Real Estate Investing for Beginners in Nigeria: The Complete Guide

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If you are reading this article, “real estate investing for beginners in Nigeria,” I guess you want to start real estate investing in Nigeria or you want to add to your existing knowledge about real estate investing.

The truth is that the best time is now.

Nigeria is currently facing one of the biggest housing crisis in Africa.

With an estimated 21 million housing deficit, the country needs to build more than 500,000 houses annually for the next four decades to meet this demand.

While this poses a big challenge to the government, it opens a big opportunity for real estate investors.

But if you are still asking “Why should I invest in real estate in Nigeria?”, let me show you.

Beyond the obvious demand for housing, Nigeria’s 223 million population is the largest in Africa…and this has caused a serious urbanization problem.

Cities like Lagos, Abuja, and Port Harcourt are expanding rapidly, creating high demand for residential and commercial properties.

Real estate investing is not just important as a means of catering for the population. It is becoming a source of wealth creation and economic growth in Nigeria.

In this article, I will guide you on how to get into real estate investing in Nigeria.

Whether you’re interested in land banking, rental income, or property development, the real estate market offers opportunities for everyone. You don’t have to be a seasoned investor. You can start from being a beginner with a modest budget.

READ: BEST PLACES TO INVEST IN REAL ESTATE IN NIGERIA

Types of Real Estate Investments in Nigeria

Real estate investment is more than just buying properties and selling them. There are different ways to go about real estate investing in Nigeria.

It ranges from buying undeveloped land for future appreciation to investing in commercial properties that generate steady income.

Whether you want to create passive income, diversify your investment portfolio, or secure your financial future, here are 7 types of real estate investment in Nigeria:

1. Land Banking

Land banking is one of the simplest ways to start real estate investing as a beginner in Nigeria. This form of real estate investment involves purchasing undeveloped land and holding it until it appreciates.

It is popularly called land banking because it is synonymous with leaving money in a fixed deposit account that will gather interest over time.

Here are some of the benefits of land banking in Nigeria

It requires very little capital to start. Compared to other developed properties, land is relatively cheaper to buy and hold.
Land banking also has the potential of a higher return on investment, especially in fast-growing areas such as Epe in Lagos, Gwagwalada in Abuja and Ido in Ibadan.
Low Maintenance Cost: You can do land banking without spending a dime on maintenance besides creating a beacon (cornerpiece) and coming around frequently to check on your land.

However, while land banking has these great benefits, there are some things that you should take note of. These include:

Location: When land banking, it is crucial to buy land with a fast growth rate which can give you returns between three to five years. While it is great to bank your land, you do not need to wait for up to 10 years before you start making money from selling it.
Know Your Land Documents: You need to understand which land documents show your ownership and title to the land so you can avoid legal disputes in future.

The most important of these documents is the Deed of Assignment which shows that the owner of the property has decided to transfer all his rights to the property to you. The Certificate of Occupancy, on the other hand, is the government’s transfer of the right of occupancy of the land.

READ: SECRETS TO KNOW BEFORE BUYING LAND IN LAGOS

2. Residential Real Estate

Another profitable way to start real estate investing as a beginner is residential real estate. This includes apartment buildings such as self-contained apartments, duplexes, and short-let accommodations that can give you consistent income and capital appreciation over time.

Here are some popular options for residential real estate investment:

Types of Residential Real Estate

Long-term rental

With long-term rental, you build an apartment so you can rent it out for 1 year or more.

This is the most popular rental style in major cities in Nigeria. Your return on investment is the rent you get from your tenants.

However, unlike land banking, residential real estate involves more capital base to cover construction, documentation, publicity, and maintenance.

Short-term rentals (Airbnb and serviced apartments)

This is the opposite of long-term rental and it is also becoming quite popular in major cities such as Lagos, Abuja and Port-Harcourt.

In this kind of investment, you list your properties for short-term stay between 48 hours to 2 months.

It is usually rented out to people like travelers, tourists, content creators, and expatriates whose reasons for using the property are not permanent residential ones.

One big advantage of short-term rental is that you get your value back in a shorter time as short-lets tend to cost more to rent than standard long-term rentals.

But just like with long-term rentals, you need to set up adequate documentation that will define the length of the stay, the events the property can be used for, and how the property can be used.

