Despite the damages of the covid-19 pandemic on the Nigerian economy, real estate investment is still all-time high – proving to be the best form of investment in the country. And the rental property is in high demand as the country’s population continues to rise.
If you have been thinking/planning on venturing into rental property investment, this article is going to teach you just all you need to know to get started and make wise decisions.
Before we dive into the keys to mastering rental property, let’s look at what residential property is.
What is residential real estate property?
Residential rental properties are homes that are purchased by a real estate investor and occupied by tenants on a lease or other type of rental agreement stated by the homeowner.
This is the most popular type of real estate investment in the world. And it is very lucrative too – if done right. However if not properly done, rental property can be a pain in the ass to own. This brings us to our topic of today “ keys to mastering rental property”. With this knowledge, you will learn what it takes to acquire a rented home at a good deal, manage them and make a high profit.
Without further ado, let’s dive in.
4 Keys to mastering rental property
Know the rental market
Just like every business, the first step is acquiring knowledge about the business before investing. Before investing in real estate, your first step should be to know the market. Market knowledge is the fundamental skill an investor must-have. Without it, you’ll be lost and could make an ill-informed decision which could cost you lots of money.
Also, the research will help you uncover all the hidden secrets in the real estate industry where you own or planning on acquiring rental property. You see, many investors avoid this phase because of the amount of time and work involved. For example, you could decide to start your research by speaking to house owners in the neighborhoods where you intend to buy property to get some knowledge of the market. This could take you days and many investors do now have time for this.
However, you must know that this phase is very important if you want to invest in rental property because knowing the rental market will help you decide if the neighborhood is a good fit for your goal. So avoiding it is not a wise thing to do. Instead, you can hire a professional realtor to do the research for you. However, if you have the time to do it yourself, Here are things to look out for when seeking rental property knowledge in Lago state.
How do you know the rental property market?
Seeking rental property market knowledge starts with research in the city where you plan on investing. For instance, your desired location is Ibeju-lekki. So what do you do? you start your research by researching about Ibeju-lekki. You find out the safety of properties in Ibeju-lekki, find out about their local market, etc.
Ibeju-lekki is a local government in Lagos state. It is also known as the new Lagos due to massive development going on there. Let’s take a look at some of these developments.
Current industrial developments along the Free Trade Zone road are
(1) Power oil production plant
(2) Lekki Free Trade Zone, which houses the Dangote refinery, Dangote Fertilizer, and Petrochemical Plant, Lekki Deep Sea Port, and other industries as well as Multi-nationals.
There are other notable developments within that axis and they include the Pan-African University new campus and the site for the proposed Lekki International Airport. Average home price: ₦150,000.
The bottom line of knowing your market If you do your market research, you will know that each market will bring a unique tenant – and you will be better prepared to connect with that tenant and achieve success.
Know What type of property is right for you
Another key to mastering rental property is knowing what type of property is right for you based on your goals.
Rental property is a very lucrative business. At the same time, it is risky. So as a prospective investor, you need to know how much risk you can take, and objectives also.
It’s important to know these things because it will help guide you in choosing your sub-market. Once you’ve done your market research and know what your goals are, you will be able to determine the best area to help you achieve your goals.
For instance, I have N150,000,000 naira and I want to invest it in a residential rental property. Should I buy one house that’s newer and in a fast developing area – or should I buy three older homes in more challenging areas for N50,000,000 each?
As a smart investor with a good knowledge of how the real estate sector works, The first thing you should do is to find out the average rent in these different areas, average maintenance costs per year. With these findings, you will be able to make a better decision.
Know your rental property contractor
Once you’re done with your market research and you’re sure of the type of property that is right for your goal, the next step is now is time to look for a contractor who can get your property ready to rent. At times this is the stage where most people find very difficult because getting a reliable contractor can be very difficult because using a contractor that is not reliable can cause a lot of problems which may lead to delay in getting your home ready on time.
How do I get a reliable contractor?
To get a good contractor who will deliver your project as at when due, make sure you carry out some research on the contractor – find out about their previous jobs, ask their past clients about their performance. Most times reliable contractors are expensive. But using them can save you a lot of stress and guarantee you a quality job.
However, it is tempting to find and use a contractor whose prices are the cheapest. And we understand the need to handle your investment wisely…but be careful; you often get what you pay for and end up even spending more than the amount you thought was too expensive.
However, you can get a good contractor at a very reasonable price and you will marvel at their work. So at times, price is a not defining factor. The best way is to check their previous jobs. And when you are satisfied with your findings, partner with them.
Know Your Tenant
Now your contractor has done a good job to get your rental property ready, the next step is to start renting it out. This stage is very important. Listen you might have gotten the other stages right, but if you are not very careful on the type of tenant you give your hour to for rent/lease, you may regret owning a rental property in Lagos State.
Because there’s more to property management than just “maintaining” the property. If this were the case, then you would be able to hire landscapers and maintenance workers and watch your wealth grow. You would be able to sit back and have prospective tenants knocking on your door.
To achieve success with a residential rental property, you need to find the right tenant – a tenant who is respectful of your property. Not the type that vandalizes your property or finds it difficult to meet up with his rent when due.
This is one area in which a property management partner is highly recommended. And if you need a reliable and competent property manager to manage your properties, Contact Bethel realtors & management limited.
If you want to be a successful residential property investor in Lagos state, you need the service of a competent property manager to manage your properties and ensure you get your rent as at when due. Saving you all the stress of screening tenants and all the other stressful work that is involved in residential rental property investing.
If you need a competent real estate management team to manage your properties and ensure maximum return on your investments, contact Bethel realtors & management limited 09024554979, 08034503952. You can visit our head office Suites 201 & 202 Akord shopping mall, Bogije, Ibeju-lekki, Lagos state.