To start a real estate business in Nigeria is not a simple task. You need capital to start with, which is very important depending on the scale at which you want to kick start. There are a few more things you need to have before starting up your real estate business.
Excellent knowledge of the local property market is of utmost importance. You can get this from previous experience or by taking a more formal course on the subject.
This will help you provide sound advice and to spot opportunities for profit early on. In addition, you should have a good idea of the costs involved in purchasing a property and how to go about getting a mortgage, etc.
Whatever be the case, in this blog post, I’m going to show you everything you need to know to start a real estate business in Nigeria, most especially Lagos, Abuja. Starting a real estate business in Nigeria is the desire of every Nigerian who has considered starting his own business.
What Is Real Estate Business In Nigeria?
A real estate business is any business related to buying and selling land, houses, commercial property, and other real estate properties.
Real estate agents are one of the most common types of professionals in this business. Real estate agents are responsible for helping individuals buy and sell their property.
This could mean helping buyers find houses to buy or helping sellers find buyers to purchase their houses or properties. Real estate agents can specialize in different areas, like residential properties or commercial properties.
Some other professionals involved in this business are insurance agents, mortgage brokers, and appraisers. Insurance agents help clients make sure that there are no risks involved with buying or selling real estate properties.
Mortgage brokers help clients find loans for financing their property purchases. Appraisers determine the monetary value that each property holds based on its condition and location.
What Does a Real Estate Business Do?
A real estate business is a business that involves buying, selling, renting and managing various types of real estate properties.
The primary services provided by real estate businesses are:
- Real estate brokering
- Real estate appraisal
- Real estate sales
- Real estate management
- Real estate loans facilitation
Real estate agencies make their money from all the people they bring to them as customers. They charge commission for this service, which is calculated as a percentage of the total value of the sale or rental. So if a broker sells a house for N1 million and charges a 5% commission, he or she will receive N50,000.
Some agencies even charge a flat fee for their services, which eliminates any confusion about percentages and ensures that the broker is paid immediately for his work. Some get paid from the buyer’s side as a consultation fee and also from the sellers’ side as a percentage, etc.
How Do I Start My Own Real Estate Company From Scratch?
If you’re a licensed real estate agent, the answer is simple: just start a real estate company. You can form a corporation or limited liability company (LLC) that acts as the brokerage, and then you just hire assistants to help you run errands and perform administrative tasks.
Real estate agents are independent contractors, so they aren’t employees of the brokerage, but work with the brokerage contractually.
One of the largest benefits of being a real estate agent is that you have access to many types of investment opportunities. If you have access to capital, you can find properties in which to invest your money and allow it to appreciate in like a full estate or single landed or complete apartment.
If you don’t have access to capital, you can be a middleman in a transaction involving someone else’s money. Either way, once you handle the deal from start to finish, they pay you a commission for your services.
Of course, starting a real estate agency from scratch takes some preparation and planning. In order to get started, here are some questions you’ll want to answer:
How much does it cost to start my own real estate company from scratch? How many agents do I need? How do I get down payments from my clients? What is my compensation structure going to look like, eta’ll?
What Do I Need To Start A Real Estate Business In Nigeria From Scratch?
You need money for this business. Many people think they can get started with little or no capital. So if your aim is to start a real estate business in Nigeria, you will need to acquire some capital first before you can kick-off.
It will be difficult trying to raise money from family and friends. You will also need to run your business like a proper business if you want to succeed. Therefore, here are all the things you need to start a real estate business in Nigeria successfully.
1. Develop a business plan
Any business, regardless of its size and scope, must have a business plan. The business plan is the road map to your future success, and it will help you lay out the steps for your new real estate business in Nigeria.
The business plan will set forth your goals and objectives, as well as the resources that you will need to achieve them. Without a clearly defined goal, any actions that you take towards achieving success could be perceived as unproductive or even detrimental.
Your business plan will provide you with the guidelines and structure that you need to start and grow your real estate business in Nigeria.
2. Register the business
The first thing you have to do is register your business. This means getting all the permits and licenses before you can operate legally.
The first official step in starting a real estate business is, therefore, getting your business registered at the Corporate Affairs Commission (CAC). Law requires all real estate agencies to register with the CAC. There are two types of registration:
- Limited Liability Company (LLC)
- Limited Partnership (LP)
- Business Name
Each one has its own benefits, and it is up to you which one you wish to choose. It will depend on your personal circumstances and what you want out of the business. You’ll need from N10,000 to N150,000 to register either of the above registration instances.
3. Develop A Marketing Plan
A marketing plan is a written document that outlines what you are going to do to market your business. This is a basic guide for the direction of your business which is usually included in your business plan.
Your marketing plan should be realistic, measurable with definable goals. It should contain details of how you are going to achieve the milestones set in the plan. Marketing plans are flexible documents – they are not written in stone and can change when necessary with approval from stakeholders.
The basic components of a marketing plan are:
- Target Market Analysis – Who is your customer? What do they want? What do they value? How can you reach them?
- Competition Analysis – Who are your competitors in the marketplace? How will you differentiate yourself from them?
- Marketing Strategy – What is the strategy you will use to get your message across to your target market? What will be your advertising budget?
- Action Plan – What actions do you need to take to implement this strategy? When will these actions be taken?
- Evaluation/Measurement Process – How will you measure if the strategy is working or not? What actions will you take if it is not working?
4. Business Website
A real estate business website is a necessity for any real estate business. The best real estate business websites are those that are well designed, easy to navigate and can be viewed on multiple devices such as desktops, tablets and phones.
The best real estate business websites provide content that helps potential home buyers or sellers learn more about the process and the market.
A well-designed real estate website should also be responsive so potential home buyers and sellers can view it easily on their mobile phones and tablets.
5. Invest In Branding
Why do people buy from some businesses and not from others? Great branding!
The brand of a business sets it apart. It’s more than just a logo, company colors, tagline, or slogans. Great branding is all these things, but it’s more.
It’s an experience that customers have with your business that makes them feel something. If you’re in the real estate business, then the best approach is to invest in your real estate business logo design, prints, and other content.
If you are operating on a small budget, then there are some free logo design websites on the Internet which are known for their quality work, such as Canva.com.
However, if you are serious about your real estate business, then having professional real estate logos is very important because they give clients a feeling of trust and show them you are a reliable source for their future investments.
How Much Does It Cost To Start A Real Estate Business In Nigeria?
There are many factors to consider when starting a business, and the costs differ. For example, the size of the property, its location and whether you need to buy or lease will all affect your costs. The location and condition of your office and any equipment and furnishings you’ll need also come into play.
So, in summary, you’ll need at least N650000 to start a small-scale real estate business in Nigeria. You can raise this money by saving money from your monthly income, getting finance from banks or private lenders, or partnering with someone who has the capital to share.
The cost to start a real estate business in Nigeria also increases if you decide to build on a prime location because of the high demand for prime locations. The prime locations command premium prices and are usually found close to city centers. The prime locations are often close to recreational facilities like golf courses, beaches, and parks.