Building commercial houses is a worthwhile venture; you will be solving one of society’s most vital needs as well as generating handsome returns on investment. In this article, I will try to explore the building industry in Enugu, with a special bias for the multifamily housing units called the ‘block of flats’
THE NEED FOR FLATS
Nigeria is a growing nation, perhaps the fastest growing nation in the world, with population estimated to be in the region of 140 million. This number has a lot of young and the growing population, the youths make up more than 60% of the population and will still multiply as they settle down and form more families. This is why more houses are needed to fill the gap. It is an open secret that vacant properties are very scarce in town due to excessive demand for them. I know how many people who want houses NOW but it is just not available, there is a demand not being fulfilled. This is an opportunity waiting to be exploited.
Another factor to consider is that flats provide a better option to the families who might find it difficult to pay for duplexes or bungalows and live in their own compounds. To live in one room ‘face me I face you’ compounds is also not advisable as your privacy could be seriously violated and your safety compromised.
TYPES OF FLATS
There are many types of flats being built by developers, the most poular is the 3 bedroom flat, there is also the 2 bedroom and 4 bedroom versions and families choose according to their need for space and family size. Those needing 2 bedrooms are mostly bachelors, spinsters and newly married couples with few kids. Those with more kids will desire more space and they usually rent 3-4 bedroom flats.
Due to improvements in the building industry, builders are now expanding their horizons by offering additional improvements to attract more tenants and increase returns. Things like en suite rooms, wardrobes, larger balconies and superior finishings has been added to the list of options in the building industry. Some builders now offer additional options like borehole for water, dish for TV entertainment and even internet services to make life more pleasurable.
We can also classify flats by their number, the number of floors they have. We have the 2 flat compound, (just two bungalows in a compound), we also have the 4 flat houses, (one floor above the ground floor) there is also the 6 flats, 8 flats and 10 flats and these are all dependent on the plan of the building, the number of floors and size of the land.
MANAGEMENT
Blocks of flats are easier to manage than some other properties; we now have property management companies everywhere to make sure tenants abide by rules as stipulated in the tenancy agreement. The landlord may not even know the faces of their tenants; all he needs to see is the cash flow from rental income. It is the duty of the property managers to ensure peace and order in the compound, to maintain a high level of hygiene and ensure the property is safe from vandalism.
COST OF CONSTRUCTION
Well built blocks of flats don’t come cheap. It is important to note here that the higher a block of flats, the more money needed to complete it and the more returns it can generate. When we build a block of flats, we save a lot of money by reusing some materials like wood which we can transfer from one floor to the next in decks and lintels. The cost of building flats ranges from N4m to N40m depending on other variables like cost of the land, location, number of flats, level of finishing etc.
PROFITABILITY
I know all of you are waiting for this one; this is where the meat is. As a prospective owner, this is the most important information. The returns on investment from blocks of flats are dependent on the type of structure and land cost. The cheaper the land, the more profitable and the sooner you can make your money back and start enjoying profits for a very long time to come. Let me not reveal too much here, I will be answering your questions about the points raised above. There is too much money to be made from owning properties that investors should really think in this direction. I can help any interested investor calculate his PE ratio. By this I mean the number of years it will take you to recover all your money you have invested before enjoying a lifetime of rents and more rents.
Rents for flats in Enugu ranges from N200K per annum for a 2 bedroom flat, 250-350 for 3 bedrooms depending on location and finishing, and more if you add more services. It is also an advantage that you could collect your rents upfront, which means that you can collect as much as 15-20% of your cost of construction immediately we collect a two year advance from the first set of tenants.
As a businessman, I understand that the shorter the period of return, the better. The strategies I have developed while building for myself could also spur me to greater performances and I can assist any investor with my wealth of experience to generate a lifetime of residual income.
THANK YOU ALL.
Signed by SPYDER880