You also will need to state the legal implications for the breach of the agreement such as the non-refunding of the security deposit in case of damage to the property.

Off-plan property investments

Off-plan investments are a more recent trend in the Nigerian real estate investment landscape.

It involves buying units of a property even before the property is completed based on the architectural plan and 3D rendering of the property.

It is popular where you have a single block of building with several apartments in it. When you buy a part of this apartment, it is like owning a share of the property.

Then you can profit off it when the rent for such an apartment is paid to you.

What to Consider Before Investing in Residential Real Estate

When investing in residential real estate, you need to consider factors such as:

Setting up rental terms of use for all kinds of properties
Managing your tenants to keep your property in good shape and respect other terms of your agreement
Property maintenance such as repairs of major faults like a main water pipe burst can directly affect the livelihood of your tenants
Security responsibilities to protect your tenants from external threats such as armed robbers and neighbourhood thugs.
Market demand for homes. Where there is a history of less demand for property in the area, you should not invest. However, if you are convinced of a surge in demand, you may go ahead and invest.
The number of competitors in the same area will affect how much you should invest. Where you have few competitors, you can build more apartments. But where you have lots of competitors within a small area, you might just create a few apartment spaces.

3. Commercial Real Estate

Commercial real estate includes office spaces, shopping complexes, warehouses, malls, and industrial buildings leased to businesses for official uses.

Upon completion, commercial real estate is one of the most profitable real estate investments. This is because it offers higher rental yields compared to residential properties.

Businesses tend to pay more rent because they make profits, unlike standard residents who do not use their apartments for money-making purposes.

Also, commercial real estate offers a more stable form of investment as it offers longer lease terms with businesses.

However, unlike residential real estate, this form of investment requires a keen understanding of economic growth factors. If there is an economic downturn and businesses are unable to either pay or renew rents, it may be more adaptable to go for other types of real estate investments.

Also, you need a bigger capital base to set up a strong commercial real estate portfolio. This is because offices need larger spaces that come with better (and smarter) features that their customers will appreciate.

For instance, you may only provide a space for hanging a ceiling fan in a home but you need specialized spaces for air conditioners in an office space.

4. Real Estate Investment Trust

If you do want to escape the issues that come with owning and managing a property, REITs are a great place to start!

REITs are a smart investment style where funds from different investors are put together to acquire, manage, and generate income from various real estate assets such as residential, commercial, and industrial properties.

These funds are shares and the returns on them are derived from rental income, property appreciation, and capital gains.

REITs have great promise in the Nigerian real estate landscape. In 2023 alone, the niche recorded an impressive ₦‎2.16 billion in rental income. This shows the sector’s profitability as well as its potential for increase and consistent RoI.

Types of REITs in Nigeria

Equity REITs

These REITs specialize in owning and managing income-generating properties such as residential estates, office buildings, and shopping malls. Investors earn through rental income and long-term property appreciation.

Mortgage REITs

This sector focuses instead on providing financing for property owners and developers. Mortgage REITs earn income through interest on property loans.

Hybrid REITs

Hybrid REITs combine the properties of both equity and mortgage REITs. Thus, investors can benefit from both property income and mortgage interest earnings.

Advantages of Investing in REITs

Passive Income Generation

Investors receive regular dividends from rental earnings without the hassle of managing properties.

Diversification

REITs offer exposure to wider options of properties, reducing investment risks.

Liquidity

Unlike traditional real estate, REIT shares can be easily bought and sold on the stock exchange, providing flexibility to investors.

Professional Management

The operations of REITs are managed by experienced property managers who oversee the acquisition, maintenance, and leasing of assets, ensuring optimal returns.

Tax Benefits

In compliance with Nigerian regulations, REITs enjoy tax advantages, including reduced corporate tax rates and tax-exempt dividends for investors.

Challenges of REIT Investment

While REITs provide numerous benefits, you should be aware of its potential risks, such as:

Market Volatility: Since REITs are traded on the Nigerian Stock Exchange, their value can fluctuate due to market conditions.
Limited Control: Investors do not have direct influence over the properties or management decisions.
Regulatory Risks: Changes in government policies and real estate regulations may impact the performance of REITs.

Steps to Invest in REITs in Nigeria

Research and Select a REIT

Study the performance, asset portfolio, and management team of listed REITs.

