Investment property?
In Nigeria, this trend is even more visible because of the massive housing deficit, currently estimated at around 28 million units.
That figure is not just a problem; it’s an opportunity.
Every year, more people move to cities like Lagos, Abuja, and Port Harcourt in search of accommodation, pushing demand far ahead of supply.
For investors, that means consistent rental income and guaranteed appreciation.
Even modest apartments in mid-tier areas, such as Surulere or Gwarinpa, can yield rental returns between 6% and 12% annually, outperforming many fixed-income investments.
And when you add short-let models like Airbnb into the mix, returns can shoot up significantly.
A furnished two-bedroom short-let in Lekki can make as much as ₦1.2 million monthly during peak periods—almost four times the income of a regular long-term tenant.
However, investment property isn’t just about collecting rent or flipping land.
It’s all about leverage and control.
In real estate, you can use borrowed money to buy appreciating assets, which multiply your returns.
With as little as a 20% down payment on a property, you can own something that appreciates as though you paid in full.
But not every property automatically becomes an investment property.
Value depends on location, purpose, and timing.
An apartment beside a growing business hub or a university campus will always attract tenants faster than one tucked in an isolated corner.
Smart investors pay attention to urban development plans, upcoming infrastructure projects, and population movement patterns.
For instance, when the Lagos–Epe Expressway expansion started and the Dangote Refinery project took off, early investors who bought in that corridor saw their property values double or triple within a few years.
Those who waited are now priced out.
The good thing about investment properties is that they serve two masters: cash flow and capital growth.
Cash flow gives you passive income every month, while capital growth builds wealth in the long term.
Even when one slows down, the other keeps working.
For example, rental yields may stagnate in a slow economy, but property values often rise with inflation.
In fact, during Nigeria’s inflation surge in 2025, which reached 27.3%, property prices didn’t crash; they climbed because tangible assets like real estate tend to hold value when money loses purchasing power.
Management is another aspect that defines success in property investment.
Owning a rental building is one thing; maintaining it profitably is another.
This is why property management firms have become essential partners for investors.
They handle rent collection, tenant screening, maintenance, and repairs, ensuring your property stays productive while you focus on other ventures.
In Lagos alone, over 40% of active landlords now use professional managers, a sign that real estate is maturing into a structured investment class rather than a family-run side hustle.
Types of investment property
Across the world, investors are using different forms of properties to generate cash flow and wealth.
Residential investment property is by far the most common because it caters to a universal human need: housing.
From single-family homes in the U.S. to high-rise apartments in Lagos or mini-flats in Nairobi, residential investment remains a major driver of real estate growth.
According to Statista, the global residential real estate market was valued at over $308 trillion in 2024, representing roughly 79% of total real estate wealth worldwide.
That figure alone shows the dominance of residential properties as both shelter and investment instruments.
In Nigeria, the story mirrors that global pattern.
The National Bureau of Statistics estimated that the real estate sector contributed 5.6% to Nigeria’s GDP in 2024, with residential investments taking a major share due to the country’s 28 million housing deficit.
This means that the demand for homes far exceeds the supply, giving investors a strong opportunity to earn steady rental income and enjoy long-term appreciation.
Residential investment properties come in different forms.
Some investors buy single-family homes to rent out to one tenant or family, while others purchase multi-unit buildings or apartment blocks where multiple tenants share the same compound.
Each model comes with different returns and management styles.
In developed markets, the average rental yield for residential investment properties hovers between 4% and 6% annually.
In emerging markets like Nigeria, it’s often higher, ranging from 7% to 12%, depending on location, infrastructure, and property type.
For instance, a three-bedroom apartment in Lekki Phase 1, Lagos, can rent for ₦10 million yearly, while the same type of apartment in Surulere rents for ₦4 million, showing how location influences returns.
The same principle applies globally.
A two-bedroom flat in central London yields around 3.8%, while a similar property in Manchester yields about 6.2% due to higher rental demand relative to price.
Commercial investment property
These are properties specifically used for business activities, offices, shopping malls, hotels, and retail outlets.
The purpose is simple: to generate profit through rent paid by businesses.
In cities like New York, Dubai, and Lagos, commercial real estate has become a cornerstone of economic development.
According to the MSCI Global Real Estate Index, commercial property accounted for nearly $35 trillion in global value as of 2024, making it the second-largest investment category after residential.
The reason for its popularity is clear: commercial tenants tend to sign long-term leases, often spanning 5 to 10 years, providing stability of income for investors.
In Nigeria, the demand for commercial properties is growing rapidly due to the rise of SMEs, fintech companies, and logistics hubs.
Areas like Victoria Island and Ikoyi are witnessing commercial rents as high as ₦120,000 per square meter annually.
That’s a level of return few other assets can deliver when managed efficiently.
Industrial property
These include factories, warehouses, manufacturing plants, and distribution centers.
Industrial investment properties may not have the visual appeal of apartments or malls, but they form the foundation of the global supply chain.
The rise of e-commerce has turned industrial real estate into a goldmine.
Amazon, Alibaba, and Jumia all depend on warehouses to store and distribute goods.
According to JLL’s 2024 Global Industrial Outlook, the industrial real estate market grew by 9% year-over-year, driven by increased online retail demand.
In Nigeria, the growth of logistics firms and agricultural processing industries is fueling interest in industrial zones like Ogun State’s Agbara Industrial Park and the Lekki Free Trade Zone.
