How to Evaluate Real Estate Investment Properties in Nigeria.

Roofone
2 min readJun 18, 2020

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Real estate investing is simply a vehicle to improve your finances, so it is important to try to get it right. No one is perfect, but it is good to understand how to evaluate deals, so you get the right one.

Over time, we at Roofone have found out that investors both in Nigeria and in diaspora want to invest in the Nigerian Real Estate but they often have major concerns about it.

Our research has been able to summarize these concerns or pain points into three, namely;

  1. Trust
  2. Data
  3. Security (fraudsters)

The main focus of this article is on pain point #2. From our little survey, we have been able to see that investors want to invest in the Nigerian real estate market but they don’t know how, where, why, and when.

Investors often times don’t know what properties to invest in, it’s either they are not sure about the profitability of a location, they don’t know why they should be investing in that particular property (i.e they have little or no knowledge about the property) and ultimately they don’t know the right timing to make the investment.

To be clear, we believe that buying a home is an investment and this also should be treated as in investment. So whether you are a home buyer or an investor having a property is an asset.

So the question is how do we evaluate investment properties in Nigeria? Generally there are two ways real estate investors make money: through equity appreciation over the long term or cash flow over the duration of the holding period. So, as an investor you have to know which market you want to invest in (Cash Flow or Appreciation?). Often times it’s possible to find the sweet spot in the middle of the two but you particularly have to prioritize one.

At Roofone Capital (roofonecapital.com) we are building a platform that solves all these pain points and you can know more by visiting our website(beta).

Whether you choose the cash flow or appreciation market there are some key metrics you should understand that will help you make better investment decisions;

  1. Net Operating Income (NOI)
  2. Capitalization Rate (Cap Rate)
  3. Return Rate
  4. Cash on Cash Return
  5. Equity Multiple

I will be sharing details about each metric and how to use them to make better investment decisions in my coming posts.

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Roofone
Roofone

Written by Roofone

Making real estate investing safer, smarter and simpler.

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