14 Mistakes To Avoid as a Real Estate Investor in Nigeria

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If you are reading this article, it is because you want to avoid mistakes when investing in Nigerian real estate. But let me tell you something: I have advised people like this, and they still went on to make the same mistakes.

Don’t be like them

Real estate can make you wealthy- and it can also wipe out your life savings. Imagine buying land after saving for a whole year, and you see someone building on that land!

I have heard about people who have lost their money, careers, and even their health because of this.

So, please follow every single advice to the detail. This is not a random article that you see online. These are issues I have had to settle, and I don’t want you to go through the same thing.

By the end of this article, you should be able to

Know the mistakes to avoid as a beginner
See the mistakes that experienced investors have made
Find solutions before problems arise!

1–7: Mistakes New Investors Commonly Make

1. Rushing Into Deals Without Research

We call this “doing due diligence.” Many times, you can get so excited about finally buying your own land that you do not see the traps in it.

Imagine someone offering you land in the exposed parts of Epe for 1.5 million. Except if it is a clear distress sale, you are supposed to take a step back and run for your life.

It is a clear scam to make you grab a deal that is too good to be true.

You must do your research to know the worth of land in that area.

2. Trusting Unverified Agents or “Omo Oniles”

Verbal promises mean nothing in real estate.

If someone tells you not to worry that “the land is yours already”, don’t believe it. If you don’t have verifiable documents in your hands, you don’t own that land yet.

Am I saying that all omo oniles are scams? No

What I am saying is that if you buy from them, be smart and ensure that you:

Collect documents from them
Verify every single thing before you pay
Use a lawyer to guide you through the process

3. Failing to Verify Documents

Now, this is not only about omo oniles. This is about every land transaction you enter into…

If you buy land, check the validity of the documents

If you buy a developing property, also verify the title documents

If you buy a fully-built house, don’t stop there. Go on and verify the documents of the house.

To effectively verify land documents, do these 4 things

Hire a real estate lawyer who has testimonials of deals like that
Go to the Land Office of the State and see if your land is not allocated for government use
Visit the Office of the Surveyor General to see who has registered the Survey of the property you are buying (if the property has one).

4. Not Doing Physical Inspection

This is the main reason why Nigerians living abroad lose all their savings to investing back at home.

It is not enough to get a picture.

You need to physically see what you are buying or building. But if you cannot be there physically, you can hire a reliable agent or an experienced real estate lawyer to help you monitor every process of your purchase.

Here are some things to look out for when doing a physical inspection of a land or building

History of floods in the area
Accessibility to the road
Nearness to major facilities. If you are a business, look out for proximity to places where you can easily reach your customers. If you are an individual, look out for proximity to places like markets, schools, and hospitals.

Again, don’t take pictures without asking any questions. Make sure you verify!

5. Not Knowing the Zoning Laws

This is something many Nigerians don’t know when buying land. Some places are allocated for agriculture, some for residential living, and some for industrial purposes.

So, if you buy land for residential reasons and it is in an agricultural zone, you may have yourself to blame when you have poultries and piggeries next to you in the future that is if you don’t lose the land…

Ensure you check the zoning regulations of the state you are buying land in.

6. No Exit Strategy

You must always have a reason for buying land.

It is not enough to have the money only. You must know if you want to sell later, build for rentals, or develop it and sell when you have a building.

These priorities will help you not to throw money around aimlessly. For instance, if you buy land in Omu-Ketu today, I’d suggest that you hold and sell it later because it has more prospects for resale than development in the near future.

But don’t just take my word for it, you can also do your research and map out your exit strategy for any land you buy in Nigeria today.

7. Overlooking Hidden Costs

When you buy a car, you should know that you also have to buy fuel, engine oil, and gadgets.

But the average Nigerian real estate investor thinks that buying property in Nigeria is all about the purchase price only!

No, it isn’t!

Other things will need extra expense. You will need to pay for your survey. If you are buying directly from the owner, you will need to pay for a lawyer.

