Land flipping is one of the methods you can use to invest in real estate in Nigeria. Real estate is among the biggest drivers of the Nigerian economy and is a sector where you can make a lot of money. This can be witnessed in cities like Abuja and Lagos where millions can be made over night.
Flipping land is perhaps the best way for a real estate investor to get started in the business. This is especially true in a developing city like Abuja, where there is plenty of virgin land. An investor with foresight and a bit of patience is bound to profit by flipping.
In this article, we shall look into the advantages of land flipping and how you actually go about doing it.
What is land flipping?
In essence, land flipping is when a buyer purchases land from a seller at a low price and then goes on to quickly sell that same land for a profit. This land is often flipped “as is” i.e. little to no improvements are made.
The buyer uses his knowledge of the real estate market in order to source cheap land and then finds other buyers willing to buy at a higher price. Those wishing to invest, frequently outsource this work to real estate agents.
Flipping distressed land can be particularly lucrative.
Why you should flip land: the benefits
Raw land can bring in positive cash flow (if done right) and is a great way to make money precisely because it is more of a hands-off investment, while giving you flexibility to pretty much do whatever you like with it.
As long as you own the right piece of land and have bought it at the right price, you are likely to have less problems than that which comes with other forms of real estate such as homes or commercial space.
Flipping land rather than houses or other forms of developed property, has a few benefits namely:
- Undeveloped land is generally less expensive to buy than developed properties.
- As land is generally cheaper, you can start small and grow your portfolio big enough to eventually be able to secure financing for future investments.
- Raw land is cheaper to maintain and you pay little to no taxes even if you have to hold onto your investment for a long period of time.
- There are fewer unknowns when it comes to land flipping: no windows to replace, no wiring to do, no damp, no leaky roofs etc. Essentially there is no building inspection to fail.
- There is less competition as not many people have the knowledge or patience to buy, hold and flip for a profit. Most Nigerians are only interested in “building a house”.
How to make money flipping land
In order to make any money on a land flip two things are required:
- You must be able to find cheap land
- You must be able to find land that is or may be in demand in the near future, thus making it easier to eventually sell
Out of these requirements the second one: finding land that is or may be in demand, is the most important. This is primarily due to the fact that although vacant land is a relatively abundant resource, its ultimate value depends on its location.
Barren land that is located in a desert will always be less valuable than that located on the fringes of a developing city. The reason for this is that generally, land located near a city has far more potential uses and ways of generating income than that in the middle of nowhere (a desert).
With this in mind, the best places to flip land in Nigeria are in Abuja and Lagos. This is due to the demand factor. These two cities have a growing direct and indirect demand for land that can be used in a number of ways including agriculture, industry, business, housing, forestry and related.
Abuja especially, is one of the best places to flip land not just in Nigeria, but worldwide. There are many reasons for this but the main one is that Abuja is the capital of the country with the biggest economy in Africa and in addition, Abuja is a developing city. This combination makes for Abuja being a place where real estate prices are guaranteed to rise in the short to near future and thus making it an excellent place to flip land for investors.
How to flip land: step by step
You need to do extensive research, focused on areas that may develop in the near future or are currently developing quickly. The less developed the area, the cheaper land there will be, but there you will likely have to hold onto the land a bit longer for the area to develop before selling. So if you are looking to sell or flip quicker, look at more established places where you can potentially flip in weeks instead of months.
As has already been mentioned, Lagos and Abuja present the best land flipping opportunities for investors in Nigeria. Although these two cities are relatively well developed, there are pockets of places that are still establishing, particularly in Abuja. Abuja is being built in 5 phases and only phase 1 has been fully developed. If you own land in phase 2,3,4 or 5, when development comes to your neighborhood, you are bound to make money.
You can start your search online, but working with an estate agent that knows the market in the location you are considering is wise. Estate agents have insider knowledge and can highlight the best neighborhoods and resulting lands to acquire. In addition, estate agents usually have knowledge on future governmental infrastructure projects which tend to increase real estate prices nearby.
Buy verified land only
Once you have sourced land, it’s time to put in an offer. But before you do that, It is paramount that you do your due diligence so things like:
- Have you verified the rightful owner?
- What documents does the owner have?
- Are the documents genuine, have you checked at the land registry?
- Have you surveyed and inspected the land: location, neighborhood, environment, infrastructure, security, soil structure etc?
- Have you conducted an independent land valuation to know how much it is worth?
When it comes to making an offer, you need to find out the selling price of similar properties nearby. You then need to offer less than what you value the land at and make it clear how serious you are by, for example, telling the seller that you are paying cash and are ready to buy immediately. This is the best strategy to get land relatively cheaply.
Our guide to buying land covers this step in more detail.
Make land improvements
Once you have bought and registered the land, you can proceed to do some improvements, if your budget allows. You need to get creative, so maybe you might clear the area, or create a path that makes the land accessible or even fence off the plot.
If the land has no access to utilities such as water or electricity, you may consider addressing that before you sell. Basically, do whatever you can that will help any prospective buyer see the future potential and value in your land. This will ensure a quicker flip/sale.
Relist you land with a real estate agent
At this stage, you may list your land for sale with a reputable estate agent. You will need to price your land appropriately, ensuring that all the improvement costs are factored in, together with a healthy profit for yourself.
You and your estate agent need to work together to present your land in the best possible way. Whether that means taking professional photographs, drone videos or writing quality descriptions. The key is to give as much information as possible so that a buyer has confidence in purchasing land from you at the given price.
You can then advertise across various channels to include social media, newspapers and real estate portals. The more channels you advertise on, the wider your reach and the better your chances of finding a buyer fast. Facebook and classified sites are two of the best places to get interested buyers.
Make the sale
After getting an interested buyer, you can make the sale and start counting your profits. However, It is important to not get greedy or too attached to a piece of land. You need to be happy enough to make a small but reasonable profit.
If your asking price is too high, it will take longer to sell or not sell at all. The trick is to give a buyer an offer they can’t refuse.
Want to get started land flipping in Abuja? Villa Afrika can help you source cheap land to buy. Get in touch with us today: +234 708 500 8039.
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