Open a Brokerage Account

Purchase REIT shares through a licensed stockbroker on the NGX.

Monitor Performance

Regularly track rental income reports, financial statements, and market trends to optimize your investment strategy.

Reinvest Dividends

Consider reinvesting dividends to maximize compounding returns.

5. Property Development

This is one of the most lucrative real estate investment options in Nigeria. It covers the purchase, construction, renovation, sale, and leasing of properties for profit.

Property development is the bedrock of most types of real estate investment.

It offers investors the opportunity to make value out of land by transforming it into profitable residential, commercial or mixed-use real estate assets.

However, unlike many other types of real estate investment, property development requires more detailed planning, larger financing, and a better knowledge of the industry.

But if you want to start property development in Nigeria, there are steps you must follow:

Key Steps to Property Development

Market Research

Conduct in-depth feasibility studies to understand the factors such as demand, your potential ROI, and the suitability of your location.

Acquire Land

Buy the land in your chosen location. However, ensure that you have legal verification and proper documentation such as a Deed of Ownership and Certificate of Occupancy to avoid future legal disputes over the property.

Project Planning

Collaborate with architects and engineers to create building designs that fit your budget. Be sure to align your structure with the local regulations and building codes of the area, if any.

Financing

Get resources to fund your project. You can either start with personal savings, get bank loans, enter into partnerships or use REITs.

Construction and Development

Work with professionals to start constructing. Use realistic timelines and set up a feedback system to ensure timely and quality execution of the project.

Marketing and Sales

Get in touch with real estate agents to bring in tenants or buyers. You can also use digital platforms or any other reliable promotional strategies to attract using real estate agents, digital platforms, and promotional strategies to attract your target market.

Benefits of Property Development

Property development has a higher potential for capital appreciation and rental income.
Gives you full control over your investment decisions.
Unlike REITs where you have limited choices, property development allows you to customize the property to meet the demands of your market.

Challenges of Property Development in Nigeria:

Despite its benefits, property development in Nigeria comes with challenges such as

High capital requirements
Bureaucratic regulatory processes
Fluctuating market conditions, and
Infrastructure limitations.

Tips for Success:

Always start with smaller, manageable projects to gain experience.
Use trustworthy partners and experienced real estate developers and professionals.
Keep track of regulatory requirements and other permits that are necessary to keep your work smooth.
Conduct all legal and financial due diligence to reduce risks.

6. Property Flipping

Overpopulation in urban areas in Nigeria has led to poorer housing conditions, hence the demand for better living conditions. This is where property flipping comes in.

Here, investors can purchase properties at below-market prices, make strategic renovations, and resell the properties at a profit.

With Nigeria having a housing deficit of 21 million units, this demand for well-renovated properties promises to drive RoI for investors interested in undervalued properties.

As an investor, you can achieve returns of 20% to 50% or more, depending on factors such as location, renovation quality, and market conditions. Popular areas for flipping include Lagos, Abuja, and Port Harcourt, where property values appreciate rapidly.

Key Steps to Successful Property Flipping

Market Research: Carefully identify high-demand locations with growth potential and affordable properties.
Property Acquisition: Negotiate for distressed properties, foreclosures, or auctioned homes at favourable prices.
Strategic Renovation: Focus on cost-effective improvements that enhance property value, such as modern interiors and energy-efficient features.
Effective Marketing: Utilize online platforms like Jiji, Facebook and Instagram to attract potential buyers.

Challenges and Risks of Property Flipping in Nigeria

Despite its high profitability, house flipping carries risks such as

Fluctuating market prices
High renovation costs
Cost of marketing
Legal complexities with the transfer of ownership

However, if you do your due diligence and work with professionals, you can get proper estate valuation as well as authentic documentation to avoid any further risks.

7. Cooperative Real Estate Investment

Cooperative real estate allows individuals—especially civil servants and low to middle-income earners—a collective means of investing in property. It is very related to REITs.

On the contrary, members of a cooperative real estate investment pool resources to acquire, develop, and manage real estate assets while having direct control over the property.

The ease that comes with this type of real estate investment is that it allows you to own property without bearing the full financial burden individually.

How Cooperative Real Estate Investment Works

Cooperative societies, often registered entities, provide members with structured payment plans to invest in residential or commercial properties.

