finding a niche

[Michael Ibosiola]

Hi all

I have been studying and taking time to pick a niche.

From all research  made ,I discovered Nigerians are more into 2 niches:  buying of raw land, hold for a while and resell when the value of the property increases in terms of cost. But I also notice this model sometimes takes years for the cost to increase which ties down capital.

The second niche is the build/buy and hold.

I want to base my real estate investment journey along this two niches.

I will  be delighted if anyone with experience in this 2 niches guide me.

Thank you

[Josh Caldwell]

I dont do either niche but I will offer some advice on the raw land strategy.   That strategy takes a long time in my part of America.  So if you are looking to do a buy and hold on raw land, choose your land carefully.  Choose areas of growth and appreciation.  Also look to follow urban sprawl.  Find out where new highways are going to built and buy up land along those areas.  Buy land in front of population expansion. 

good luck

Josh

[Michael Ibosiola]

@Josh Caldwell

Thank you for your reply...

I agree with you that the raw land hold and buy strategy takes a longer time to yield profit...

I will put all points you gave into consideration when looking for a raw land to invest in...

ThAnk you...

[Bill Gulley]

Michael, I'll echo Josh's point as well. 

Land speculation isn't for any beginner! It is usually thought of as the highest risk in terms of profiting in RE. 

When you are talking about changing land to its highest and best use, that means you must understand the local politics besides the economic aspects of development. 

Think of it this way, a house flipper has to know costs of improvements  and rent levels to sell to a buy and hold landlord, if they don't, know that market, they can't bring the property in at a price that the landlord might be willing to pay. Land is pretty much the same, You need to develop a market, the use, come in at a cost effective development to sell to a developer.

Changing use begins with zoning changes, that is not just a local regulatory process but political as well. The "city fathers" will want developers with experience, proven track records, capital backing and commitments, all too often someone tries to build a shopping center or residential neighborhood and the run out of steam and can't finish the project, they don't want failed projects for various economic and social reasons.

Generally, you'll find local developers who are "favored" in doing certain types of projects, in reality you'll need to be a bird-dog for them, to be good at that, just like the landlord mentioned, you need to understand costing of developments, time lines and other facets of development. This is a big hill to climb for the education and it can get expensive learning from engineers, developers, attorneys and venture capital folks.

When land can become more valuable quickly, the cost of changing it and the political aspects will be greater. If you are willing to sit on a property for 10, 20 or 40 years, say leasing it to a corn farmer, you may end up doing well. 

Your other interest, buy-build-hold is much better. You avoid much of the politics, buy an existing lot, build to the market (a residential market) and be a landlord. Buy a lot, hire a good contractor, construction loans are much easier to get than development financing, upon completion roll the construction loan over to your end loan, rent and be a landlord. 

Many get into RE trying to "select" a niche, that's a problem on the road to success. You don't select a profitable niche as much as the market dictates the niche to operate in.  

This is why people really need to start out in general real estate training, not guru niche tactics. You may end up  in a certain niche, but it needs to be market driven, not based on your desires of doing something.  Master the basics of RE and you'll be able to identify markets, apply techniques that are correct for the circumstances and you'll find more opportunities to profit. Good luck :) 

[Michael Ibosiola]

@ Josh Caldwell

For about one and half years now have been working in UAE..

Uae has a very good real estate market with nice ROI...I intend learning from this market before I head back home but my challenges are :1) investment are on the high side and i am on a low income job 2)because am on a low income job , I can't have access to loan.3)am new around so I don't know much people.4)getting a local investors to learn from on weekend because I work from 5 to 5pm.

Advantages with the Uae market:

1) RE is very lucrative here

2)due to the expo 2020 coming to uae, the region is developing very fast and looking to have more investors then

3) due its stable economy among other countries in the middle estate, investors are attracted to d region.

4) the youths are not really entrepreneur minded but are gradually embracing investment opportunities.

5) easy access to funds/loan for locals with low interest rate and long tenure of 25 to 30yrs.

So @ Josh Caldwell and other professionals, how can i work with this advantages to kick start my RE education and investment in Uae.

[Michael Ibosiola]

@Bill Gulley

Wow that was more than an echo, very insightful.

please can you expanciate on rolling the construction loan over to end loan..

Also the issue about loan in Nigeria is that the interest rate is as high as 20-25% for a tenor of 3 to 5yrs max but the government said its working on a mortgage scheme for 15% and 20 to 30yrs plan. Is it advisable to get such loan...

I also appreciate you pointing out that when picking a niche one has to give more consideration to the market than looking for a profitable niche. That's why for now I spend my time studing so I can get the basic knowledge

Thank you

[Bill Gulley]

Yes, here banks will provide a construction-perm loan, they fund construction as required, at various stages of the project and when it is completed, that loan is "rolled over" to a new permanent loan. Larger projects may be funded by several "affiliate" banks who share in the loan with one bank taking the "lead" known as a lead lender who will service the loan. Other types of financing may be involved in the construction or the permanent financing.

If I had to pay 25% interest I wouldn't be borrowing! Ouch!  That's greedy!  :( I suppose the risks there are perceived to be very high.

Get a text book that agents use for their testing, an older edition will be fine as the basics haven't changed, they are about $20 on Amazon. Good luck :)

[Michael Ibosiola]

@Bill Gulley

Thanks for the response.

The bank rates are very high for newbies who are just starting out as you stated but am still searching for other alternatives.

Please can you recommend any of the old books to purchase.

Bill can you also give me your opinion on my post about exploring the uae market. Today I went to meet a real estate investor to discuss how I can work with he's company on weekends so I can start learning on the field. He said I should give him two months to fix he's office, so I look forward to that.

Thank you all for your response..

[Bill Gulley]

@Michael Ibosiola

I just caught this by chance, the mention didn't work. Type the @ sign and then the person/s name, no space between the sign and first letter of the name. A window will pop up below the text field, go to the name you need and click on it there. I  believe for the mention to work the name will appear and be highlighted in blue, then it should work for you.

Look for books on Amazon, "Mastering RE Principles" is one, any textbook is fine really, you can get one for about $20.00. Just make sure in the description that the book is to study for a state or national real estate agent's test, that will keep you from getting some guru book.   

After you study the text you'll understand more as to how to identify your market. Your post above is fine but it doesn't begin to touch on the market and I have no clue about AUE, I have enough going on in the USA! It's great that you have a mentor there, use him. Good luck :)