Welcome to the Piedras Properties learning center. In this series, we will be looking at real estate investment from a beginner’s perspective. We will begin our journey by sharing our knowledge with everyone, both beginners and experts alike.
Definition of Real Estate
Real estate can be defined as any piece of land and immovable object on a piece of land. It could be the bare land or any other development done on the land. It includes the land, the buildings, fences around the land, and water wells or boreholes done on the land.
When development is done on a piece of land that is not movable, the development is part of the real estate. However, if there is any moveable part of the land, that is not a part of the Real estate. The movable fixtures can be considered as a property of the current owner. They can be sold or removed from the land at any given time.
Every country has laws that govern its real estate. In Nigeria, the practice is Nigeria is governed by the Property Laws of Nigeria. Property law practice in Nigeria involves the process of acquisition of land and devolution of real property.
TYPES / DIVISION OF REAL ESTATE IN NIGERIA
There are three basic categories of Real estate in Nigeria.
- Residential Real Estate
- Commercial Real Estate
- Vacant Land
RESIDENTIAL REAL ESTATE:
Residential real estate involves the construction and sales of homes. This is where a person pays to live in the property. How long a person (tenant) stays is dependent on the agreement and payment made. Most agreements between tenants and the owners (landlords) usually last from 12 months and above in Nigeria. The tenant may choose to pay for more years, as agreed with the house owner.
Some of the type of houses in the residential estate includes:
Residential real estate is a common starting point for aspiring real estate investors because it has a lower cost of entry and can be easier to obtain financing for than commercial real estate. Residential properties are one of the most popular types of real estate to invest in, with multiple types of houses to be aware of. Some of the house types include:
- Single-family homes
- Terraced house
- Cooperative housing (a co-op)
- Duplexes
- Bungalows
- Container houses
- Penthouses
- Apartments
Ways to Invest in Residential Real Estate
There are several ways of investing in residential real estate. Some include:
- Fix n Flip: here, you buy a house for the short term, fix it up (renovate), and then sell at a higher rate. The houses are just bought for fixing and selling purposes.
- Renting: You buy a property and then keep it to rent out. The property is kept long-term. You bear the maintenance cost of this property.
- Extra Space Rentage: you may choose to rent extra space in your house. Companies like Air BNB offer opportunities for homeowners to rent out their extra spaces for cash.
2. Commercial Real Estate
Commercial real estate (CRE) is the second most common type of real estate to invest in. Commercial real estate is any property that is used primarily for business purposes.
Commercial properties consist mostly of office buildings and business outlets. Popular commercial real estate includes shopping centers and strip malls, medical and educational buildings, hotels and offices, etc.
If you were to construct a small building with individual offices, you could lease them out to companies and small business owners, who would pay you rent to use the property: shopping malls, strip malls, and other retail storefronts, banks. Commercial Real estates are more expensive than residential real estate.
Commercial Real estate is used for any or more of the following:
- Office space
- Hotel and lodging
- Self-storage or mini-storage
- Multifamily (e.g., apartment complexes) properties
- Retail (e.g., strip malls, shopping malls, or individual retail spaces) properties
- Industrial (e.g., warehouses, manufacturing buildings, or data centers) buildings
- Health care (e.g., hospitals, clinics, doctor’s offices, or senior care facilities) facilities
- Special purposes (e.g., church, car wash, or museum)
Ways to Invest in Commercial Real Estate
The most popular of investing in CRE is by renting out units of the property. Examples include the renting of multi-unit office buildings to several businesses, Retail malls, or self-storage facilities which allow businesses to have all their properties within their confined areas. Others are single-unit rental properties such as an industrial building, a daycare, a single dental office, or a retail space.
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3. VACANT LAND:
This refers to the type of real estate with undeveloped, early developed lands. They are used for farmland and ranches. The lands do not have commercial or residential properties. They are often called raw land.
This type of investment often comes with the natural resources located on that raw land. Resources such as minerals, water, and even air are owned by the landowners. Raw land is typically worth less than land that has been subdivided or where the development process to build residential properties — such as a planned urban development (PUD), townhomes, or commercial real estate — has already started.
Ways to invest in vacant land
Investing in vacant land is done with the aim of the land appreciating or being developed by other investors. These lands can also be bought and kept by the investors for selling later on at a higher rate. These lands can be given out for agriculture or even storage temporarily in exchange for money.
FINAL THOUGHTS
There are many ways to invest in real estate, as you can see, including different types of real estate and different methods of investing. As with any investment, before buying a property, it is important to educate yourself on the process based on the specific asset type and conduct your own due diligence.
Whatever form of real estate investment you desire to get into, reach out to us through the chat button or contact us through any of our social media platforms to get started. You can also check some of our Investment packages we have for our clients. Also, see our Landed properties here.
Remember to share this knowledge with your friends. In the following writing, we will be looking at Real estate investing in more detail. Remember to visit our blog on Friday.
