Home ownership is usually top on the list of all the reasons why people want to invest in real estate, globally. Real estate is in no doubt an indispensable tool designed for the support and sustenance of human life. It is also a tool created for mankind to express creativity, desires, and ambition. When the Coronavirus pandemic spread across nations, governments were forced to give shelter-in-place orders, causing us all to stay in our homes for months. This shows that homes are indeed a necessity. Yet, it is beyond reach for many people in developing countries who desire to own one.
Mortgage loans are one of the common options for homeownership in many countries because it is believed to create some ease of home ownership. In Nigeria, mortgages have not been effective. In cases where it is accessible, it is expensive.
READ: Uber Introduces Uber Cash In Nigeria
The case for mortgage ineffectiveness is a result of many underlying issues bedeviling our development as a nation. This article seeks to provide you with a creative homeownership option that is legitimate and efficient in achieving your real estate investment goal as an individual seeking to own a home.
The mortgage option requires you to provide equity of 20 – 30 percent of the total value of the home sale price. This also means that the home will be the collateral for the loan as you increase your equity over a period of years. Loss of income or ability to earn an income during the tenure of the mortgage translate in most cases to losing the home to the lender.
READ: Union Homes REIT reports 34.5% dip in profit
The loss of ability to earn income high enough to repay a mortgage is bad in itself. Losing that home to the lender makes it worse as you would have lost your homeowner status and in some cases, the equity.
An alternative to the mortgage option is the invest-to-homeownership. It is a creative real estate investment option. It allows you to invest equity with a real estate business or private home developer. The equity is used to execute projects and turned over until the equity builds up to an agreed amount required to own your home. This option creates leverage that is not available in the traditionally popular options.
The invest to homeownership option is ideal when you do not have enough cash to buy a home in one fell swoop of payment. It also does not need you to pay interest. Instead, the returns on your equity accumulate towards your home purchase. The real power of compounding in real estate comes into play.
READ: Everything you need to know to become a real estate investor
Five major conditions that make invest-to-homeownership work
1. Your choice of the real estate developer
The developer must have a track record of executed and sold-out residential units. Invest-to-homeownership relies a great deal on the integrity of the developer. The first test of the integrity of a real estate entity is the track record and the quality of claims.
You should choose based on qualitative pieces of evidence and not emotions or appeal.
READ: The real estate value that silently affects monetary returns
2. The project locations.
The developer must have ongoing residential projects in strategic locations of the city. These projects must be real and positioned to sell out. This is because not all locations are profitable for all kinds of real estate business goals.
3. The readiness of the developer to work with you
The developer must be desirous to accept your equity on respectable terms. This is because people management can sometimes be a tall order. If managing a bank loan will be easier, a developer may choose the bank above accepting to use your funds to execute projects thereby growing your homeownership equity.
READ: What BBNaija winner, Laycon can do with N30 million
4. Your mindset and belief
Many people, hold the belief that owning a home in Lagos, Nigeria is hard. This belief sets you up to miss creative opportunities.
Invest-to-homeownership option is a simple yet effective way to achieve a homeownership goal. A cheaper option that takes money out of your pocket fewer times than the popular mortgage option.
READ: Landlords offer incentives to counter “work from home” induced vacancy rates
5. Ability to adopt and trust the process.
Your readiness as an intending homeowner and willingness to trust a transparent process when you find a developer who offers you one. The real estate investment terrain in Nigeria is still evolving. With many unpalatable experiences dotting the landscape. These experiences are due to a combination of several issues. Some real estate stakeholders have been able to master some fundamentals of the evolving terrain and can minimize foreseeable issues. Your ability to identify a trustworthy process, helps you harness the opportunity to own your home interest-free.
READ: Best ways to get free money with little or no effort
With the invest-to-homeownership option, the risk of losing your home to a lender in the case of protracted default or loss of income is eliminated. The developer that you choose to work with is obligated to deliver to the terms that will be agreed upon at the point of investment. You should carefully choose a stakeholder who can and will deliver on your homeownership goal in record time.
READ: Bamboo says USD Wire Transfer option is no longer available for deposits
You may be interested or have questions about the possibility of the invest to homeownership option. In addition to letting you know this option is possible and available, we want to answer your questions too. Send ITHO via WhatsApp to 07062028677 or email to firstname.lastname@example.org
Nice write Oluwakemi, please do you know any reputable real estate company in Lagos nigeria that is into invest to homeownership?
I love this, the challenge is getting a trust worthy developer to work with.
This is beautiful if one can get a developer with integrity.
Is there any difference between such developer and the concept being promoted by Mr Gbola Oba wish also promise house ownership through an investment of N100,000 investment in the company’s Debenture Bond?
Do you see the venture possible?