These investments can take various forms, including

Direct property acquisition
Land banking
Shared ownership of rental properties.

Usually, members pay a monthly instalment or any other form of periodic payment. The cooperative entity then handles the property procurement, legal documentation, and sometimes, management.

Benefits of Cooperative Real Estate Investment

Affordability

Spreading payments over time makes property ownership accessible to members of the cooperative who have limited capital.

Risk Reduction

Collective investment minimizes individual exposure to financial loss and market fluctuations.

Access to Prime Properties

Cooperatives often negotiate better deals, allowing members to invest in prime locations at lower costs.

Professional Management

The cooperative handles property development, tenant management, and maintenance.

Challenges of Cooperative Real Estate Investing in Nigeria

Cooperatives, despite their numerous benefits often come with several challenges such as

Poor management by the leadership of these societies
Lack of transparency with resource allocation
Delayed property delivery can arise, especially because other members of the society have delayed payments.

It’s best to join reputable cooperatives that have a proven track record of smooth delivery. Also, choose ones with efficient management of properties as well as clear legal structures that allow for transparency and accountability.

Key Factors to Consider Before Investing in Nigerian Real Estate

Before venturing into real estate, it’s essential to evaluate several factors to ensure a profitable investment:

1. Location and Accessibility

The location of your property is one of the biggest factors that determine its value and potential returns. Pick areas with these features as they improve the value of your property:

Rising population and increased high demand for properties
Good infrastructure such as roads that can increase accessibility
Proximity to essential services such as markets, schools, hospitals, and shopping centres.

If it helps, do well to visit the location to check for the traffic conditions and to see if it is prone to flood.

2. Title and Legal Documentation

Ensure that the property has a valid title to avoid future legal disputes. Do your due diligence to avoid being scammed as a result of insufficient documentation. Here are some ways to verify the property’s title:

Take the coordinates of the land to the Land Office of the state you are buying in
Confirm the availability of key documents such as the Deed of Assignment, the Certificate of Occupancy (C of O), and the Survey Plan.
Engage the services of a qualified real estate lawyer to conduct a thorough title search

3. Market Trends and Economic Factors

Observing market trends is the point where you become not just an investor but an entrepreneur. Look out for the demand for property in the area you are investing in.

Also check for economic factors such as inflation, exchange rates, government policies, and the earning power of your target audience.

Here are some other economic factors you should look out for:

Past and current property price trends.
Economic reports and real estate market insights.
History of property demand in your target location.

4. Developer’s Reputation

If you are investing through REITs or cooperatives, be sure to look out for the credibility and the track record of the property developer who is managing your investment property.

These factors will show whether they will deliver timely and quality work for your money. Here are some ways you can assess your developer’s work:

Research their past projects and client reviews.
Visit their completed and ongoing projects to assess construction quality.
Check if the developer has the necessary government approvals and certifications.
While they are working on your property, you can make frequent visits to see their on-the-ground performance and work rate based on your agreed timeline.

5. Financing Options and Affordability

Real estate can make you a lot of money, but you also have to invest some money to start. It is crucial to explore financing options that align with your financial capabilities. You can:

Research available mortgage plans from banks and financial institutions.
Compare interest rates and repayment terms that fit your budget.
Create a detailed budget to account for hidden costs like legal fees and maintenance.

6. Security and Neighborhood Environment

No resident or business person will want to live or work in an unsafe location so you have the responsibility to check out for the crime rate and stability of the area you are investing in.

Also, where there is a lot of crime, the value of your property can be negatively impacted as there would be low or no demand for it.

Here are some ways you can check for the security of an area:

Speak with residents and the local police branch to assess crime rates.
Measure the presence of security measures such as gated estates, police stations, and surveillance systems.
Consider the potential impact of environmental factors like flooding.

7. Property Inspection and Structural Integrity

If you are directly buying built properties for flipping, resale, or management, it is important to inspect your property for its structural integrity. If you fail to check, you can incur very expensive repair or rebuilding costs.

Do your due diligence by doing these:

Hire a professional surveyor or structural engineer to inspect the property.
Check for common issues such as foundation and wall cracks, plumbing and pipe leak problems, and electrical faults.
Inspect the building materials to see if they are durable enough for the weather used to ensure durability.

