The growing population in Nigeria and demand for more living space present an opportunity for real estate investment, particularly in the rental property sector.
In this blog post, we highlighted key benefits of owning rental properties and factors to consider when investing in one.
What Is A Rental Property?
This refers to property that is leased or rented out on an agreed payment for a specified period of time. The property is occupied by a person referred to as a tenant and the owner is referred to as landlord. The tenancy agreement is usually between the the tenant and landlord, or the tenant and the authorized property manager
Benefits of Rental Property Investment in Nigeria
- Steady Rental Income: Landlords generate a regular income stream through regular payments from tenants on the rental properties.
- Capital Appreciation: Rent cost is sometimes affected by the economic fluctuation. When the cost of living increases, the value of rental properties also appreciates, leading to potential capital gains for the property owner.
- Tax Benefits: Cost of property management, mortgage interest, and depreciation on rental property may validate the eligibility of tax deductions which benefit the owners.
- Diversification: Rental properties are also a way for real estate investors to diversify their investment portfolio and reduce risk. This helps to protect their investment against inflation caused by financial fluctuation.
Factors Affecting Rental Property Investment in Nigeria
Growing Population: As demand for living space is greatly affected by population. A significant increase in population of the country will lead to increased demand for housing, both for sale and rent.
High Development Costs For Properties: The cost of acquiring land, constructing a building and maintaining it also affect investors’ decision to own rental property.
Urbanization: This refers to the migration of people from rural to urban areas. The more people migrate to cities for better opportunities, the more the demand for rental housing in urban areas.
Government Regulations and Policies: The Nigerian government has implemented policies to encourage real estate investment, such as providing tax incentives and improving land administration.
How to Choose the Best Rental Property For Your Investment
- Location: The location is a foremost factor to consider when investing in a property. You should consider areas with high demand for rental housing with easy access to good road networks and essential facilities.
- Property Type: To arrive at a decision for your property type, you must first consider who you target market (tenants) are. You should choose a that would fit them in terms of property size, amenities, and budget (rental fee)
- Property Management: If you do not have the right knowledge and experience to manage rental properties, you may hire professional property managers.
- Legal and Regulatory Compliance: To avoid legal complication, ensure that you comply with relevant laws and regulations related to rental property ownership and management. This is to help you make the most of your investment.
Conclusion
Rental property investment in Nigeria is a promising opportunity for individuals to generate income and build wealth. At Sterling Homes Limited, we have a wide range of property options that would meet your rental property investment needs.
We have bungalows, semi-detached apartments, duplex and some other housing projects available for sale. Visit our website to view our listing of available properties and choose one that would meet the diverse needs of your target market (tenants).