If you want to be successful in real estate investing or real estate business whether you are doing it full-time, part-time, large scale, small scale, there are some basic pieces of information or knowledge that should be at your disposal or at fingertips; and those are the pieces of educational tips that EncumberedProperties.Com will be bringing along your way in this article.
Here at Encumbered Properties, we bring to you details and information of disputed/ encumbered properties and properties that are for any reason(s) are not for sale, we also teach on the common tricks of land grabbers/scammers and on general knowledge of real estate investing and property regulations that are targeted at helping you make safe and profitable investments.
Introduction: Why Real Estate Investment is a Game Changer
Real estate investing is one of the most lucrative ways to build long-term wealth. Whether you’re investing full-time, part-time, on a small scale, or large scale, there are essential principles, you must understand to succeed.
In this guide, I will share insights from my experience as a real estate investor, lawyer, and police officer, exposing the best real estate investment strategies and how to avoid real estate scams.
If you’re serious about building wealth through real estate, read this guide until the end you will thank me later!
What is Real Estate?
Real estate refers to land and everything attached to it, both naturally and artificially. This includes minerals, crops, water, buildings, and roads. In Nigeria, however, minerals beneath the land belong to the government. So real estate has to do with land and it has to do with the natural attachments, the minerals, the crops, the water on it and also the artificial attachment. Artificial attachments have to do with buildings, roads, flowers and every thing man has put in place on the land. Understanding what constitutes real estate is the first step in making informed real estate investment decisions.
Types of Real Estate Investments
When we talk about types of real estate investment we are talking about the different real estate investment vehicles in. If you say you want to do real estate, or you want to do real estate as a business or a part-time business or as a full time business, which of the vehicles in real estate are you looking at? Real estate offers multiple investment vehicles. Here are some of the most common options:
1. Rental Real Estate
Rental real estate investors are those who concentrate in rental buildings. Rentals could be annual rent, it could be monthly rent, it could be six monthly rent, it could be Airbnb. So rental real estate concentrates on renting to people, renting to people. One advantage of rental real estate is this: it guarantees regular cash flow. One major disadvantage you have to look at is it comes with regular maintenance demands from tenants.
You have to be up and doing if you want to keep your apartment attractive to tenants. If you don’t want to record any period of vacancy, the apartments must be in the best conditions always. With that, you can be guaranteed that you will always have tenants. You can actually concentrate on rentals: if you buy, you put it in tenantable condition and rent to people. This is one of the most common aspects of real estate investing.
2. Flipping & Land Banking
. It is a situation where you buy and hold for its value to appreciate. You can buy a property and improve on it, give it a facelift, and, it would increase in value thereafter. You can flip land. by buying an undeveloped plot of land from a developing area and give it some months or years and you will re-sell at a good profit. That is flipping. You can buy a property, give it a facelift, renovate it and resell at a profit. If you have the capital, this is one area that gives a lot of money especially if you know the things to check out for, example: location. We will explain location later.
3. Commercial Real Estate
Commercial properties include: Office spaces, Shopping malls, Warehouses & factories, Hotels & event centers. This type of real estate yields higher rental income but requires strategic location and large capital.
4. Industrial & Agricultural Real Estate
Agricultural real estate is where you buy and you give to people to use for industrial or agricultural purposes. This involves investing in land for: Farming, Industrial production, Large-scale storage facilities
This type of real estate is ideal for long-term investors looking for high-value land appreciation. As an investor, you can concentrate on this aspect of real estate.
5. Real Estate Investment Trusts (REITs)
REITs works the same way publicly quoted companies works. Whereby, the stocks or the shares of the company are publicly traded. Now if you buy the shares of any REIT company you earn dividends. It could be monthly, quarterly, it could be half yearly, it could be yearly depending on how it is structured. The REIT company put money together and now invest it on behalf of their investors into properties. It could be hotel, commercial real estate, it could be agricultural real estate and they pay you dividends.
One other thing you enjoy when you invest in REIT is capital appreciation. As the property where your money is invested is appreciating, the value of each of the shares or stock you bought is also appreciating. For REIT, you don’t need large amount of money. REIT companies I can recommend to you are; Wood Properties Incorporated, TPG Refinance Trust, and PDM Trust.
6. Property Development
Real estate simply means land, and when we talk about land we are also talking about the natural attachment to the land. We are talking about plants, minerals, rocks, water and every other thing that God has attached to any particular land. Natural attachments include crude oil. But in Nigeria, minerals in any land is already taken by the government. It is not part of your land in Nigeria. That’s the law here in Nigeria.
This involves buying land, constructing buildings, and either selling or renting them. It requires significant capital but yields high returns. some of the top property development companies in Nigeria are Efab, Brains, Urban Shelters and Hammers.
Location
A very important aspect of real estate investing, is Location. Location is very, very important because it determines how well your investment will fair. Irrespective of the branch of real estate you choose to concentrate on, location is still vital to it. Because how speedily your capital will appreciate is dependent on the location. So location is very, very key. I will advice that before you buy, visit the location, check out for the things that will attract development faster, or that will attract people to come to that place.
