Buying land is always hot. Millionaire Real estate investors say the best time to buy land was five years ago and the next best time is today. But, before you go bringing out your cheque books, you need to understand the land business. Buying and selling land is good business if done correctly. The following are important pointers to help you determine where to buy land.
Establish what you want to use the land for
People buy land for different purposes like buying a house, for commercial use, land flipping, agricultural use, a recreational park etc. To help you get started, answer the following questions:
Set a clear and concise objective for buying land. What do you need the land for?
Determine the most suitable location for your chosen venture.
Define the size required, boundaries and access to and from urban centres.
Verify the title documents of the land. Choose lands with proper land documents.
Identify the problems involved in acquiring the land and evaluate the risks involved. Identify possible solutions before moving ahead with the transaction. For instance, if you decide to invest in a land yet to be excised by the government, take into consideration the consequences should the government decide not to excise the land. All investments have a degree of risk. Choose your risks wisely.
Distinguish between long-term ventures and short-term ventures. For instance, buying land for agricultural use is a longterm venture. Depending on what you intend on planting, it could take as long as five years to see returns on your investments. Land flipping, on the other hand, could reap a good return on an investment after a year or two.
Think long-term. It is always more profitable to buy land where people will settle in three to five years from today. The challenge is, no one knows for sure where people may decide to settle in the future. However, they are predictive economic factors that could help determine where the next people will migrate to.
Once you’ve decided what you need the land for, do your research on the size required and the right location. For instance, if you’re looking to buy land to build a commercial building, you’d need to choose a location where businesses would want to pitch their tents. In the same vein, if you want to buy land to plant cocoa, the first thing to consider is choosing the location with suitable weather for growing cocoa.
Although, millionaire investors advocate for buying land, having a purpose for buying land is the first step in the right direction.
Determine the basic features of the type of land you need
To get the best land deal in the market, it’s necessary to take into consideration certain features like the following:
The land resources, climatic conditions in the area, soil type and landforms. Coastlines in Lagos are prone to flooding during the rainy season. Before buying land, it’s important to examine the soil type and the nature of the land. Would you need to sand fill before building? How much clearing do you need to do?
Examine and verify the survey plan. Ensure the land you want to buy falls within the coordinates of the survey plan. If you’re buying land in Lagos, verify the survey plan at the Surveyor General’s office at Ikeja to make sure the assigned purpose of the land is the same as your objective. For instance, if the land had been assigned for agricultural use only, you cannot buy the land if your objective is to build a residential building.
Take into consideration the existing infrastructure. Is there any access to the highway? What is the distance to the closest urban centre?
Consider the land tenure system in the locality and how it can affect your rights to use the land. There are certain areas in Lagos that require a buyer to see the Oba of the local town before buying land in the locality. Take all these into account when choosing where to buy land.
Finances are a significant determining factor in determining whether or not you can acquire a property. It’s no use going through all the trouble in making sure the land you want to buy is a perfect fit if you don’t have the means to finance the project. The cost of land isn’t just limited to the cost of land per square meter. There are hidden factors that cost money and should be taken into consideration like the following:
Gathering information and researching on the land in itself costs money. The cost of verifying land documents, the transportation cost of going for a site inspection and cost of inviting a surveyor to survey the land all costs money.
Consider the cost of providing support services like clearing the land and paving a road. Some real estate companies bear the cost of clearing, fencing the land and paving an access road. However, in a case where these services aren’t provided, you’d need to determine the cost.
Additional fees like developmental levy, survey fees and documentation dues may not be included in the cost price of the land. Before making a commitment, find out if there any extra fees and when and how these fees should be paid.
Commercial real estate is property exclusively used for business purposes or designed as operational offices. Commercial real estate includes retailers of all sorts from huge shopping complexes to offices, restaurants, kiosks, hotels, pharmacies, gas stations, etc.
Why should you invest in Commercial Real Estate?
Without a commercial real estate, there will be no organized venue for business to successfully carry out their activities and cater to customers conveniently. Companies generally rely on commercial investors to erect structures in the allotted commercial zones and lease the space to them for an agreed period of time. Other than creating a cost-effective and profitable business space, commercial real estate investors, help boost local businesses.
When commercial real estate investment is rightly done, it is extremely lucrative and serves as a secure source of income when compared to the volatility of the stock market. A bulk of the returns from investing in commercial real estate comes from tenant rents. Typically, business spaces are leased out to tenants for an agreed period of time, say two years and even up to ten years. After this, the tenant may choose to renew the lease period, or the property is refurbished to suit another business.
There are two major ways of investing in commercial real estate. They include:
Here, investors become the landlord through direct acquisition of the physical property. Unlike residential real estate, commercial real estate requires substantial capital to purchase and revamp to suit the type of businesses expected to move in.
Investors most suited for direct investment need to have an in-depth knowledge of the real estate market and the interworking of the local economy or work with a real estate company that does. Commercial properties are a high-risk, high-reward real-estate investment. As such, if it’s not done correctly, losses may be inevitable. For instance, there are certain streets like the Admiralty way in Lekki and the Computer Village at Ikeja that are booming locations for commercial real estate. There are also certain areas that aren’t suitable commercial zones. The result of carrying out a proper feasibility study before investing in an area is a high vacancy rate or low occupancy rate. There are a good number of unoccupied plazas around Lagos, especially those located away from major roads. Most businesses would typically go for areas that offer good visibility to attract more customers.
