A property rental business is where a company or an individual owns a property that it rents to consumers or tenants for a particular period. A property rental business is a venture through which an individual can purchase and manage one or more income-producing properties.
These properties can have one or more units leased to tenants for monthly rental fees. The individual can have an effective property rental business plan without directly managing these properties; you can hire property management companies to carry out the duties often associated with landlords, such as rent collection and maintenance.
The property rental business model is beneficial because the company or the individual involved doesn’t need to replenish its supply constantly, and it’s often less expensive for consumers to get the items they need.
Lagos is a state in Nigeria that is highly populated, modern, full of prospects for property rental business, and everything good. Just like they say that you can achieve anything in New York, Lagos is a city where you can accomplish a lot because it provides lots of opportunities and accessibility to getting closer to your dreams.
The economic standard of Lagos has motivated people all over Nigeria to migrate to Lagos because they see the city as their greener pasture. In a place where the population keeps rising, there is expected to be a demand for accommodations for rent.
Property rental business is the new oil money in Lagos. And no matter how high your rent is, you already have a population ready to go for it.
So, why should you start a property rental business in Lagos?
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Rapid economic growth
Lagos is leading in terms of business which helps the economy. The city is also considered Africa’s eighth-fastest-growing town in terms of population and is expected to be the world’s third-largest by the year 2050.
The numbers speak for themselves, with Lagos responsible for more than 53% of production jobs, generating 25% of the national GDP, and consuming over 60% of the country’s electricity.
Lagos is host to more than 2000 manufacturing businesses and 200 financial institutions and is also host to Africa’s most significant concentrations of small and medium-sized enterprises.
The critical need to start a property rental business
The rates of leasing in Lagos keep rising rapidly, which promotes the fact that many people in Lagos are opting to rent over buying out properties. It is mainly due to the usually massive cost of homeownership, land costs, and building construction costs.
Most landowners already have plans to develop real estate for rental properties due to the ability to quickly provide a return on their investment and an ample supply of renters available as soon as construction is completed. Developers are aware of the direction the real estate industry is heading.
Stable political environment
Lagos has the most stable political environment compared to other states in Nigeria. Since the return of democracy in 1999, Lagos has been under the control of the same political party, ensuring a continuum in governance.
It is suitable for the real estate market because projects and developments are implemented according to the master plan. It also means that important projects that drive growth are not altered because of politics.
At this point, the biggest reason why Lagos is a great location to start a property rental business is an almost ridiculous rate of return on investments on real estate properties. The Lagos State Market Analysis presents Lagos as having some of Nigeria’s most significant estate prices.
The Lagos State real estate industry remained buoyant and, in some cases, flourished even when the value of the real estate in other states across the nation plummeted from the latest economic recession.
A plot of land bought for 5 million in Lekki in 2006 could now go for an average of 75 million. It’s no surprise because real estate transactions occur dozens of times every day as more and more people seek to stake their piece of the blossoming city.
A population is undoubtedly a significant engine of property rental business for the real estate industry; Lagos is easily Nigeria’s most populated state. The megacity has risen to about 22 million today from 1.4 million residents in 1970.
Projections have estimated that at least 89 people move every hour to Lagos, which is more than 2000 people every day and nearly a million people every year. That’s a constant flow of bright-eyed citizens looking for accommodation, purpose, and fulfilment.
Property rental business may be considered a business endeavour, depending on who you ask. It may seem like a controversial question, but at least two answers are to consider.
From a financial standpoint, the property rental business may result in passive income. It is important to note that investors do not have to pay self-employment taxes when reporting their rental properties. Therefore, many would argue that owning a rental property is not considered a “business,” specifically in the lens of tax filing.
However, from a career standpoint, many individuals live on passive income derived from their property rental business; in this lens, renting a property can be considered a business. It’s entirely possible to manage a property rental business portfolio as a business.
Still, those with a single rental property may not need to start a company to collect passive income. It’s only once the portfolio starts to grow that turning the practice of real property rental business becomes more critical.
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