8. Rental Yield and Return on Investment (ROI)

If you are an investor looking to earn annual rental income, it’s important to evaluate the potential rental yield by

Comparing rental rates in the area to estimate your income potential.
Calculating expenses such as property management, maintenance, and security fees.
Assessing long-term appreciation potential based on the rate of development in the same environment as yours.

9. Government Policies and Regulations

Real estate investments are subject to various laws and regulations. These laws such as the Recovery of Premises Act, Cap 544 LFN 1990, the Lagos State Tenancy Law 2011, and the Rivers State Tenancy Law, 2012 can impact your relationship with tenants, your ownership rights, taxation, and development.

Be sure to

Get to know state laws that concern your property.
Comply with tax requirements, including property tax and capital gains tax.
Stay updated on government initiatives such as affordable housing schemes so you can take advantage of them.

10. Hidden Costs and Maintenance Expenses

Sometimes, investors can focus on the purchase price and overlook other ongoing costs that are associated with owning a property. Instead, focus on

Budgeting for costs such as taxes, insurance, and service charges.
Planning for unexpected situations such as renovations and repairs.
Working with experts and professionals will streamline your maintenance costs.

11. Resale Potential

Everything about real estate investment is RoI. So, from the outset, propose your investment strategy to plan for resale. You can do this from the start by:

Choosing locations that tend to appreciate more.
Investing in properties that meet a different audience. This way, you can repurpose a property to attend to another audience if one is no longer viable.
Considering factors such as future urban development plans.

Why Invest in Real Estate in Nigeria?

There are many benefits of investing in Nigerian real estate that should drive you to get started today:

1. Steady Cash Flow

The real estate sector tends to generate consistent rental income. With the increasing housing deficit and the demand for residential and commercial properties, you can earn passive income as an investor through rent payments.

If you want to get the cash flow out of real estate, start by identifying high-demand areas such as Lagos, Abuja, Port Harcourt, and other major Nigerian cities to invest in rental properties that promise steady returns.

2. Capital Appreciation

Unlike most assets, real estate hardly ever depreciates, especially in prime locations.

Look out for areas with ongoing infrastructural development and population explosion. These types of locations with growth potential help to maximize long-term capital gains.

3. Hedge Against Inflation

Because real estate can keep appreciating, it is a good asset to hedge against inflation. While living costs rise, property values also increase. As a result rental income also increases and this ensures that your investment retains its value over time.

As an investor, you need to keep an eye on economic trends such as inflation and foreign exchange to adjust your rental pricing and also strategize your investment accordingly.

4. Portfolio Diversification

Adding real estate to your Investment Portfolio can help to diversify and reduce the risk that comes with fluctuations in other asset classes like bonds and stocks and more recently, cryptocurrency.

You can also explore different types of real estate like residential commercial and land banking to increase your chances of balance while diversifying.

5. High Return on Investment (ROI)

When you invest in fast-growing urban areas, real estate offers a high return on investment. This is because, unlike many other investment options, the demand for real estate consistently outweighs its supply.

However, you have the responsibility to conduct thorough market research to find an area with demand and a greater potential for appreciation.

6. Greater Control Over Asset

Unlike stocks and bonds, real estate is a tangible asset that you can physically inspect, develop, and manage. You have full control over decisions such as renovations, rent adjustments, and property sales.

However, if you cannot do it all by yourself, consider working with professional property managers who can help you watch over your properties and maximize the value of your investment.

7. Government Incentives and Policies

Real estate investment helps you leverage the Nigerian government’s several policies that encourage investment in the sector.

Some of these include the National Housing Fund (NHF), tax incentives, and public-private partnerships.

These programs and incentives help you reduce costs and widen your profit margin.

Steps to Start Real Estate Investing in Nigeria

Whether you’re a first-time investor or looking to expand your portfolio, you need to carefully plan for every stage of your investment so you can achieve long-term success.

This is a routine I follow for every real estate project I want to undertake and it has helped me several times:

1. Define Your Investment Goals

Before you start investing in Real Estate you need to determine what you want to achieve. Are you looking for passive rental income or long-term property capital appreciation?

You may also choose to go for quick returns from property flipping.

Write down your short-term and long-term goals, considering factors like budget, target locations, and expected ROI.

