How To Make It Big In Real Estate Business

Real Estate business is one business the world over that never goes out of patronage - even with changes in tastes, culture, or technology. This is because people will always need homes to reside, offices to do business, places of worship, and places where they can relax and unwind. They will need schools, hospitals, and other services that make living pleasurable.

All the above services can only be provided conveniently in a building, and that’s where Real Estate business comes in – to make such property available to those who need them, and of course, make some profit from it.
If you are thinking of going into the Real Estate business or you have just started, or you have been in it for some time without much success, and are looking for new and proven ideas to achieve a breakthrough, this report is for you. It will help you understand the industry deeply, and properly guide you to making it big in the industry.

What is Real Estate?

If you have property in form of land or buildings, it is called Real Estate. But if you begin to sell the land or build houses on them for sale, lease or rent, then you are into Real Estate business.

Why go into Real Estate business?

High demand for property: While most Nigerians desire to live in their own houses instead of living perpetually as tenants, the reality is that there are not enough houses to go round. In fact, the nation’s statistics for housing deficit is extremely high. Mr. Olaitan Komolafe, the Managing Director of Global Trust Savings and Loans, a Primary Mortgage Institution (PMI), puts this deficit at over 16 million. Even at that, he says the combination of all the PMIs and the private estate developers in the country provide less than 2000 housing units in a year. This short supply in housing is a major reason for the high demand for property in the country.
There is also a high demand for other kinds of properties, including land and buildings suitable for schools, offices, hostels, shopping complexes, hospitals, hotels, filling stations, and event centres - all across the country.                                                                                    
Safe investment: Mr. Fisayo Akinlolu, Managing Director of Hulk Innovations (a real estate development company) looks at the Real Estate business from the angle of good and bad debt. He says, “Bad debt is the money you borrow to buy things like cars and clothes to feed your family - things that have no appreciating value. The good debt or investment debt is where you borrow to buy things like land or build a house. When you do any of these with borrowed money, it is an investment. Komolafe and Akinlolu acknowledge investments in Real Estate as one of the safest anyone can think of.

Mr. Samson Olatunde, the Chief Executive Officer, Business Impact Limited, says, “To me, Real Estate is an investment in which you can never lose - the worst that can happen is that you get your money back. It is one investment that never depreciates. Be assured that your money is safe”.

It is lucrative: Akinlolu recommends Real Estate as one business that can make someone rich, especially if one is intelligent enough to know how to finance it. He says, “Depending on one’s financial intelligence, loans obtainable from the National Housing Fund have the potential to make someone rich. You can get a loan from NHF, build or buy a house, and later discover that the house you have built from the loan has paid itself back, without you having to pay any money other than the equity contribution”.

He simplifies it further by saying, “If a property is valued at N15m, you can take a loan and make an equity contribution of N4.5m, and own it. Assuming you are aged 30, that property can give you rent income of N1.5m or N2 per annum. That money will be able to pay for your monthly contribution to service the loan for that year. For the next 20years, you will discover that the rent from the house is able to pay for the loan you took.

“At the end of 20years, after paying, the house becomes your own, and do not forget that the property would have appreciated over a period of 20years. It may now have a portfolio of over N30m or N40m; a property that you started with an equity contribution of N4.5m.

“So, when you talk about the NHS and you look at it critically, it is a medium you can use to grow rich without actually using your money. That is what we call good debt. It’s not something to run away from, in fact it is one of the secrets of getting rich quick. I say this because going into good debt is an investment and if you know how to manage the debt, you are made.

For me, it really doesn’t have a disadvantage, just make sure you know and have a means of paying back the loan, there are a lot of benefit that comes with it. If you have your own house, you don’t have to pay house rent anymore, think of how much you are to pay as rent; Moreover, the rate of inflation is on the increase by the day”.

Olatunde says, “When we started, we were selling a plot of land for N250,000, but now - within the space of one year - it is being sold for half a million naira, and those that invested have doubled their investment”.

Mr. Debo Adejana, the Managing Director of Realtypoint Limited, says, “It is as lucrative as the business of the basic needs of life - food, shelter and clothing. It is actually as lucrative as the mind handling it”.

How to begin Real Estate business:

Since the business of Real Estate involves the buying and selling of buildings and land, it is believed that a lot of money (millions of naira) is required for one to go into it, but this has been proved wrong.

Mrs. Ilaboya’s experience: This notion that millions of naira is required before one can go into Real Estate business is not necessarily correct, as the story of Mrs. Patience Ilaboya illustrates.

