Ever wondered as a first-time home buyer if your first home could be more than just a place to live? Instead of just settling into a home, you could be stepping into an investment opportunity.

Buying investment property as a first-time home buyer is often referred to as ‘rentvesting’. First-time buyers are beginning to invest in rental properties, house hack, or flip homes.

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Are you curious about how to make your first property work for you? Then, this article is for you. 

This article explains how a first-time home buyer can buy an investment property in Nigeria.  Let’s explore the exciting possibilities together!

Buying Your First Home As an Investment Property

You can buy a home as an investment, but it limits financing options. Most home loans are for owner-occupied homes.

If you want to rent it out, you’ll need an investment loan. Renting a house on such a loan could result in fraud charges.

Most first-time home buyers are drawn by rental yields.. This can vary due to factors like vacancies and expenses. It is quite profitable if managed well.

Investment Options For a First-Time Home Buyer in Nigeria

1. Buy a Home and Rent It Out

Buying and renting it out is the easiest way to turn your first house into an investment.

You will be required to live in the home for at least 12 months. Most people don’t. 

However, you’ll need to rent or buy another place for yourself to live in. So weigh the pros and cons before making a decision. 

2. Buy a Multiunit Property

Hacking is another option for first-time home buyers. This involves buying a multiunit property and renting some units out to others. 

Mortgage banks offer loans that allow you to buy properties, depending on the unit. 

3. Buy and Flip a Home

Another way to acquire an investment property is to buy and improve a fixer-upper, then sell it quickly. You get to sell more than you paid for it.

This method is known as house-flipping. If you are well informed, house flipping can result in significant financial rewards. 

Consult knowledgeable flippers and real estate agents. They will guide you through the whole process.  

Pros and Cons of Buying an Investment Property in Nigeria

Buying an investment comes with its merits and demerits. Every first-time home buyer should consider this.   .

Pros of Buying an Investment Property In Nigeria

The benefits of first-time homebuyers purchasing an investment property include:

• Generating Income: Owning an investment can be a source of income that is more than the cost of buying a home.
• Long-Term Appreciation: Properties often appreciate in value over time. This can lead to notable gains. This can be especially advantageous for first-time buyers. 
• Diversifying your investments: Real estate makes your investment diversified. It reduces your overall risk of investment. 
• Potential tax benefits: There can be tax benefits to owning investment properties, They include deductions for mortgage interest, property taxes, and depreciation.

Cons of buying an investment property In Nigeria

Putting your money into real estate does not guarantee success. The risks of buying an investment property as a first-time homebuyer include:

• Potential depreciation: Sometimes, properties lose value over time. This can  be due to market fluctuations and economic conditions.
• Vacant rentals: When your property remains vacant for long periods, rental income can vanish. Some tenants might even struggle to pay the rent. This affects your income monthly or annually.
• Management responsibilities: Being a landlord comes with responsibilities. You have to maintain your home as well as your tenants’ home. You need to maintain your living space, as well as your tenants’ units. This can cost even more.
• Financing risks: If your property value drops, you could face severe financial losses.

How To Buy an Investment Property as a First-time Homebuyer in Nigeria

The process of buying an investment property as a first-time homebuyer is almost the same as buying a home to live in. Though, you will need to borrow more money to buy a property.

Here’s a rundown of what is typically involved with successfully buying an investment property in Nigeria as a first-time buyer.

1. Assess your finances

First, check your financial situation and take steps to increase it, if needed. Check for how much you can afford for down payment. Check for the closing costs too and other mortgage payments. Factor in maintenance fees, homeowners association fees, insurance and maintenance. 

2. Research the market

Research the real estate market. Verify this information with an experienced real estate agent.  

They will help you research property prices, home types, rental demand, and housing trends in the area you plan to buy in.

3. Shop for a mortgage

Research your loan options. Checkout the financing options made available for you. Compare mortgage and interest rates from different lenders. 

You can work with experienced loan officers in Nigeria to better guide you in your decision. 

4. Get mortgage preapproval

Seek mortgage preapproval when you’re ready to start looking for homes. This will help you to determine your budget. Also, it puts you out as a serious buyer.

5. Find and make an offer on a suitable property

Look for properties that match your goals and objectives. Consult your agents when you are ready to buy a particular house. Expect to see counteroffers or rejections on your offer. 

6. Conduct your due diligence

Once your offer is accepted, be sure to carry out all the necessary requirements. Avoid some common mistakes first-time home buyers make. 

Go for a home inspection, home appraisal to check the home’s value. Conduct a title search. Hire a real estate attorney to review all documents. 

7. Close the deal

Close the deal on your investment property. If everything matches your criteria. Make your down payments, closing costs and sign the necessary documents.

Once these are done, the home ownership is transferred to you. 

Conclusion

Buying your first home is exciting. It gets more exciting when it becomes an investment. Make sure you understand the market and don’t be in a rush.

Whether you choose to rent it out, house hack, or flip, be prepared and informed.

However, network with the right people in the industry and work closely with an experienced real estate agent. Ask questions to clear your doubts about things you don’t understand.