Investing in Lagos real estate can be a highly lucrative venture, but it’s also a market fraught with unique challenges. First-time investors, in particular, often fall into predictable traps that can lead to significant financial loss and stress. By understanding and avoiding these common mistakes, you can set yourself up for a more secure and profitable investment journey.

Here are 5 of the biggest mistakes first-time investors make in Lagos real estate:

1. Failing to Conduct Thorough Due Diligence

This is, without a doubt, the most critical mistake an investor can make. In Lagos, a lack of proper due diligence is the primary reason for falling victim to fraud and legal disputes.

  • The Mistake: Relying solely on the word of a seller, agent, or developer without independently verifying all claims and documents. This is especially true for land purchases, where fake titles and “Omo-Onile” (local land-owning family) scams are rampant.
  • How to Avoid It:
    • Verify the Land Title: Never assume a document is genuine. Conduct a thorough search at the Lagos State Land Registry to confirm the authenticity of the title (e.g., C of O, Governor’s Consent) and check for any encumbrances, pending lawsuits, or government acquisition.
    • Physical Inspection: Don’t just look at pictures or videos. Physically visit the property or land to inspect it for yourself. Check for potential issues like flooding, poor road access, or any signs of dispute.
    • Engage a Professional Team: This is not a time to be frugal. Hire a reputable real estate lawyer to handle all legal checks and a professional surveyor to verify the land boundaries.

 

 

2. Underestimating the Total Cost of Investment

Many first-time investors focus only on the advertised purchase price, failing to budget for the numerous hidden costs that can quickly add up.

  • The Mistake: Not factoring in expenses beyond the initial purchase price, leading to financial strain or an inability to complete the project.
  • How to Avoid It:
    • Create a Comprehensive Budget: Your budget should include the purchase price, legal fees (which can be a percentage of the property value), agent commissions, survey and documentation fees, and government levies.
    • Account for Development Costs: If you are buying land, budget for the cost of building, including materials, labor, and a contingency fund for unexpected expenses.
    • Consider Post-Purchase Costs: Factor in the costs of maintenance, property taxes, service charges (for estates), and utility connections (e.g., electricity, water) which are often significant in Lagos.

3. Ignoring the Importance of Location and Infrastructure

A property’s value in Lagos is almost entirely dependent on its location and the quality of surrounding infrastructure. An undervalued property in a well-planned, high-growth area is often a better investment than a cheap plot in an undeveloped, inaccessible one.

  • The Mistake: Buying in a remote or underdeveloped area purely because the price is low, without considering future growth potential, accessibility, and proximity to essential amenities.
  • How to Avoid It:
    • Research Growth Corridors: Identify areas with ongoing or planned infrastructure projects, such as new roads, bridges, ports, and commercial developments. The Lekki-Epe corridor, for example, is a prime example of a location driven by such factors.
    • Analyze Market Demand: Assess the demand for residential or commercial properties in the area. Look for factors like population growth, proximity to business hubs, schools, and markets.
    • Check for Zoning Laws: Confirm the land’s zoning status. Buying a residential plot in a commercial zone could lead to legal issues and prevent you from developing the property as intended.

4. Rushing the Decision-Making Process

Scammers and unscrupulous agents often use high-pressure tactics to force a quick sale, preying on a first-time investor’s fear of missing out on a “too good to be true” deal.

  • The Mistake: Making an emotional, rushed decision without giving yourself enough time to verify the property, negotiate the price, or consult with professionals.
  • How to Avoid It:
    • Be Skeptical of “Bargains”: If a deal seems too good to be true, it likely is a red flag. Be cautious of properties priced significantly lower than comparable ones in the same area.
    • Resist Pressure Tactics: Do not let anyone rush you into making a down payment or signing a contract. A legitimate seller will give you time to conduct your due diligence.
    • Take a Step Back: After a physical inspection, take at least a few days to process the information, review your budget, and discuss the investment with your legal and financial advisors.

5. Not Working with Reputable Professionals

Going at it alone or trusting the wrong people is one of the quickest ways to lose money in the Lagos real estate market.

  • The Mistake: Trying to save money by not hiring a lawyer, working with an unverified agent, or buying from an unknown developer.
  • How to Avoid It:
    • Find a Reputable Developer: If you’re buying off-plan, research the developer’s track record. Look at their past projects and read reviews from other clients.
    • Engage a Qualified Lawyer: A real estate lawyer who specializes in Lagos land transactions is a crucial partner. They will perform title searches, draft the legal agreement, and ensure the transaction is legitimate.
    • Use a Licensed Real Estate Agent: Work with an agent who is not only reputable but also knowledgeable about the specific area you’re interested in. They can provide valuable market insights and help you find a fair price.