And if you want to develop, you will need to start paying land use charges.

So, always draw up a budget that covers your real price and not just the purchase price. It helps you stay prepared.

8–14: Mistakes Seasoned Investors Still Make

8. Expanding Too Fast

Scaling too quickly can drain your cash flow faster than you expect.

What you should do is create a plan that will eventually help you grow as big as you expected. Then, grow gradually.

Your company stands at great risk if you expand too fast.

You may not have enough well-trained staff to handle your requests.

You may run out of cash to handle building projects if the cost of materials skyrockets.

Expansion is a long-term game, so play it slow.

9. Emotional Buying

I usually advise investors to buy where “everyone is buying”- and it works.

But it works because they have a personal strategy.

If everyone is buying land in Abeokuta tomorrow, you need to sit back and ask how it will be of long-term benefit to you.

This is why you see that our parents have land documents from purchases all over Nigeria, but they are not coordinated. The best you can do is to sell because many of these properties are not even good enough for other uses.

Instead, have a goal. Know what you want out of your real estate journey.

Then streamline your investment process to that line only!

10. Not Diversifying

If you put all your money into only one estate, it can be very risky.

Sometimes, that can be tempting because you may want the bulk money that will come from that one location.

But what happens if the value of land in that area does not grow as fast as you predicted?

You will start regretting your actions, and that’s the worst place to be as an investor.

I will advise you to spread your investment into multiple locations. When you grow larger, I will even say you should extend into multiple types of real estate.

That way, one stream of income can sustain you while the other grows.

Read Also: 5 Things You Must Know Before Buying Land in Lagos

11. Overleveraging Loans

Taking loans can help your business grow, yes. But debt should only be a tool, not a lifestyle.

If you always have to take loans to fund every single thing your company needs, you may be heading towards bankruptcy and not know it.

Hire an accountant to evaluate your assets and see how much risk your portfolio can carry.

They will direct you to know when to borrow and when not to, based on their review of your portfolio at a time.

12. Poor Record Keeping

Managing a real estate portfolio is not the same thing as running a small-scale business.

You must document everything you do, such as

Land purchase and hidden costs
Building expenses
Land appreciation
Rent inflow
Maintenance outflow

This simple action is what differentiates the billionaire investors from the rest. Keeping a good record shows that you have a goal and you are working towards it.

13. Forgetting Taxes

If you own a real estate company in Nigeria, tax avoidance is the last thing that should be on your mind.

As a real estate entrepreneur, you have the responsibility to pay taxes such as

Capital gains tax
Land use charges

You may look at your friend who owns a fashion store and ask why they are not paying those taxes. It is because real estate has its own tax rules.

And sadly, ignorance isn’t an excuse at law. Your office may get closed down even if you claim not to know about the law.

14. Avoiding Professional Advice

No man is an island. If you don’t hire lawyers, surveyors, or planners because you want to “save money”, you may end up spending even more!

Am I saying you should spend all your money on hiring professionals? No

Find affordable ones and go for them!

There are many benefits to getting professional advice:

A good accountant will show you the best and the worst times to take loans.
A lawyer will save you from years of legal battles by ensuring that you only get valid documents.
A surveyor will protect your investment by measuring every inch of property.

7 Rules for Avoiding Real Estate Investment Mistakes in Nigeria

Inspect before you invest.
Verify all documents with the land registry.
Work with a trusted real estate consultant, not your cousin or friend.
Create a long-term investment plan.
Listen to professional advice.
Start small and expand your portfolio gradually
Ask questions. Then ask again.

Final Thoughts

If you have made one or two of these mistakes, you are not alone! Many investors still make them too!
As you are reading this, an investor may even be making one or two of these mistakes!

What makes you a smart investor is that you learn from your mistakes, create new strategies, and move forward.

Stop guessing- use expert advice when you can!

And if you are thinking of buying land in Nigeria, message us via our Instagram channel or call us to get a guide to investing with long-term value in mind.