Real estate is all about about one thing, location, location, location.
Getting the perfect location is the difference between you buying a land for N5 million and selling it for ₦100 million 10 years later and buying it for ₦5 million and selling it for ₦10 million 15 years later.
To further illustrate the power of location in your real estate investment I want to tell you a story of two men.
The first is Mr Ben, the CEO of a big company here in Nigeria. I won’t bother to mention their name in this article.
So in 2004 he was approached with the opportunity to buy an acre of land at Lekki for less than ₦10 million.
But he declined. He said that Lekki was a marshy land and undeveloped, thus not a smart investment.
So he used about ₦30 million to buy plots in Ikorodu.
The other person is Paul Adefarasin, the founder of House on The Rock Church. He used ₦25M to buy about 10 acres of land at Lekki Peninsula.
Fast forward today Paul Adefarasin’s land which he bought at Lekki for just ₦25M is valued today at over ₦5 Billion Naira.
What about Mr Ben that rejected Lekki and bought Ikorodu?
His land today is worth about ₦150 million and till now he credits his dismissal of the opportunity to buy an acre for just ₦10 million at Lekki as the worst financial decision of his life.
Both these men invested in real estate. Both these men invested almost the same amount with only ₦5 million naira difference yet today one’s investment is worth over ₦3 Billion Naira while the other’s hasn’t even passed ₦200 million.
What happened? What is the difference?
One got their location right and the other didn’t.
Investing in real estate is like planting a seed in the ground. If you plant your seed in a fertile ground it will grow buoyantly and reward you with plentiful, sweet and wonderful fruits.
If you plant your seed on an infertile ground the plant might not even grow and even if somehow it does grow, it will scarcely bear fruit.
That is how important location is in your real estate investments.
Whether you are buying land or houses, You must get your location right for your investment to be very profitable to you long term.
So how do you determine the best location for your real estate investments?
It depends on the type of real estate property that you are going for.
Are you going for houses or are you going for lands?
If you want to invest in houses that you will use for shortlets for example, then the only location you should be considering are developed city centres and urban areas like Lekki, Ikoyi, V. I, Ikeja( very close to the airport) et cetera. If you are in Lagos.
The reason is that your clients will be mostly expatriates on business.
Nigerians abroad that are here for a visit or holiday amongst others and these people are only looking for houses in developed and exciting areas like the ones I mentioned above.
If you want to run shortlet business and you are buying houses in areas like Ikorodu, Ojuelegba, Epe and other developing areas. You have shot yourself in the foot.
Same goes for when you are buying a house for rentals. Buy houses on Lagos Island where your tenants will be affluent and successful people in different walks of life.
This will save you the trouble and hassle of always fighting your tenants when it is time for them to renew their rent because they are unable to pay their rents.
Getting a house in places like Lekki, Ikoyi et cetera also ensures that you can charge significantly higher rents per annum as opposed to developing areas.
You can’t compare annual rents in Ikoyi to rents in Gbagada.
It is the same Lagos but different locations.
So whether you are buying houses for short lets or buying houses for annual rentals, buy developed city centers. That is where you will make significant money.
What about when you are buying lands?
The strategy for choosing the right location is different when you are buying lands.
When buying lands you don’t buy developed city centres. No! That is not a smart move. You will spend more money while getting a smaller ROI.
When buying land the first questions you should ask and answer is, where is the population moving to now? Where are major developments happening now?
Where are investors moving and investing their hard earned funds? Where are the government building infrastructures and projects now?
That is where you should be buying land.
For example, as I am writing this over $30 billion dollars have been invested in Ibeju-Lekki by Dangote, the Lagos state government and multinationals companies like Rendeavour, Indofood, Dufil Prima Plc amongst others.
You have mega projects like the Lekki deep sea port, the Dangote refinery, the proposed Lekki-Epe international airport, amongst others coming up.
All these are setting up Ibeju-Lekki and it’s environs to be a developed mega-city within the next 10 years because when they start working they will attract hundreds of thousands of workers with their families, then thousands of business that will spring up to meet the demand of these new population.
When finally the Lekki-Epe international airport start functioning, it is projected to attend to 5 million customers yearly.
That is 5 million people descending on Ibeju-Lekki and it’s environs every year.
If you buy land now in Ibeju-Lekki how much do you think that land will be worth 10 years from now?
If you do not have the money to buy Ibeju-Lekki, that’s fine. Buy Epe.
When you are buying lands buy lands that are in close proximity to mega-projects like the Lekki Free Trade Zone, The Dangote refinery, the proposed Lekki-Epe international airport.
This way you position yourself to benefit much when these projects become functional.
I know some people reading this will start saying, I don’t want land close to an airport or refinery.
To these people I say, remember that this is an investment. You are buying the land to resell it later after it has appreciated massively in value. You are not buying it to go and build your house and live on it. No!
You are making an investment. Always remember that.
Buy lands close to major roads, buy lands close to water. Lands very close to major roads appreciate fast in value due to their ease of access. Lands close to water appreciate fast too because in the end the people that will buy the land from you are very rich individuals who can bear the cost of sand filling it.
That is what mainly happened in Lekki. The people who could afford to build and live in Lekki were very rich individuals because of the cost of sand filling.
That was how Lekki ended up attracting only the top 1% of Lagos and property prices skyrocketed.
By now you already know that investing in real estate is one of the best decisions you can make in your life.
But what you may not know is that getting the location right, buying the right location at the right time will not only change your life but will also change your financial history of your generation.
Paul Adefarasin invested ₦25M years ago when he bought lands at Lekki, today that investment is worth over ₦3 Billion Naira.
From ₦25 million to ₦3 Billion. This is the power of investing in real estate. This is what happens when you get the location right.
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