Our Top Tips to owning your dream home in Nigeria

——  February 13, 2020

Following upon our discussion regarding the two main modes of property acquisition available to those interested in acquiring real estate as outlined in our article Buy or Build – which approach works better for you, we would like to engage in some more in-depth consideration of the factors to consider when embarking on the process of property acquisition mainly through purchase. Notwithstanding, some of the principles to be discussed here would also prove relevant for those intending to buy land for subsequent construction. This discussion we believe, is particularly relevant for Nigerians in the Diaspora looking to invest in property back home as there are countless stories of such Nigerians that have lost funds intended for investment in some form of Real Estate or the other and one phrase that should resonate in the mind of any intending Investor in the Nigerian real estate market is “Buyer Beware”.

Whilst majority of the unpleasant experiences referred to above have to do mainly with the purchase of parcels of land, there are also many other instances that involve the construction process and these are some of the factors that make purchase of an already completed property relatively safer. Nonetheless, even that option in itself is not totally foolproof. Certainly the Nigerian property market still has a long way to go when it comes to security of title but we believe that by following the road map indicated below, you can all things being equal reduce your risks and likewise the possibility of any negative experience to the barest minimum.

1. Determine your budget for the proposed Property acquisition:
Almost everyone desires to own a property but not all may eventually acquire the capacity to purchase one. It is important therefore for the prospective buyer to pre-determine how much he can generate for the intended Real Estate purchase either through personal funds or with the aid of a financial institution. Taking this very important first step should help indicate from the word go whether one could successfully opt for purchase of a fully built house or if one’s financial capacity is limited to purchase of land and subsequently building to one’s taste and at one’s pace. It is of the utmost importance in our view to ensure that one does not get in and then get stuck halfway as this may eventually lead to a significant loss of hard-earned resources.


2. Commence with some preliminary research of your own
In other words – ‘look before you leap’. This is another critical step in purchasing a home that many people ignore but that is really very important. This preliminary research should cover several facets as follows;

  • Endeavour to get an overall sense of the direction of property values in the locality you plan to invest in over the previous one, two years or more.
  • Obtain adequate insight into prevailing rental prices, and ease of letting in the locality of interest if you are thinking of buying for Investment.
  • In addition, if you are buying for Investment, research property management options open to you post-purchase.
  • If you intend to buy into a particular ongoing development, do some research into the background of the developer and ensure his/her track record aligns with your expectations.

The foregoing is an exercise that one can easily carry out oneself via the Internet, in the comfort of one’s home or office and by visiting property portals and websites devoted to the Nigerian property Market. Useful background information can be obtained in this manner that will serve as a foundation for further analysis in the next step.

3. Seek Professional Advice
Even where one is buying a property for one’s own use, real estate remains an Investment and especially where one is buying real estate for Investment purposes, this requirement becomes doubly important. It is highly unlikely that you would proceed to Invest in the Stock market without seeking advice from a seasoned stockbroker who would guide you as to the best stocks to buy at a particular time and why you should buy a particular stock rather than the other. Similarly if you intend to invest some funds or purchase financial instruments for investment purposes, you would seek out a knowledgeable financial adviser towards this purpose. An investment in Real estate is in principle no different and to ensure you optimize the expected returns on your Investment, expert guidance is most advisable. Carrying out preliminary research on your own as advised earlier helps prepare you to identify the right questions you may need to ask and could also help give you an adequate background from which you can determine the quality of professional advice you are being offered eventually.


4. Ensure you do a proper title search on the identified property
When making a decision to buy land or landed property in any clime but especially in Nigeria, one very important issue to take into consideration is the ‘Title’ that covers such a property. This is an area that gives a lot of individuals concern, and we expand more on the issue of land title in our blog on Navigating the house buying process. A “Title” simply connotes the bundle of rights that come with ownership of a particular piece of property and a popular maxim that buyers should be aware of in this context is – Quic quid Plantatur Solo Solo Cedit, which in simple terms mean that, whatever is affixed to land becomes part of it” and in the event one inadvertently builds on land rightfully owned by another party, the implication is that whatever you have built then becomes the property of the rightful owner of the parcel of land.

