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Is it Worth Buying a House to Rent it in Nigeria? Tips for Putting Real Estate to Income in 2022

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Many people ask, especially in light of the news concerning the Post-covid-19, and recession period. In today’s guide, we will try to give us an answer, which may not be done in a couple of lines but that needs some reasoning.

That said, we’ll be talking about the particular economic moment that our country Nigeria going through, especially about the real estate market, identifying if, when, and how to buy a house to rent and earn.

The good news is that the time is right, especially if you have some capital, no matter how small, to use at least as an advance for the purchase.

As we will see very soon, there have been some more unique than rare conditions that make the time particularly favorable to invest.

Is it worth it to focus on income properties?

The answer to today’s question is, in general, affirmative. Yes, at this very moment it is worth investing in the property and it is worth buying to rent.

The market is experiencing three very particular conditions that make the purchase of a property and the consequent rental income very convenient:

  • Prices are low: except for big cities like Lagos, Abuja, Port Harcourt, and the likes, (and not even for all neighborhoods), property prices have not yet recovered from the crisis and the housing bubble; the market is full of great bargains, no matter where you decide to buy;
  • The economic crisis increases the opportunities: from the Coronavirus onwards the big question concerns the future. With an economic downturn on the horizon, there will likely be more people who need to sell;
  • Rents are on the rise: in every part of Nigeria, also given the fact that purchases have been wavering for a while, rental prices are on the rise. The annuities are particularly good and will continue to be so at least for the foreseeable future; nothing suggests that in the short and medium-term people will stop living in rent, especially if an economic situation persists where few can buy;
  • Interest rates are at an all-time low: however, we will necessarily have to return to the question of buying with a mortgage to rent; the good investor, the one who wants to earn, must do the math well because not all the rent will go into our pockets: there is to talk about both taxes, and for those who buy with a mortgage, the interest, however low they are maybe.

 

 

Buying with a mortgage … yes, but be careful!

Let’s go against the tide: while all or almost all real estate agents recommend buying, at any cost (and therefore also at the cost of the mortgage), why not think about it before buying a house to finance with a high percentage of the debt.

It is certainly true that the rates are extremely low, but this certainly does not mean that it is always convenient to buy houses with 80% of the capital that is provided by the bank through a loan.

The interest of the sum must be taken into account, which can certainly be below, but still one of the factors that reduce your possibility of having an adequate income from your new real estate investment.

 

 

Does this mean that buying a house with a mortgage to rent it out and have an income is always not recommended?

Not at all: but we take into account the costs of the loan, mainly interest, which can make an investment that would otherwise be profitable for us, profitable only for the bank.

How to monetize a real estate investment?

Is it worth investing in rental properties? Where is it worth buying a house to rent it out? If you are asking yourself these questions, you will also have to take into account the fact that in many areas of Nigeria, the classic rent, the one through which we grant our property to a family, is only one of the possible options available to you. put your capital to good use.

Depending on whether they are busy and big cities, or serene and low-level cities, you can make various choices that we see immediately.

1. Rent to students

 

It can be a more problematic and more difficult way of renting to follow, but in many cities, it yields much more than traditional renting; renting by room, moreover, generates higher revenues, although you will also have to take into account the periods in which the rooms could remain empty; renting to students is all the more interesting when the property is close to the university facilities.

2. Rentals to tourists for short periods

Airbnb and all the services that imitate its functioning have opened very interesting doors for those who have a property in a tourist or business city; rents make it so much more, even if also, in this case, we must take into account the fact that we will not always be able to guarantee maximum occupancy.

Many also think about buying a second home to use for these projects, here is what I think about it:

B&B, suites, other accommodation facilities
Are you thinking of buying a property in a tourist city? It might then be convenient for you to convert it into an accommodation facility, even if with few beds.

The possibilities are many and if you want to buy a property to rent it you should take into account the possibility of following new paths for the monetization of properties.

Some useful advice to make a good deal for the purchase to be rented

 

There are some small tricks of those in the trade to choose a perfect property to be rented and generate an income. These tips, typically secret from those who have been operating on the market for a long time, you can apply them too without any kind of problem:

  • The houses occupied by tenants cost less: the rental contract does not dissolve in the event of a sale and we will have a double advantage; lower price for the house and rent that will continue to arrive without us having to search for a tenant;
  • If you want to work on it, choose a property to renovate: in case you have that spirit, you could buy a property in a less than perfect state, one of those to be restored, and then do the necessary work and resell it on the market for a higher income;
  • Where it is is more important than how it is: better to take a non-beautiful property in an important area (center, university, another important area for a group of people).

In short, is it worth renting a house? With these tips you can begin to take your first steps in the sector, to identify the best house for our investment too through rent.

As you already know, it’s not at all easy to have positive returns always and regardless but it is necessary to carefully study the context and the type of choices that are made.

Investing in real estate in Nigeria is a real business and, as such, requires time and planning that you may have to acquire in the field after tests, mistakes, and successes.

Beyond, therefore, the general information that you have been able to acquire through this article, my basic advice is to carefully analyze the city in which you want to act, probe the ground by making the rounds of real estate agencies, and devote time to theoretical study. and to practice: only by acquiring information daily will you be able to refine your decision-making skills and reduce the potential risks of operations.

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