Looking to buy a property? Here are the top ten financial tips to help you save towards buying property in Nigeria.
Let’s start with the basics, except you inherited property or got it as a form of payment or gift, if not, you need money. An outright payment would be ideal but what here’s what you can do if you’re perhaps a salary earner or don’t want to borrow money from the bank.
Determine how much you can afford each month
Your first step should be to evaluate the cost of the property in proportion to your regular income and then, decide how much you’re willing to set aside. For instance, if you earn N150,000 every month and the property you’re looking to buy costs N3,500,000. You can decide to set aside N50,000 every month.
Consider this rule of thumb, aim to spend no more than 25% of your monthly take-home pay on your property payment. Depending on the number of responsibilities, you have, avoid tying up too much of your monthly income to avoid being stranded in the face of emergencies or to embrace other opportunities.
Evaluate the worth of the property you’re buying
Before you go on saving a huge part of your income to acquire property, you need to evaluate the worth of the property. Is it really worth it? What’s its estimated ROI?
The goal of acquiring any property is to leverage on future gains. Let’s do the math, if you decide to buy property at Egbeda, you need to ask hard questions like what would be the worth of this property in five years? What do you intend doing with it? What’s the estimated ROI suppose you to decide to resell?
Where property plays a huge role in deciding the value of the property. If you decide to invest in owning land at Ibeju-Lekki today, you should expect at least a 600% ROI in the next five years. Why? Because this region is rapidly growing and has attracted massive industrial developments.
In addition, location determines the cost of the property. Don’t expect a property located at Ikoyi for example, to cost N4million. Here again, what’s the possibility of having a high ROI on property located in this area.
Aim to make between 10% and 20% for your down payment
If you have found the ideal property, ensure you put down at least 20% of your total payment to lower your interest rate. The one benefit outright payment has over installment payment is the absence of accrued interest rates.
For instance, a plot of land that cost N5million ends up costing N6million due to the added interest rate. Aim at starting with a down payment of at least 20% to help lower your interest rate. Always do the math.
Also read: Top 7 benefits of becoming a landlord
Set up a Property Fund
You can acquire property if you set your mind to it. Don’t let the seemingly huge sum scare or overwhelm you. Take baby steps!
Start by setting up a separate account for the sole purpose of getting your dream property. Next, divide the total cost of the property and note down how many down payments you’d need to make. This will help you determine how much you need to save daily or monthly.
#Quick tip: set up an account that makes it almost impossible to withdraw money for any other purpose except buying your property. You might think you’re financially disciplined, but you’d be surprised how fast you swipe your card. Ditch all cards or apps linking you to that account.
Look For Ways To Cut Back On Your Daily Expenditure
If you had to write down every naira, you spend, you’d be shocked how much you’re really spending on eating out, buying snacks, drinking on Friday nights, buying new clothes and all that. Identify ways to trim your daily expenditure, so you can put more towards your down payment. Here are a few ideas:
- Prepare your meals at home.
- Cut back on Friday night hangouts
- Get a wig instead of frequently changing your hairstyle.
- Determine whose aseobi is absolutely necessary.
- Start a side business.
- Work overtime if you get paid for overtime.
- Get a second job.
- Leave earlier to avoid getting stuck in traffic to lower your fuel consumption.
Sell off belongings that you do not need
Look around you and you’d notice that extra couch or home appliance you hardly use. If you take a closer look at all the things you own, you’d realize half the stuff you keep around, you don’t really need them. Think about it? Your house is probably filled up with things you’re keeping around ‘just in case’ you need them.
Consider selling stuff you do not need. Evaluate the value and auction them online or sell to close friends and family. This is a quick, convenient way of raising money and a great way of de-cluttering your house.
Move into a smaller, less expensive apartment
If you can move into a smaller, less expensive apartment then you should. Consider moving in with your friend, if you’re single to split the bills. The goal here is to pay the least amount possible on rents and save up the extra towards acquiring your own property. The truth is, when you make up your mind to own property, you need to downgrade your current living conditions to achieve your goal.
Let’s say you live in a self-con that costs N300k yearly. It would be a good idea to move in with a friend to split the bills in half, letting you save more. Another option, if you have the patience, is to move in with a family member while you saving up.
Make a budget and stick to it
Making a budget is one thing and choosing to stick to it is an entirely different thing. It’s no use cutting down on your daily expenditure or moving in with a friend or family if you’re going to use the extra money to pay for a new iPhone or splash on an insignificant event.
Learn to make wiser choices, pay in the money directly into your property fund account, if you can’t help yourself. Also, pay close attention to what you spend your money on. Make a list of all the important things you need and stick to it. Remember, you’ll be rewarded for your frugal habits, plus you’ll learn how to manage your finances.
Encourage Your Spouse To Be A Part Of The Saving Process
If you’re married, it’s a clever idea to carry your spouse along. Encourage your spouse to get involved in the saving process. It’s important for both on you to be on the same page financially. Let the better saver be in charge of the property fund, that way, the urge to spend would be reduced.
Pick a trustworthy team, including a real-estate agent, an architect, and/or a contractor
This step is as important as your decision to buy property in the first place. There’s no use saving up only to lose all your money to fraudsters. Choosing the right people to aid you to navigate the buying process safeguards your investment.
You need to be extra cautious when buying property in Nigeria. You need to cross-check and double check everything. To do this effectively, you need to work with a passionate team that puts your interests first. Choose a company you can effectively communicate with. Here at Sevic PDC, we assure complete transparency and a team of trustworthy people you can rely on.
We will work with you to choose a payment plan that suits your budget while guiding you toward making the best deal possible.
Get in touch with us today and achieve your dream of becoming a landlord.