Determining the ideal location is a bit tricky as the most populated street isn’t always the high in-demand location. Also, the type of structures built should be suitable for the businesses that would likely thrive at the location. For instance, constructing a building with the purpose of creating co-working spaces is completely different from a building constructed to house a restaurant.
The ideal property is in an area with a high demand for commercial real estate and low supply, coupled with favourable rental rates. The economic growth of an area greatly influences the value of commercial properties.
For the third year in a row, Hong Kong’s Central district is ranked the world’s most expensive office space, primarily due to the high demand from Mainland Chinese firms. The average office space in Hong Kong’s Central costs $306 per square foot per year. That’s roughly N 120, 000 per square foot.
Alternatively, indirect investment allows investors to invest in companies that primarily finance or develop commercial properties like banks or real-estate companies. Another option is owning various market securities like Real Estate Investment Trusts (REITs) and exchange-traded funds.
Real-estate investment trusts (REITs) are corporations or trusts that operate as income-producing real estate. They use the pooled capital of investors to purchase and manage income property, which is often commercial real estate. REITs are traded like stocks, where you can buy or sell REITs through a stockbroker.
The profit potential of investing in commercial real estate is limitless. A classic example is how McDonald’s – a renowned fast-food company – derives most of its profits from its property assets and not from selling food. With its vast global network and expansion, McDonald’s owns valuable property in premier locations all over the world.
Advantages of Commercial Real Estate
Profitable Lease Rates
Commercial real estate pulls in large amounts of cash flow from its attractive leasing rates. In areas where there’s a high demand for commercial real estate and low supply, limited by land or law, the value of commercial real estate skyrockets, allowing investors to make fantastic gains.
Long Lease Periods
Unlike residential real estate, commercial real-estate benefits from comparably longer lease contracts with tenants. These long lease periods give the commercial real estate holder a stable cash flow and high occupancy rate of the building.
Other than the attractive lease rates, high occupancy rate and providing a stable source of income, commercial real estate offers the potential for capital appreciation. As long as the property is adequately maintained and renovated.
Investing in commercial real estate is a profitable and effective way to diversify your investment portfolio. Give us a call today on 09081234564, 09095757575 to get our latest juicy investment deals.
Land tenure can be defined as the rights of ownership a community or an individual holds with respect to land and the resources on and in the land such as trees, minerals, pastures, and water. A land tenure system defines the rules for allocating property rights, the transference of ownership rights, how land should be used and managed in a region.
In Nigeria, the various land tenure systems vary from state to state and from village to village. An ideal land tenure system acts as a cornerstone for economic growth and an incentive for investment. It makes room for secure land rights and ownership, the inclusion of vulnerable groups like women and low-income earners and reduces conflict. When land rights are unsecured, it leads to conflict, instability, tribal wars and discrimination against women – denying women the right to own or inherit the land.
The following are the major forms of land tenure systems in Nigeria:
The communal land tenure system
Open Access Land Tenure System
Inheritance tenure system
Leasehold tenure system
Gift tenure system
Rent tenure system
Freehold tenure system
Tenants at the government will
Communal Land Tenure System
A communal land tenure system ordains the community head as the governing power of the land. Although the land jointly belongs to the community, the head of the community takes the decision of how the land is distributed. This land tenure system is typically used for large scale farming. On the flip side, the land cannot be used as collateral to obtain a loan.
Open Access Land Tenure System
Open access tenure is a tenure where ownership rights are unallocated to anybody and nobody can be excluded. Open tenure typically includes marine residency where access to the high oceans is largely available open to anybody. This might extend to forestry like rangelands and woodlands. Here, animals are allowed to graze freely.
Inheritance Tenure System
Inheritance land tenure system is the transference of land ownership rights to a successor after the death of the primary owner. Under this system, the next of kin of the owner- usually the children- assumes the role as the new owners of the land. The major disadvantage of this land tenure system is, this land allocation could cause disputes between the beneficiary and other family members.
Leasehold Tenure System
The leasehold tenure system is having ownership rights over a property for a given period of time. Simply put, it is owning land temporarily. Here, the temporal owner is called a tenant and the principal owner is called the Landlord. The land in question cannot be used as security to obtain a loan. Depending on the lease period, this system is suitable for permanent crop cultivation.
Gift Tenure System
The gift tenure system is the voluntary transfer of ownership rights from the landowner to another. This type of land ownership can be used as collateral to get a loan by the new landowner. The new owner also enjoys the full benefits of land use. However, under this form of land tenure, the new ownership status can be revoked by a court order.
The rent tenure system is similar to the leasehold tenure system. The main difference is the duration of time the tenant is allowed to use the land. A lease period could go on for many years but the rent period is typically shorter. Temporal ownership is received after an agreed sum of money is paid. This form of land tenure system discourages the tenant from paying for a long-term plan.
Freehold Tenure System
In this case, an individual or a group pays an agreed sum of money to get the right of ownership to a part of the land. Buying land under this tenure can be expensive. The advantage is, the land can be used to source loans from a financial institution.
Tenants at Government Will
The government can allow a portion of land to an individual or a community. A good example is the Federal Government giving a massive portion of land to farmers to foster agriculture at a low cost. Although the individual or community generally has full autonomy to the usage of the land, the land cannot be used as collateral for the loan.
Here’s how you can become a landowner:
Other than inheriting land or receiving land as a gift, you can become the proud owner of the land at Lekkivale Estate, fair and square. LekkiVale Estate located at Ibeju-Lekki has a C of O land title and instantly allocates your portion of land once payment is complete.