Revealed - 8 Ways a Small Player Can Cream Off Mega Profits From the Property Market.

Property is a money spinner, we all know, but it's also a high-cost investment. The huge financial outlay it takes to acquire property generally leaves it in the hands of the wealthy. They earn the big money it generates (especially through capital appreciation), leaving those without the financial muscle as on-lookers and usually tenants in their property. But really, is it totally out of the reach of a small player? Not exactly, because there are niches of the Nigerian property market where he can play and still earn good returns. Read this if you're wondering how.

Why You Should Be Interested
If you are seeking to build wealth, a well-diversified portfolio of assets will help you achieve a fortified financial treasure. A decent number of the world's richest people, you probably know, built their wealth in real estate. More importantly, many started small and grew big over time. Their successes owed more to strategy than their capital outlay. The implication: even without much money, you can replicate their success by applying same or similar strategies or, better still, developing an effective self-crafted approach.

Getting Started Your Own Way
With limited resources, how can you break out of this property-is-for-the-rich syndrome and find a niche to play in the property market? Given the profit potentials of real estate, shouldn't it provide you another spring-board to financial breakthrough, if only you knew how to find a window to launch into it? If you are ready to stretch yourself into this turf, here is an eight-point guide to hand-hold you to success.

1. Invest In Property Companies
This is perhaps the easiest option, especially if you have very limited funding at your disposal: buy into companies that invest in real estate. For the quoted companies, this is a hassle-free process - you just buy their stock on the Nigerian stock exchange. The key attraction here is that this option is ultra-empowering, enabling even a student that has just N5,000 to become a real estate investor. There are other attractions. The company you buy into is run by a management that has relevant expertise and a pool of resources to invest even in costly but highly lucrative property businesses, indirectly giving you a bite into these otherwise exclusive market segments. If your investment fund is managed by a fund manager, you enjoy another level of expertise and diversification: the manager can switch funds based on the performance of the property companies.

If you are going for quoted Nigerian companies, your two major options today will be the UACN Property Development Company PLC (a developer and investor) and Union Homes (a primary mortgage institution financing housing projects and often co-investing). Unquoted ones may also offer an opportunity to invest, so make inquiries.

2. Buy Into a Fund That Invests in Property
Obviously, you don't have to buy a house to reap returns from real estate. Just as with buying units of share in a property investment company, you can buy into an investment fund that has an exclusive or strong focus on the property market. Many Nigerian banks and other financial institutions manage funds that invest in different economic sectors, including real estate. What's more, these funds are managed by trained, experienced professional managers who possibly can earn you more mileage. Besides, because of critical mass - there are many investors, creating sizeable investments funds - they can play in markets segments that you can't access, giving you better leverage. So, don't wait untill you can build a house to enjoy property earnings; invest through a fund.

3. Go For Land Speculation
For reasons of limited funding or pure investment strategy, land speculation may also prove a lucrative engagement for you. There are those who focus on this investment channel: buy land in up-coming areas where you foresee future growth and price appreciation and wait. Often the result comes quickly, while in other cases, a protracted wait may be required. If you choose well, excellent returns will be your reward. Today, much of the land lying from Aja to Epe in Lagos has been bought off, though largely undeveloped. Many of the owners are pure land speculators waiting for the right moment and price. With the big projects on hand in that area (EPZ, etc), they can hardly be disappointed.

If you choose to pursue this strategy, a word of caution. Land title, especially when you fail to develop promptly, could get slippery, particularly in high-demand locations like Lagos. Be sure you deal with rightful owners. A good lawyer, versed in land matters, will also be a good safeguard. You may effect some development, if you can afford, to secure effective possession over the waiting period.

4. Buy And Renovate
To minimise your outlay, you may also target fairly worn or even dilapidated structures which you can secure at a bargain price. If you buy right, the cash outlay plus a reasonable cost of modest renovation will still leave you at a comfortable investment cost. Most times, that modest renovation you carry out will turn the property around and catapult the value. You can exit quickly, having made a decent margin.

If you go on this option, a key factor to watch is the cost of required improvements. If you grossly underestimate this, you could end up with a huge hole in your pocket. The lessen: get reliable professional assessment of the scope of deterioration and the necessary scale of restoration work. Cost carefully, adopting a worst-case approach, to determine how much to factor in for renovation cost when buying.

5. Go for Buying to Redevelop
Buying to redevelop is similar to renovating, except that the old structure will not count as it will be totally uprooted and replaced. A bigger investment outlay is therefore implied. It may therefore not be exactly for a small player, depending on the location. This strategy will work well if an aged property is located that has some growth potentials. Being a developed structure, it is easier to get mortgage funding from financial institutions to acquire and even rebuild it. The poor condition of the property could help you secure it at a bargain price.

6. Focus On Commercial/Market Developments
Some investors focus on developing commercial outlets (stores, shopping complexes, office space, warehouses, etc) in strategic business areas. The size of such investments would vary, but a small investor could still find space in this market segment. Shop spaces are not very cheap and often keep spiralling in rentals, meaning more income for the owner. Building a string of shops, which will tomorrow command high rental value and market price may simply require taking pains to identify potential high growth locations. Once a residential or business area grows in population density, the value of commercial units quickly goes up because they will be in demand. Even a small shop space in such location could become a profitable investment. The point here is to think small while aiming big.

7. Log Into Residential Accommodation Development
For cities like Lagos, Abuja, various state and commercial capitals, residential accommodation will remain under pressure, given the acknowledged low ratio of the housing stock. The population growth has continued to out-pace the snail speed of housing development, leaving a huge, yawning gap. Little wonder that vacant property gets quickly snapped up. What this says is that residential accommodation will remain good business in a long time to come. With little funding, what can you do? Look for outlying areas and take on a small unit you can handle. Somebody will pay to move into it. It is an investment and will still yield returns to you. Don't stay waiting to build a 'complex'.

8. Finance Any Option Using a Mortgage Facility
We have touched on various ways you could enter the property market using the limited funding at your disposal. The other truth is that you can fund any property opportunity using a mortage facility, provided you have the capacity to borrow. Usually, the property itself is the collateral, so not having a current property will not stop you. How do you get a mortgage facility? There are several mortgage institutions, some quite active in mortgage funding. Most universal banks also offer mortgage products today. A first step will be to find their requirements and how to structure a request. Armed, you can begin your search for bargain property targets.

The list here is certainly not exhaustive, but throws a challenge to you initiate some action to earn from the high-paying real estate sector. Unless you deliberately choose to stay off, it is clear that there are creative ways to get your hands into this market. You only need motivation, focus and a strong will to achieve.