Real estate is one of the most lucrative and fast rising businesses around the globe. You can make a lot of money in Nigeria today by starting a real estate business, either as a real estate agent, an app builder or as an investor. Real estate builds wealth more consistently than other asset classes.
Starting your own real estate company is a great investment option. But just like every other business, the real estate industry is not devoid of challenges and difficulties. The market is well founded by a number of new and existing players with tough competition. However, do not be intimidated by the competition, but rather focus on building a unique brand that stands out from the rest.
What is Real Estate Business?
Real estate can be defined as a property (land or building) or a collection of properties. While real estate business encompasses all that is involved in the management of a property or collection of properties. This includes the process of buying, selling or renting a property (building, home or land).
Real estate agents act as a link between property owners, businesses and investors. They assist in the buying, selling, leasing or renting of all four types of properties.
The Four Types Of Real Estates
The real estate business can be grouped majorly into four areas:
Residential real estate:
This includes both new construction and resale homes. The most common category is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes, multi-generational and vacation homes.
Commercial real estate
Commercial real estates include shopping centers and strip malls, medical and educational buildings, hotels and offices. Apartment buildings are often considered commercial, even though they are used for residences. That’s because they are owned to produce income.
Industrial real estate
Industrial real estates emcompasses manufacturing buildings and property, as well as warehouses. The buildings can be used for research, production, storage, and distribution of goods. Some buildings that distribute goods are considered commercial real estate. The classification is important because the zoning, construction, and sales are handled differently.
Land includes vacant land, working farms, and ranches. The subcategories within vacant land include undeveloped, early development or reuse, subdivision and site assembly.
Real Estate Business Prospects In Nigeria
Real estate is a serious business in Nigeria. Indeed, one of the longest-standing industries in Nigeria is the real estate industry. Over the years, the industry has become a gold mine, and many smart entrepreneurs are tapping into it and making tons of profits.
Nigerians always need residential apartments, office buildings and commercial outlets. They are either interested in buying or renting the buildings and structures, and sometimes need to consult a real estate agent or an expert before making their choices. This explains why the real estate industry knows no limits in business opportunities and has been ranked the 5th largest contributor to the Country’s Gross domestic product.
Real Estate Business And Technology
Technological innovation is rapidly advancing in the real estate industry and preparing it for disruption. A lot of technological inventions have improved the way buyers, sellers and investors interact with each other. Many years ago, there were traditional means of interactions but technology has made it a lot easier for advanced communication, negotiations, agreements, and payments.
Developing countries are now embracing these innovative technologies that keep emerging in the industry and investors are following the smart train.
How To Start A Real Estate Business?
Despite being the fifth largest contributor to GDP, the real estate business is deluged with major investors who have acquired substantial experience and expertise over the years. This makes the sector highly competitive. However, many of such investors are to a large extent doing the same thing and competing for the same markets.
There is no doubt that technology has played a big role in several industries especially in the real estate industry. However, if you look closely, there are a lot of opportunities yet untapped in different sub-sectors in the real estate industry.
In order to be successful in this sector, one should have good knowledge and up-to-date information in this field.
This basic guide will equip you with the knowledge and information you need to start and run a successful real estate business in Nigeria.
1. Find a niche
Specializing in a niche market is the easiest way to do away with the competition. By narrowing down your target to a specific scope, you can be considered an expert in your niche and can easily grow to the top in that specific area.
Nevertheless, narrowing down your target audience without thinking and planning can be very dangerous as this could reduce the number of your potential clients. That is not to say focusing on a niche market is a bad idea. You will be extremely successful and make good money if you can identify an opportunity in your market.
Research and brainstorm deeply! Is there a specific group of people who need special real estate services? Is there any real estate company in the market catering for this group of people? If you can find a group of people whose needs have not yet been addressed by any other real estate business, this is your opportunity.
2. Develop a unique business plan
You need to strategically plan your business to be able to conquer the market. Real estate investment is just like starting a career in which you can’t start at a whim without having a specific business plan in mind. A business plan is vital for any real estate investor, and one of the best advice you can get on the housing market is to start a small one and have a solid plan in place.
This move is particularly important if you’re planning to become a real estate investor in the long term. In this case, you must strive to strategically increase your real estate investment portfolio.
3. Create a unique brand
Brand reputation is important to building a successful company in Nigeria, especially when it comes to investing millions of Naira. Branding is all about creating a image of your business in people’s minds. To turn your real estate business into a trustworthy brand, you need to give your customers more than enough value for their money and build a personal relationship with them.
In addition, set your real estate business apart from the competition by investing in premium brand identities such as logo, a website, social media pages, promotions and more.
4. Legally register a company
If you really want to make your real estate company look as legit as possible, then you have to legalize its life by registering the business with the Corporate Affairs Commission (CAC). Registration as a Business Name with CAC is appropriate at this point if you can not afford to register as a Limited Liability Company (LLC). Also, watch out for the rules and regulations that govern qualified real estate companies in Nigeria to ensure that you do not operate in violation of the law.
Some of the prominent real estate professional bodies to watch out for include; Association of Estate Agents in Nigeria (AEAN), Real Estate Developers Association of Nigeria (REDAN) and Nigerian Institution of Estate Surveyors and Valuers (NIESV).
5. Source for startup funds
If you did a good research on your business plan, you must have known the minimum amount of money needed to get you going, depending on the scale at which you choose to start. If your resources and financial ability are not enough to begin with, then you must look for an alternative way to source funds.
Real estate business is very capital intensive and requires a huge amount of investment. If you don’t have enough, it’s important to look for investors before you begin. You can look for equity investors who can give you enough leverage at the start and accelerate your growth.
6. Invest in technology
House hunting done the old-fashioned way — checking the local classifieds, noting the “For Sale” signs you spot on your way to work, and chatting with your network of realtor friends — can be one of life’s most stressful undertakings. But it doesn’t have to be that way. Thanks to venerable platforms such as PropLand Hub and Flatfy.ng that help facilitate real estate deals and help clients easily find homes that fit their budget.
However, most of these apps are limited to major cities. There is still a huge untapped market in terms of coverage and specific services in the real estate industry. You can focus on developing an app that covers a specific city where there is little or no competitors doing the same thing.
7. Hit the ground running
The last step to start a real estate holding company is to put the plan into effect. Meticulously execute all that you have developed in your business plan. A good number of Nigerian businesses have failed due to very poor execution. Execution includes your day-to-day business activities. This includes the closing of deals, public relations, networking, client orientation, human resources, etc.
Starting a real estate business is not for the faint of heart. However, to be successful in the real estate business, you need to be prepared to squarely face the challenges. At a personal level, and as a business owner, stay glued to your vision, cultivate discipline and became a goal-oriented and structured individual. Keep in mind that the real estate sector is not about instant success. Rather, it’s a long game that requires a lot of patience.