What is Real Estate?
Real estate is a class of real property that includes land and anything natural or man-made (buildings, water, trees etc) permanently attached to it. It is different from personal properties of people such as vehicles, furniture, jewellery that are not permanently attached to it. It is this permanency that gives real estate its value. Secondly, it is not in production such that there is unlikelihood of extreme volatility. At present, the value of real estate in Nigeria is $56 billion and total commission payable is 10% of this, which is $ 5.6 billion. This is a lucrative business that requires wisdom, commitment and persistence to achieve success.
Who is a Realtor?
This is the person who acts as agent for the sale or purchase of buildings or land, whose job is linking a buyer to a seller or negotiating on the behalf of the buyer or the seller.
What is Owning a Real Estate?
Owning a real estate means possessing a physical property as well as having the legal right to use it and redistribute it legally. The choice of real estate business to venture into depends on duration. If you’re investing in long-term, commercial real estate have more benefits but if you’re investing in short-term, land is more profitable.
Advantages of Real Estate Business
- It is not volatile unlike stock market, forex trade or cryptocurrency.
- The values tend to go up constantly.
- It is not usually subject to theft, natural and man-made disasters.
Types of Real Estate
The types of real estate include:
1. Residential real estate
This is the most common type of real estate. It includes any type of building that can be used for people to live in. This includes single family homes, townhouses and condos.
2. Commercial real estate
This is the property that is used for business. Commercial properties include office buildings, malls and warehouses. They are built for business functions and not used for residential habitation. Commercial real estate is classified into: retail, office, industrial (factories or mines) and multi-family (apartment complexes).
3. Industrial real estate
This is similar to commercial estate but three key factors set it apart namely: it is usually large in scope; it is located at places that have easy access to major roads and it involves large scale production. Examples of this are factories or mines.
4. Agricultural real estate
This is basically used for large scale farming like ranching, poultry farming, piggery etc.
5. Land
Land comes in different forms according to size and zone. Some are zoned for residential purposes while some are zoned for commercial purposes.
In each case, land is the basic thing used. Land is measured and sold in plots and it is important we understand how this is done. A plot of land varies from place to place. A plot of land in Anambra state may not be same in Lagos or Abuja. Also, a plot of land may not be exactly same in dimensions because of irregularities. Lands are usually measured in plots, acres and hectares. For instance,
In Anambra, a plot of land = 465m2
In Abuja, a plot of land = 1000m2
1 acre = 4047m2
In Anambra, 1 acre = (4047/465) = 9 plots
In Abuja, 1 acre = (4047/1000) = 4 plots
1 hectare = 10000m2
In Anambra, 1 hectare = (10000/465) = 22 plots
In Abuja, 1 hectare = (10000/1000) = 10 plots
Aspects/Business Opportunities in Real Estate
Real estate development
Real estate sales and marketing
Brokerage
Property management
Lending
Professional services eg Lawyers, Surveyors, Engineers, Accountants
Online Business Ideas in Real Estate
Real estate blogging
Real estate app development
Creating a course or class about real estate
Real estate podcast
How to Raise Capital for Real Estate Business
Personal funds
Loans
Affiliate marketing or Brokerage
Investment partnership
Challenges in Real Estate
Illegitimate properties.
Misdemeanors by land owners.
Poor profit, slow and poor sales.
Environmental factors.
Poor government support such as security, infrastructural developments, loans, policies etc.
How to Overcome these Challenges
Always perform with due diligence no matter who’s selling.
Let your word be your bond.
Don’t be over optimistic.
Start regardless of your predicament.
Use every advantage at your disposal but don’t lie.
Don’t sell properties that has issues even if you have committed your money to it.
Don’t be greedy. If even your commission is cut short go ahead with sale as far as the property is legitimate.
How to Excel in Real Estate Business
Stay focused, consistent and persistent.
Set your plan, goals and target.
Make your client top priority and allow them to be Mr Right.
Always be very open to your Clients about all fees involved in any land transaction with them.
Be precise and consistent about every information.
Measures to Acquire Land
The first stage in real estate development business is acquiring land/properties. This can be done in one of these two ways:
1. Purchase from the government
When purchasing from the government, the buyer would be given allocation letter and ‘C’ of ‘O’.