2. Conduct Market Research

If you want to achieve success in the Nigerian real estate market, you need to make smart and informed decisions. Do well to research fast-growing areas, demand for property, legal regulations, and all the risks attached to your investment type.

You can use online platforms like property listing sites, market reports, and real estate blogs like this one you’re reading to gather the data you need.

You can also talk to real estate agents in the area who will share live insights about the viability of real estate investment in the area.

3. Choose the Right Investment Type

After you factor in your goals for real estate investment, feel free to choose the particular investment option that you want to execute in the area. As I mentioned above, there are multiple options you can pick from including:

Land Banking
Residential Properties
Commercial Properties
Short-Term Rentals
Real Estate Investment Trusts (REITs)

4. Secure Financing

Your next step will be to find Capital to start your investment. You can use various means including:

Personal savings
Bank loans
Cooperative societies
Mortgages as well as partnerships.
Cooperative societies
Joint Ventures

5. Work with Real Estate Professionals

Real estate is a wide-ended sector. You will need to get as much guidance and support from professionals no matter how experienced you are. Some of these professionals include:

Real Estate Agents
Lawyers
Surveyors
Property Managers
Accountants
Building contractors

6. Conduct Due Diligence

Before you finalize the purchase of a property, it’s important to verify the legitimacy of the property and the seller. Here are some things that you should look out for:

Land titles (C of O, Governor’s Consent, etc.)
Prior encumbrances or disputes
Physical condition of the property
Development plans in the area

7. Manage Your Property Effectively

Effective property management covers regular maintenance, timely rent collection, and compliance with housing laws. However, you should not restrict yourself to these.

Also, optimize your property to include management that can help you to maximize profitability. These efforts should include:

Renovations
Expansion (if you have extra land space)
Upgrades (attaching newer fixtures and fittings to increase your property’s value)
Partnership

Challenges of Real Estate Investment in Nigeria

Investing in Nigerian real estate comes with a set of challenges. Understanding these peculiar situations helps you to reduce risks and maximize returns.

1. Land Ownership Disputes

Land ownership disputes are common in Nigeria due to inadequate documentation, multiple claims of ownership, and fraudulent sales.

In the southwestern parts, there is also the problem of land grabbers (also known as omo onile). A notable case is Erinosho v Owokoniran (1965), a legal case where conflicting claims over a parcel of land led to a prolonged legal battle.

To avoid these situations, it is best to

Do your due diligence by checking your document validity at the Land Office.
Engage legal professionals
Partner with only trustworthy professionals

2. High Cost of Property Development

Due to the high rate of inflation, the cost of labour, building materials, and regulatory fees that are increasing, you might seek solutions such as

Leverage public-private partnerships by using government incentives for subsidized development.
Find instalment plans that allow phased payments. This reduced your upfront costs.

3. Bureaucratic Bottlenecks

Obtaining approval for property development can be time-consuming. To skip this red tape, it is best to work with local experts and leverage technology like the Lagos eGis Portal so you can skip repeating visits to physical offices.

Also, explore other investments that require minimal regulatory interference like short-term rentals.

4. Security Concerns

When developing and managing properties in Nigeria, there is a high risk of insecurity. This can result in you losing tenants and future buyers.

You can reduce this risk by investing in secure locations, using up-to-date security systems like surveillance cameras and hiring security guards.

Also, consider investing in gated communities with robust security infrastructure.

5. Economic Instability

The fluctuations in the Nigerian economy as a result of inflation and foreign exchange volatility have affected property value and rental income. This can reduce the economic capacity of your tenant to pay rent and even the ability of your investors to pay their dues.

Here are some smart ways to secure yourself against economic instability in real estate investing:

Diversify your investment across multiple real estate sectors. This will help you to reduce dependence on just one single area to generate RoI for you.
If you’re dealing in high-end properties, it is best that you lease in foreign currencies like dollars or euros to make a hedge against Naira’s volatility.
Focus on properties that are recession-proof such as education and healthcare.

Major Documents You Should Know Before You Invest in Real Estate in Nigeria

One of the biggest factors of real estate success is the security of your property. And one of the best ways to protect your property is to have good legal documentation that will protect you in case of any legal battles in future.

