How to make passive income with real estate in Nigeria

Passive income with real estate provides an opportunity for diversified portfolio

Myth: You must own and manage the property to make income. True or false?

Fact: You do not have to be landlord managing apartments or properties to make passive income from real estate

When Business Insider reported that financial planners quoted real estate as the winning mode of passive income for their clients, one would expect that most of them are landlords. However, that is not the case.

With the world’s citizens needing to adapt their lifestyles, also came the need for all cash expenses to be accounted for as either making money or serving actual necessities. So gone or limited are the times in which a client will patronize you without getting what they term as ‘full value’ or some returns on their investment.

The report went ahead to explain the means of investing in real estate that they employed to make such returns to include:

1. House hacking – renting out a room or parts of their property for a period of time
2. Investing in REIT’s for monthly returns

These methods are completely acceptable here in our clime, but there are slight variations that you need to make so that they can work for you.

First, let’s define what passive income is.

“Passive income includes regular earnings from a source other than an employer or contractor.”

If we are going to use this definition, then, some of the currently winning strategies to earning passive income with real estate in Nigeria are:

1. SHORT TERM RBNTALS: Whilst the highest number of these opportunities are implemented by people who are buying their units, there are also a few who are doing this without owning but leasing or renting the apartments for it. Short term rentals are more commonly known as short-lets & Airbnb and they are managed like hotels on a smaller scale.

• BUYING CHEAP AND RESELLING: This strategy might take a while to complete because most of the cheap offers present are off-plan investment options and for those who can take the risks will buy then and sell when the property is built and has appreciated. Other avenues of getting cheap properties include buying distressed offers for property that the owners are needing to let go off.

RELATED STORIES:

• Is your home a liability?
• Read this before you invest in that off-plan property
• 5 reasons why now is the best time to invest in real estate
• 8 most important facts you wish you knew before getting into real estate

• LEASING: For areas that are currently being rebuilt and/or upgraded, there are a few offers for investors who want to own a property at a lesser amount to the cost of buying. Do you know that you can get a 2-bedroom for less than 10 million Naira? Yes, on a lease agreement you can, and also for as long as 15 years and you can be earning income from the units.

• INVESTING IN DEVELOPMENT PROJECTS: Because developers need a source of income, they are open to private investments for which they offer a percentage as an added return on investment. These amounts can be as minimal as 5 million Naira and will be calculated per calendar year (ie 12months).

PS. Ensure to do your full diligence here and before getting involved

• INVESTING IN BUSINESSES THAT ADD VALUE TO PROPERTY DEVELOPMENT: Such businesses could include a hypermarket, laundromat or even a children’s playground that will be a driving force to differentiate the project as a family-friendly residential community.

Are you already investing in real estate? Share your best practices for investing in Nigeria.

And if you are not, which one would you like to know more about so you too can start earning money from real estate.

Till next time, I remain your ally in real estate.

For more insights on real estate investing, get Lerato’s e-book here