2. Purchase from individuals or community
When buying from the community, the buyer would be given Deed of Assignment which he/she would use to get ‘C’ of ‘O’ from the government.
Before Acquiring Land, Realtors should know this
- By the Land Use Act of 1978 every land is owned by the government so the government can acquire any land or property for the overriding interest of the public.
- The process of acquisition of land limits the power of the government so the ministry of lands should write letter of acquisition first.
- If government is acquiring land, they pay for economic trees and plants on the land and not the land itself.
- In government allocation of lands for estate, they don’t sell it but you pay premium for it because they expect you to develop it and if after three (3) years nothing is done on the land, government can revoke the allocation and give it to another person.
- As a prospective realtor, it is advisable to buy land from private people or community.
- When buying land, don’t pay all the money before processing the papers.
- Always use original copies of your documentation in any land dealings and confirm the documents at the ministry of lands.
Stages/Points in the Acquisition of Lands
1. Choice: This is about the location of the land/property, the size of the land needed, purpose of the land and budget of the buyer.
2. Physical Inspection: This is very important to ensure that the shape of the land, the texture, topography and other physical features are in consonance with the purpose of the land and choice of the Client.
3. Verification: Verification is done at the ministry of lands. It is very important to go for verification/search to ensure that the land was not mapped out by government for something in the future or that the land/property have not been sold before unless the property is not registered. If the property is not registered and cannot be found at the ministry of lands, it is necessary to confirm that it is an ancestral land that have not been sold before. If it has been sold before, it would be necessary to trace the previous acquisition process back to the original owners.
4. Documentation: In Anambra state, it is the duty of ministry of lands to register properties and the following documents are usually signed:
i. Power of Attorney
This is a document that authorizes a person to own a property or perform certain action with a property on behalf of another. There are two types: revocable power of attorney and irrevocable power of attorney. This document is signed by the Attorney of the state or the Deputy Registrar of Deeds who can be a Lawyer or Estate Valuer.
ii. Deed of assignment or Registered deed
This is an act of assigning or transferring ownership of a property from the owner (donor) to another person known as the Assignee making the Assignee the legal title bearer.
iii. Deed of legal mortgage
This is usually issued from the government and it is also called allocation letter. It is what government uses to allocate a land to someone to use for some purpose.
iv. Customary right of occupancy
This is similar to certificate of occupancy but it is signed by the local government chairman.
v. Certificate of occupancy (‘C’ of ‘O’)
This document is a title document that is signed by the governor of a state or Attorney-general. Land ‘C’ of ‘O’s should be renewed after 99 years while agricultural ‘C’ of ‘O’s should be renewed after 45 years otherwise the land belongs to the government or original owners.
How to Obtain ‘C’ of ‘O’ in Anambra State
There must be an agreement document before one applies for ‘C’ of ‘O’. These agreement documents could be deed of assignment, irrevocable power of attorney, deed of gifts, memorandum of sale of land, conveyance etc. Among all these, only power of attorney and deed of assignment are registerable.
With these documents, one would be given an application form at the ministry of lands to fill and would be required to swear affidavit that the land belongs to him.
The form would be submitted with two passport photographs for individual ownership of land and with additional documents such as certificate of incorporation, article of association and memorandum of understanding for company ownership of land.
With these documents, a file is opened and other necessary checks carried out to ensure validity of the land. One of such checks is ‘root title of land’. For instance, somebody from Ekwulobia cannot have ancestral land in Awka. The location of the land (the survey plan) is also certified by the office of the Surveyor-general of the state.
Once all checks are certified, the Governor or Attorney-general would sign for government land or individual land respectively. After signing, the applicant pays stamp duty for every document that was registered. Tax such as capital gain tax and premium tax are also paid.
Other Important Document not Signed by the Ministry of Lands
The Survey drawing: The survey drawing shows the exact location of the land on the earth’ surface in terms of geographical coordinates and size. Survey drawings should be properly registered and can be used to trace any land to ensure that it has not been sold.
Sources
The thoughts on this article are attributed to the following group/people (in no particular order):
CADLANDS (www.cadlands.com)
Arnold and Associates
GSS Group (www.gssgroup.ng)
Classic Gates Estate Limited
Honorable commissioner of lands, Anambra state
Thank you!
1 Comment
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