It is most advisable in carrying out a proper title search to ensure you employ the services of a qualified lawyer who should be able to ascertain there are no encumbrances or undeclared lien on the property Title. Beyond this, you should request the lawyer to obtain for you a Certified True copy (CTC) of the original land title from the relevant land registry whilst also producing a written search report on the property stating his/her findings for your records. In conclusion, one can hardly overstress the fact that establishing genuine Title for any property one intends to purchase is a step that should never be compromised, as interest in land/landed property is probably the most important aspect of the purchase.

5. Consider buying a property within a Serviced/gated Estate
Though different individuals have their preferences in this regard, from our own experience there are many advantages to buying a property within a serviced estate especially for prospective buyers who are not resident in the country. These include;

Good title – Experienced developers of communal estates generally ensure they have sound title prior to commencement of their development. This is in order to avoid possible litigation by their subscribers for title defects that may be discovered in future. Therefore, if you buy into these types of schemes, you are almost certainly assured that the title would be a sound one. This is however not absolutely certain, as in recent years there have been some cases where ownership of some large tracts of land in Lagos changed hands after legal cases that had spanned decades were eventually concluded. Instances of these are the recent Supreme Court judgements with respect to the Abebe Village area on Lagos Mainland and Osapa Village and its environs in Lekki Peninisula . These however appear to be exceptional cases and in any event, the reality of the situation dictated that pragmatic solutions be arrived at that did not result in displacement of any long standing homeowner or resident.

Communal security and maintenance – Most, if not all, serviced estates make use of professional security guards and also ensure the communal areas of the estate are well maintained. This automatically means that there is an eye on your investment at all times as opposed to when your property is on its own and you need to have someone live in an attached Boys quarters if it exists or continually have to send people to the property just to keep an eye on same and monitor its condition.

Value preservation – Scheduled and daily maintenance of properties within serviced estates helps preserve property value. Clearly a property that is not properly maintained is very likely to lose value and where it is being put out for rent, such loss of value is in addition likely to diminish expected returns.

6. Avoid being seduced by ‘Mouth-watering deals’
Most of us would agree that nothing good comes free and also that ordinarily you cannot get something for nothing. Nevertheless on numerous occasions our opinion has been sought as regards some developments where potential subscribers were being offered free additional units if they made multiple purchases whilst unfortunately it has also being our experience to have encountered numerous others who had gotten their fingers burnt in taking up such offers. Whilst one would have imagined that otherwise quite intelligent people would have been able to logically analyse and see through many of such offers (though some are indeed genuine), more people than expected had tales of woe to tell in this regard due to the fact that they apparently allowed themselves to be carried away by the lure of potential easy gain. In the light of these experiences therefore, it may be helpful to make one or two comments regarding such phenomenon.

With regards to sale of plots of land, it is very possible for a developer to make offers of free additional plots if one purchases a certain number of multiple plots due to the fact that in negotiating for the purchase of a large tract of land, the developer had been able to secure very significant discounts from the landowner family, and a portion of this discount, he may now seek to pass on to some of the purchasers in order to hasten up his sales and free up cash. One should note however that such areas where huge purchase discounts from landowners are possible, more often than not tend to be located more remotely from significantly built up areas as well as proximate infrastructure and thus the development horizon for such plots of land may be longer than that for areas nearer the main city.

Concerning the purchase of buildings however, it should be noted that the construction of a building is a complex and involving endeavour which requires considerable resources, and for any developer desirous of remaining in business for the long run, it is important to ensure recovery of the resources expended on every succeeding project and enough returns to execute the next one. Thus where a developer’s sale prices are more or less at the same level as other developers in the locality and a promo of say ‘buy two get one free’ is being advertised which translates to a discount of about 33%, then the question the prospective buyer has to ask himself is whether with similar sale prices as other developers, this particular developer has been able to achieve a markup of at least 43% on each unit after allowing for all construction, infrastructure and land costs. On the other hand, where a promo of ‘buy one get one free’ is being advertised – a discount of 50%, the question becomes one of whether a markup of over 60% could have been realised since the developer still needs to make a good enough margin to make the development worth his while. Simple logical analysis of this type should easily reveal to any prospective buyer the credibility or otherwise of the offers being made.

In concluding, our readers should note that whilst the forgoing may not be an exhaustive discussion on steps to take when trying to acquire a property, we do believe it can nevertheless serve as a useful guide if the principles enunciated therein are carefully followed.  

And on that note, we do wish you the very best of luck in making that Real Estate decision!

Posted in GeneralTips