Here are some important documents every investor must know:

1. Certificate of Occupancy (C of O)

This document is issued by the state government. It legally confirms land ownership the state no longer owns the land. As a result, ownership is transferred to the new buyer by the state governor for a specific period, typically 99 years.

2. Deed of Assignment

The Deed of Assignment is probably the most important document you could strive for. This is because it is the only document that transfers title from the seller to the buyer, confirming the sale of the property.

3. Survey Plan

This outlines the property’s coordinates (locations), size, and boundaries, ensuring it aligns with government-approved layouts. It is usually submitted to the Surveyor General in the state where the land or the property is located.

4. Governor’s Consent

Many people think that this automatically comes with a C of O. No. The Governor’s Consent is required for property resale with a C of O. It is the state’s acknowledgement of the transfer of transfer of ownership.

5. Deed of Lease

This is similar to a deed of assignment for leased properties. It clearly defines the terms and conditions of property use between the owner and tenant.

6. Building Plan Approval

This ensures that the property construction complies with local building regulations and zoning laws.

7. Land Purchase Receipt

A proof of payment you get from the seller that shows that they have received your payment for the land or property bought.

Note: If you are buying from a family or community, ensure that the signatory is unanimously agreed upon by all the decision-makers in the family or community.

This creates a legal backup for you in case of the contest for the land in future.

8. Power of Attorney

This is used where you have someone in charge of your property. It grants authority to this representative to act on your behalf in legal or financial matters. Most times, this document is given to a lawyer or a professional property manager.

9. Tax Clearance Certificate

This confirms that you have fulfilled your tax obligations to the state, as a property owner. As such you are free from any future liabilities that may arise from not doing so.

10. Letter of Allocation

This is issued for government-allocated properties. It clearly confirms the rightful owner and property details.

8 Common Mistakes Beginners Make That You Should Avoid

In my experience as a real estate investor in Nigeria, I have seen people make so many mistakes that cost them either their property or some hefty legal fees. Here are 7 most common pitfalls that you must avoid to ensure a successful real estate investment experience:

1. Skipping Due Diligence

Many beginners fail to verify the authenticity of property documents and the ownership status. This can lead to fraud and many other legal implications.

Before you finalize a purchase, always meet a lawyer and other experienced professionals such as relevant authorities to verify these documents.

I already highlighted all the documents above. Read through and check for the ones you do not have based on the type of real estate property you own.

2. Ignoring Market Research

Investing without understanding market factors such as market trends, property appreciation rates, and demand can result in poor investment decisions.

Research high-demand areas and also consider factors like infrastructure development and economic growth before investing.

3. Keeping Non-Paying Tenants

Allowing non-paying tenants to stay too long can destroy your investment. It often starts with a minor delay—excuses like unpaid school fees or salary delays. But it can spiral into years of lost revenue.

If you were a bank, you’d reclaim your property without hesitation; apply the same principle to protect your investment. Cash flow is key to survival as an investor.

Make sure you do the following to keep your rent intact and your tenants in check:

Set and Enforce Eviction Rules

Clearly communicate eviction policies from the start—your rules are your rules!

Follow state tenancy laws for eviction notice periods (e.g., Lagos Tenancy Law):

1-week for tenants at will
1-month for monthly tenants
3-months for quarterly tenants
6-months for yearly tenants

Act Legally and Quickly

Initiate eviction proceedings once rent arrears reach legal limits (e.g., 6 months for monthly tenants, 1 year for quarterly tenants).

File for possession and rent recovery in court if needed.

Protecting your property isn’t being heartless; it’s smart investing. Your financial security and future depend on it. So, act decisively.

4. Avoid Emotional Attachment to Property

Real estate is business, not sentiment.

Focus on factors that help you sell your property and not just the visually appealing things. While aesthetic features like flowers may attract residential real estate buyers, but they won’t matter if your target market consists of business owners looking for offices.

Prioritize locations with a rising population, especially family-friendly areas, and ensure accessibility with good road networks.

Do these before you start investing to avoid emotional attachment

Know Your Target Market

Clearly define your ideal buyer and evaluate properties through their perspective. Also create a customer avatar, considering profiles like:

A family with four kids needing space and schools nearby.
A student with roommates seeking affordability and proximity to campus.
A remote-working bachelor valuing peace and connectivity.