The lady, who hails from Uzebba in Edo State, came to Lagos in 1982 and began business selling palm oil, groundnut oil and yam tubers in retail. By 1986, she added Kerosene to the list of the things she sold. In 1998, her husband introduced her to SuccessDigest, and she read in one edition, the story of how one can do business with little or no money.

Ilaboya says, “At first, I dismissed the story as a deception. But my husband encouraged me so I read it several times. At that time, there was this site at Oke Afa – Jakande Estate – and it was during Sallah, and the local land owners (Omo Oniles) were begging people to buy the land - for them to have money to buy ram for the Sallah. I saw it as a great opportunity and I called the Omo Oniles - that I needed an acre. They sold it to me at N100,000 per plot, and it amounted to N600,000 (for 6 plots).

“But all the money I had from my kerosene business was N200,000. I gave it to them and they released the six plots to me. The following week, I started looking for buyers and a week later I sold two of the plots for N300,000. I gave another N200,000 to the Omoniles and kept N100,000 for my business. I later sold another two plots, and I balanced the Omo Oniles and I still had two plots left”

From there, she built her capital. And now, according to Ilaboya, she has acres of land at Pakuro in Mowe, and that is where she built her shopping complex of 36 shops. She also has a hostel of 60 rooms and is currently building a warehouse.

Adejana says how much one begins with depends on the area of Real Estate business one is looking at. Even at that, all the money does not have to come from ones’ pocket. He says, “Every industry and sector is divided into three - the bottom, middle and the top. So, where you want to play determines how much you will need to start with.”

“There are Real Estate transactions for a few tens of thousands of naira. Our own experience in the industry has helped to address the aspect of people thinking it involves a lot of money. Even if it requires lots of money, must all the money come from your own pocket? If you are not greedy, if you are ready to share and you have substance and you are honest, people can invest in you and believe in you to reward their efforts. Money can come from different places to help you build your business. So, does it require a lot of money? I will say yes, maybe sometimes, depending on the market sector you are going into, but all the money does not have to come from your pocket”.

Adejana goes further to say that it is even possible to start Real Estate business with no money at all. He says, “We have people who came into the industry without a kobo. How did they start? They just positioned themselves as probably retailers to some of our projects.

“Some of the people who now own plots of land didn’t have money to buy on their own when they first came. But from the commissions they got, they got their lands. Some of them have even gone on to become estate developers. There are different segments in the business - you can be an agent, a developer, an investor, or a consultant advising people. So, you can be a professional in any of these fields, and render your service.”

Adding his voice, Olatunde says misconception and ignorance prevent many people from starting Real Estate business, because they think they need millions of naira to start it. He says, “There are places you can still get a plot of land for as low as N150,000. The basic truth is that people haven’t tried looking for cheap lands or buildings they can buy and sell for profit. If you search for it, you will find it.

He adds that a person who has no money but has a lot of goodwill can go into the business too. He explains that you will have to act as an agent. What you need to do is to find a good property, agree with the owner of the property that you will find buyer for it and get a commission from the sale. Let the agreement be written out and signed by the two of you and a witness.

Then contact the people you know, including your friends, colleagues, relatives, and others, informing them of the property. You can also get the word out through Facebook and Twitter. Tell these people to also inform other people they know. Highlight the advantages of buying the property and let your message be compelling for people to want to buy it immediately.

By this, you are bound to find buyers. Get your commission and build up your business capital by repeating the above strategy.   

Do you need an office to start with?

Adejana says it is possible to start from whatever you can afford or wherever you are. He says, “If you are the type who cannot work from home, like me that needs to leave home and go somewhere called an office to be able to encourage the discipline to work; what did I do? I looked around me and got people who God used to provide a place for me free for almost a year or so. The furniture was there, and the only thing I took there was a desktop computer. After a year, we got a land phone and I employed two people with me before we left the place for our own office today.

“I have seen friends that have started from their homes, sometimes from their cars - the boot of their cars with a phone and their documents in place. Thank God for the electronic age we are in today - which makes it possible for you to do virtually everything in or out of the office”

Success Factor - How to Hit Juicy Deals That Most People Can’t See

The success factor in this business has to do with your ability to buy land or buildings at low prices and sell under a reasonably short period at a good price, making a handsome profit. This ability is what sets aside the successful big time Real Estate firms from the others.

Real Estate business is not about somebody taking you to a forest and telling you the land is available for sale at a low price, and you going ahead to buy it, build on it, and hoping that one day the place will become a town and you will be able to sell the property for millions of naira. That may never happen, and you would have wasted your money.

