the developer or investor pays the landowner a percentage of the revenue as decided on the Joint Ventures agreement.
Basically, all parties (investor, developer, and landowner) form a joint partnership to set up the estate, and everyone goes home happy!
Step 5
Create a Real Estate Website
This tip adds to your credibility and shows how serious you are with your real estate business. Having a niche website on your real estate business would help investors located you on the internet and also showcase you business on a wide scale.
If you can’t design a professional website or blog for your business, hire a professional to do that for you. Make sure that your website has your contact information for inquiries an an about us page.
Step 6
– Promote Your Real Estate Business
To succeed in this business, you need a solid marketing plan! If no one knows what a capable developer or agent you are, your business remains stagnant.
Your marketing strategy would ideally have been included in the business plan we discussed in Step 3.
In order to attract a large client base, you absolutely must make use of these modes of marketing:
- Online marketing (social media, Google ads, etc.)
- Referral marketing
- Newspaper marketing
- Word of mouth
- Collaboration/partnership
Also, make sure to set up your real estate business website as soon as possible. On this site, you can build up your brand, blog about your experiences in the real estate world, and reach a wide audience all over the world!
Your website should be interactive and engaging, permitting clients to enquire about your services and to see photos and videos of available property.
Careers In Real Estate Business
If you’re looking for a career in real estate, you may want to consider any of these areas of the industry, Here are the most common jobs in the real estate business:
1. Analyst
– Performing financial analysis and valuation of properties
2. Appraiser
– Valuing properties
3. Agent
– a sales agent or “realtor”
4. Building Inspector
– Someone who examines buildings and works with appraisers
5. Commercial Broker
– An agent who sells commercial properties
6. Director of Real Estate
– A corporate job
7. Home Inspector
– Someone hired to assess the quality of a home for a seller or purchaser
8. Loan Underwriter
– A person who analyzes the creditworthiness of a borrower
9. Mortgage Specialist / Underwriter
– A person who approves mortgage applications
10. Real Estate Attorney
– A lawyer who specializes in real estate transactions
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