Invest Based on Demand, Not Preference

Choose properties that align with market needs rather than your personal taste. Focus on aspects that influence long-term value, such as infrastructure, security, and economic growth potential.

5. Paying to a Land Owner’s Representative NOT Real Owners

When looking for land, you may go through a real estate company or a property manager to get to the owners of a property. But this is the point that most investors make the mistake of paying the real estate company or the supposed “agent”.

This kind of situation is mostly encountered by people who are not living close to the place they want to acquire land- like someone who lives abroad.

This person may innocently find a real estate company to scout for good land in a choice location but the land may not belong to the company.

Many Nigerians in the diaspora and other foreigners have complained of being duped for their money. I have received many calls and messages with stories of people who get scammed of their millions for trusting the wrong person with their money.

Sometimes, my hands are tied because these scammers have devised smart ways of covering their tracks.

They can incorporate and close a company in less than one week all because of one deal.

They can also open and close a bank account in the same period just to close a scam deal.

So, every time you can’t confirm the identity and authenticity of a company, DON’T GO INTO ANY PURCHASE DEAL WITH THEM.

Instead, find the owners of the property and pay directly to them. If you will use the real estate company as an intermediary, ask them to connect you with the land owners who can then hand over their commission to them.

6. Giving Your Property Without Payment

Sometimes, as an investor who is into land banking, you may permit someone especially an artisan (e.g., mechanics, block makers) to stay on idle properties for security. This can be a very critical mistake in real estate.

Allowing someone to occupy your property without collecting rent can make you face legal issues later.

If the landowner passes away, the occupant may falsely claim ownership, rent out portions, or deceive potential buyers. And because the occupant has stayed long enough on the land, the community will perceive that they own the land, making legal battles challenging.

The best solution to this is to:

Charge Rent (Even If Small)

Always collect rent, no matter how minimal. This helps you to establish a formal arrangement and it also proves your ownership of the property. See, your rent can be so small, but make sure it is paid. For instance, if the standard rent is N180,000, consider charging 10% to maintain control.

Draft a Written Agreement:

Clearly define the duration of stay, rent amount, and payment method (bank transfer, cash deposit, etc.). Also, include an exit clause to reclaim the property when needed. Ensure that your lawyer is fully aware of this agreement.

Keep Payment Records

Maintain proof of all payments via bank transfers or deposits for legal defence. Avoid cash payments unless properly documented with receipts and witnesses.

7. Not Defining Investment Goals

Don’t do real estate investing because you heard that “there is money there.”

Instead, invest with a clear goal in mind. Do you want rental income, resale, or long-term appreciation?

Skipping your goals can result in poor decision-making and reduced returns. Set clear investment objectives before purchasing any property.

8. Failing to Work with Professionals

Attempting to navigate the real estate market alone is like diving into an Olympic-sized without any swimming experience.
Do well to consult agents, meet with lawyers, and discuss with surveyors. Sometimes, their little advice is what will save you from costly mistakes.

Now is the perfect time to take action!

Whether you’re a beginner or an experienced investor, the Nigerian real estate market presents endless possibilities for growth.

Start small, stay informed, and build your portfolio one step at a time.

Conclusion: Everything You Need to Know About Real Estate Investing for Beginners in Nigeria

Investing in real estate in Nigeria is a pathway to wealth creation and long-term security. It offers vast and promising opportunities such as land banking, residential properties, commercial spaces, or innovative investment options like REITs and cooperative real estate.

However, you must consider key factors such as location, legal documentation, market trends, and financing options before you make an investment decision.

Throughout this guide, we have explored

The different types of real estate investment opportunities available in Nigeria, from land banking, which offers low capital entry and high appreciation potential, to property development.
Rental properties, commercial real estate, and REITs—each offering unique advantages and challenges.
The need for quality market research, working with reputable professionals and drafting a clear financial and legal plan.
Challenges such as land disputes, regulatory hurdles, and financing constraints can be mitigated with due diligence and strategic planning.
The major documents you need for a successful real estate investing
Common real estate investing mistakes that you must avoid like a plague

Now is the perfect time to take action!

Whether you’re a beginner or an experienced investor, the Nigerian real estate market presents endless possibilities for growth.

Start small, stay informed, and build your portfolio one step at a time.