As a property investor, you should know the risks that come with investing in the Nigerian real estate sector. There are several hidden taxes and fees that are not very apparent. It is, therefore, important to ensure that you get your eyes opened to all risks before deciding to buy any properties in Nigeria. Here are some risks that you may want to consider. The legal system gets changed regularly.
Property investors in Nigeria need to know that they face some risks as they invest in properties. Some of these risks include:
- The risk of paying the wrong price for a property
- The risk of paying too much for maintenance and repairs
- The risk of falling victim to property scams
- The risk of falling prey to the adverse effects of the economy and political instability
- The risk of overstretching yourself and getting into debt troubles
Property investors must know by focusing on just one aspect, such as the potential return on investment, they will also be exposed to many other risks. Understanding these risks and overcoming them is essential for any property investor in Nigeria.
A real estate is a popular form of investment in Nigeria. There are several reasons it’s popular, but one of the main reasons is because many people want to invest in something tangible, hoping their properties will increase in value.
This is a perilous type of investment for several reasons, but one of the biggest risks is that you can lose control of your property by not doing enough research into the title deeds.
What Are the Risks of Investing in Property In Nigeria?
You deserve to know all the inherent risks of property investment in Nigeria to face the unexpected.
1. The risk of paying the wrong price for a property
The risk of paying the wrong price for a property is something that every property investor must know. Buying a home can sometimes be difficult and time-consuming.
When you find the right property, you want to make sure that you do not end up overpaying for your investment. You may think that you are getting a great deal on a property, but if you really take the time to do the math, you may realize that it was not such a great deal after all.
Many people do not pay close enough attention to the details when purchasing a new home. They simply see an ad and call the number listed. They may think that this is as easy as it gets, but they are sadly mistaken.
The actual work begins after they have contacted the seller. There are many things that need to be considered before making such an important investment. To help keep yourself from overpaying for your home, try to do your homework.
2. The risk of paying too much for maintenance and repairs
Property repairs can seem like a tedious task, but they are necessary in order to keep your property in good condition at all costs. If you do not properly maintain your property, there is a risk that it could fall into disrepair or even collapse.
The cost of repair work can vary widely depending on the type of repair work required, the extent of the damage, and the location of the property. But you need to put this cost in mind before deciding to invest in a property.
3. The risk of falling victim to property scams
There is a widespread proliferation of illegal real estate schemes in Nigeria. There are those who will pose as government officials and even engineers and solicit for upfront payments. This is common in cities like Lagos and Abuja.
Not that all the real estate investments in Nigeria are fraudulent, but there are some genuine ones with reasonable returns on investment (ROI). However, you must be extra careful with investing in properties by doing due diligence.
This does not leave property agents out with this common practice of scams. They can take a consultation fee from you and never show up. That’s because they are fake and know no property vendors to join you two. We scrutinize our estate agents on this website.
4. The risk of falling prey to the adverse effects of the economy and political instability
While the news on the Nigerian economy is mostly negative, it is not all doom and gloom. The country, which is Africa’s most populous nation, has enormous potential. Oil brings in foreign currency while agriculture offers fertile land for food exports.
Investing in real estate in Nigeria still offers investors many opportunities despite the risk of falling prey to adverse effects of the economy and political instability.
The Nigerian economy has been on a downward spiral since 2009 due to lower oil prices, security issues and corruption. As a result, it has suffered from high inflation, rising unemployment rates and devaluation of its currency.
These factors have had an adverse effect on real estate in Nigeria by slowing down its growth rate.
5. The risk of overstretching yourself and getting into debt troubles
Consider the risk of overstretching yourself by buying too many properties, the risk of your tenants not paying their rent on time, and the risk of Tenant Default.
There is a hidden risk that most real estate investors do not realize. But it is important to be aware of one time before investing in the industry.