Real Estate business is for you to know what exactly you are looking for that you can easily prepare for sale at a reasonable time and pull out your investment. For example, you can go to a town that hosts a High Institution of learning like a university, which is facing accommodation challenges and you find a piece of land at a good price which is suitable for a hostel. You can buy that land, look for developers, organizations, or firms that may be interested in building hostels, sell it to them at higher price and go away with your profit. Or, you can build a hostel on it yourself, run it for some time and sell it off later if you wish. By so doing, you make your profit and pull out your investment at a reasonably short period.

Adejana says, “Every business, even real estate is divided into three categories – the top, middle and bottom. You need to understand the market; and if you do, there is no stage [in which] you can’t make your money in real estate. You could decide to invest in any area of your choice, be it Ikoyi, Ikorodu, Abule-Egba or other remote areas. However, what must be done in Ikoyi shouldn’t be applied in Ikorodu or any other place. Each area you are venturing into has its peculiarity. If you mix things up, you might not make any headway.

“For example, if your target is to provide residential accommodation for low income people in a densely populated area, Ikoyi is not the place for you to go. You are more likely to succeed with that kind of idea in Abule Egba or even Sango in Ogun State.

“If it is the development of petrol stations that you are interested in, you know that you have to target prime properties along busy roads. You can then build and lease them out or sell them to petroleum marketers. Also, you have to put your clients’ interest first as a developer. What are they asking? Know it and provide it. You must be knowledgeable enough, because real estate business depends on the person going into it”.

Mr. Seye Peters, Managing Director SP, Assetlink Limited says, “It depends on your vision and your passion, and where you are going to. For instance, you can go to your village and buy land with N50,000 – buying to keep. This is the speculation aspect of real estate. The land you bought for N50,000 can be sold for N150,000 in the next few months.

“So, your capital will determine where you start from. When you see that development is coming towards a particular area, you can forecast by looking into the future of the area, and take the risk; who knows, in the next 10 or 15 years, people will come to that side, and you make it big.  It depends on how, when and where you want to start from and where you are heading to”.

The idea is that you should know what kind of property you are looking for, and who you would be selling it to before you buy such property. You may have observed that a particular town is growing, with different businesses coming in, and you believe banks will want to set up branches there too. You can search for property in that town that will be suitable for banks to operate. When you find such property, buy it, put it in good shape and call the attention of banks to it. You sell and make your profit. If you want to go further, you can develop the land and build a structure suitable for banking operations and sell off the building to the bank that comes for it and make an even bigger profit.

Find a piece of land or building that is suitable for a particular use (which is needed in that area), buy and develop it and then call the attention of the would-be buyers to present their offer. Continue to increase your portfolio across the country, and soon you will become a leading Real Estate player in the country. 

 Challenges to Brace up for:

Adejana says challenges exist in all businesses, including Real Estate. The challenges are not supposed to drag you down, but to let you be more informed and knowledgeable about the business.

The basic challenges in real estate are issues that have to do with title - access to land in the first place, because it is on land that everything works in Real Estate and this is a problem. There is a problem with the Land Use Act, which has not been amended.

Finance is also a problem. Real Estate business requires lots of money, and there are ways by which this money can be sought in other parts of the world, but in this country, it has not been that way: Mortgage is not available as it should be; micro finance is not there and the pension we have trillions of naira in is not yet easily accessible, or not channeled towards housing provision - the way it should be.

Top Five Mistakes to Avoid

Olatunde lists the following as the top five mistakes to avoid in real estate business:

1.   Never invest without having a plan.

2.   Never invest without having the basic knowledge of what you are investing in.

3.   Be disciplined when it comes to investment.

4.   Believe in the company and yourself.

5.   You mustn’t invest through people, invest by yourself - you mustn’t be lured or cajoled to invest.

“These work for anybody. It is a principle, you just apply”, he says.
Buying of Land

If you want to buy into a property, first confirm how real it is. Every location or area can easily be checked for at Land and Bureau offices of every state. There is map and statistic of the land. You should also make use of a property lawyer to help you check all the information. You should have received all the needed legal documents and agreements before making payments for the land.

Advise to a Beginner

Olatunde says, “I tell anyone who wants to come into this industry to start by being an Agent and help provide buyers to other Real Estate companies for a commission. If you can pull sales, then there is a significant probability that you will be able to achieve success, when you are running your business.

I started from selling other people’s properties, and when I realized that people were telling me that they were comfortable buying land from me because they trusted me, I knew I would succeed in the business . So, that was why I moved a step further. It is your credibility that matters before people start supporting you with fund to start your own.”

Culled From Successdigest