Do you have government presence coming to the place anytime soon? Is there any industry that could be cited there very soon? So these are some of the things you will check out for. The road network too, even if it is proposed, it is very, very key so that you wouldn’t just go into a desert and put your money and the next 50 years the value of the property remains the same.
You always need to visit the place, you need to ask around, you need to ask from people what is that area designated for? What has the government proposed to do in that area? Those are the things you need to know to decide whether that place holds any prospect for you or not. Personally, there is a place I bought land in a part of Abuja. That purchase is over 10 years now, the value of that land has barely appreciated because I bought that land in the midst of nowhere; up till now there is no access road.
What the estate development company that marketed it to me did before they took me to the place was. They opened a pathway through the bush by grading through bushes thereby giving the impression that it was to be a permanent road to be tarred soon. But 10 years after, nothing! In fact the graded road regained it’s natural vegetation. So it is very, very important there is road or potential for road network. Access to the land is key. And you would not have a good idea until you visit the location. Do not buy based on oral explanation. Another reason that will cause you to visit anywhere anybody is marketing to you is when you visit, you might notice pieces of evidence of encumbrance.
How to Identify Disputed Properties
What do I mean by evidence of encumbrances (disputed properties)? I am talking about anything that will suggest that there is a contrary claim, sometimes you visit a site or a property or a land as the case may be. You may notice that the fence has been pulled down, you will have reason to ask “It’s like this place was fenced but demolished, what is the reason for the demolition? If you observe very carefully too, you may notice contradicting beacons; beacons very close to each other, you might notice that there are some beacons that might have been broken off destroyed. These will be red flags to let you know that there might be adverse or contrary claims over that property.
So the number one reason why you should visit any property you want to buy is to confirm that at least that it has prospect of improvement and appreciation in the nearest future. The second reason is that you would check out for red flags that would enable you know that probably the property might be in dispute or not and also if you also suspect that any property is in dispute and you don’t have any means of confirming, all you need to do is to log into encumberedproperties.com. At encumberedproperties.com, you will see list of all the encumbered properties. All you need to do is to type the location.
For instance, somebody is marketing to you a property along Michael Jackson Street Asokoro, all you need to do is to type Michael Jackson Street Asokoro and all the properties that have been flagged (caveated) as encumbered, in dispute, undergoing divorce proceedings, etc.. will pop up. If the property you’re about buying is there, you collect the number of the person who has flagged the property. You call the person to confirm whether you are buying from the right person or not. In most cases you will hear stories like: I’m in court with that person who is marketing the property to you please don’t buy.
Want to learn more about securing safe property deals and avoiding disputed properties? Check out our in-depth guide on avoiding real estate scams
click here for the guide on avoiding real estate scams
Why You Must Take Possession After Payment
My advise from experience in real estate investment, is you don’t leave the land or the property under the management of the person you bought it from. when you buy a property from any particular person, you have finished paying, if you need someone to be taking care of the land, let it not be that it is being recommended to you by the person you bought from; take charge! It is called taking of possession. You taking possession will eliminate the chances of the person who sold it to you still posing as the owner and probably take advantage of that in reselling it to another person.
So once you have completed a transaction over any property, all you need to do is you check out any other person that the original owner or the person who sold to you have put in that position even if the person is there for free of charge is better that you are in charge or you are the landlord of the person who is making use of the place and giving you information of the development about the place and if for instance you are far from the property, I will advice you instead of mounting a big sign board, that this property is not for sale, beware of trespassers, beware of 419ners, you take the survey plan of the property and dash over to encumberedproperties.com and enlist it there as un-encumbered in other words undisputed but not for sale.
When you put it there anybody that puts that location at encumberedproperties.com, will see your name and see your number. Peradventure somebody wants to resell your property, you will get a call from the prospective buyer that somebody is marketing this property to him but he saw it at encumberedproperties platform as not being for sale. So it is in your own interest that you dash over to encumberedproperties.com once you are not on sight to oversee what is happening at your property to enlist it there as not encumbered, not disputed but not for sale. When you do that, you’re saving yourself a lot of heart break, and also you will be saving innocent buyers from buying properties that are not for sale. So you are helping yourself as well as the innocent buyers.
Final Thoughts: Conclusion
In conclusion, we have defined what real estate is, types of real estate investment any investor can go into, importance of visit to the property you are negotiating to buy, what to check out for as signs of encumbrance/dispute and finally the need to recourse to encumberedproperties.com to caveat your property and to search to know if the property you’re trying to buy has been flagged or not. By following our tips, you will hardly fall prey to land grabbers and scammers.
At Encumbered Properties, our mission is to help you make safe and informed property investments decisions. Before you buy, always:
Verify the title deed at the local land registry. Check the property status on EncumberedProperties.com; Consult a real estate lawyer; and Avoid untraceable cash transactions.
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This article was put together by Madueke Enwere: a property lawyer, a real estate investor, a senior police officer and by God’s grace, the founder, encumberedproperties.com