Investors who once focused only on residential buildings are now diversifying into these industrial hubs, realizing that manufacturing and logistics infrastructure offer long-term leases, minimal vacancy rates, and stable returns even during economic slowdowns.
Mixed-use properties
They integrate residential, commercial, and sometimes recreational spaces into one development.
A single mixed-use building may have shops on the ground floor, offices on the middle floors, and apartments on the top levels.
This type of property is gaining traction globally because it meets modern lifestyle needs, people want to live, work, and shop in the same area.
According to a report by CBRE, mixed-use developments have increased by 18% globally over the last five years, driven by urban planning reforms and demand for convenience.
In Nigeria, these types of projects are fast becoming the future of urban real estate.
Developments like Eko Atlantic City in Lagos or Jabi Lake Mall in Abuja show how mixed-use spaces attract both residents and businesses, maximizing profitability for investors.
They reduce risk because if one component(like retail) slows down, the residential or office segment can balance income flow.
Short-let and vacation property
This refers to apartments or homes rented out on a short-term basis through platforms like Airbnb, Booking.com, or private management companies.
The short-let market has exploded globally in the last decade, valued at over $132 billion in 2024 according to Allied Market Research.
Investors are drawn to it because it combines flexibility with high cash flow potential.
Unlike long-term leases, where rent comes once a year, short-lets can generate weekly or even daily income.
In Nigeria, cities like Lagos, Abuja, and Port Harcourt have become hotspots for short-let apartments, particularly among business travelers, expatriates, and tourists.
A well-furnished two-bedroom apartment in Lekki or Victoria Island can earn between ₦900,000 and ₦1.5 million per month during peak travel seasons, significantly outpacing traditional rental income.
However, the model also demands active management, consistent maintenance, marketing, and guest handling.
Those who do it well have turned what used to be a luxury model into one of the most lucrative property investments in the country.
Farmland
In both developed and emerging economies, farmland has become a preferred hedge against inflation and economic uncertainty.
The World Bank estimates that global farmland value grew by an average of 8.2% annually between 2020 and 2024.
Investors buy farmland not just to cultivate crops but as a store of value, as land scarcity and food demand continue to rise.
In Nigeria, the demand for agricultural land has surged as commercial farming expands. States like Oyo, Ogun, and Kaduna are seeing new farm estates that blend agriculture with real estate investment models.
For example, investors can buy plots within a large farm estate and lease them to agribusinesses or partner with farm management companies.
This type of investment property offers both capital appreciation and agricultural profit, merging traditional wealth creation with modern sustainability goals.
New-age investment properties
This includes virtual lands in metaverse platforms like Decentraland or Sandbox, which have become unconventional yet fast-growing investment categories.
While still speculative, digital real estate has attracted billions of dollars globally.
According to Grand View Research, the metaverse real estate market surpassed $5.2 billion in 2024 and is projected to grow at 37% annually.
Younger investors see this as an evolution of property ownership, similar to how cryptocurrencies disrupted banking.
While this space remains volatile, it highlights the broader trend of property investment diversifying into both physical and digital dimensions.
REITs
In many developed countries, investors are also turning to Real Estate Investment Trusts(REITs), a form of collective investment that allows people to own shares of large property portfolios without directly buying or managing real estate.
REITs pool money from investors to purchase and manage income-generating assets like apartments, offices, and malls.
According to the Global REIT Market Report, the total market capitalization of REITs reached over $2.2 trillion in 2024, showing how institutional and individual investors alike are embracing real estate indirectly.
Nigeria has started adopting this model through platforms like UPDC REIT and Union Homes REIT, offering Nigerians a chance to participate in property investment without needing millions in capital.
It’s an innovative path that aligns with global best practices and democratizes property ownership for everyday investors.
How to Buy Your First Property
The idea of owning investment property is no longer limited to real estate moguls. Across the world, individuals are now entering property markets earlier, driven by access to digital real estate data, online investment platforms, and growing awareness of passive income.
According to Statista(2025), the global real estate market is projected to reach $33.5 trillion, with rental income expected to grow by 6.7% annually.
In Africa, particularly in Nigeria, the real estate sector contributes about 5.6% to GDP, with Lagos and Abuja leading in property investment growth.
Yet, for every person who profits from property, there’s another who made costly mistakes due to poor research or emotional decision-making.
So, how do you buy your first investment property without falling into common traps?
Understanding What an Investment Property Really Is
In Nigeria, for instance, the most common entry point for first-time investors is residential real estate, especially rental apartments in cities like Lagos, Abuja, Port Harcourt, and Ibadan.
This is because rental demand remains strong due to urban migration. Reports from the National Bureau of Statistics(NBS) show that over 1.2 million Nigerians move into major cities each year, yet only a small percentage can afford to buy homes, creating a sustainable rental market.
Meanwhile, in global markets like the United States, about 65% of investment properties purchased in 2024 were single-family homes, as reported by Realtor.com.
But it’s not enough to just “buy property.” A first-time investor must see beyond physical beauty or hype.
Every property must answer one financial question:
How will this asset make me money? That clarity determines whether your purchase will become a stream of income or a liability disguised as an investment.
Defining Your Investment Goal
Every successful investment begins with a purpose.
Buying your first investment property should not be driven by emotions or peer influence; it should be anchored on a clear financial goal.
Ask yourself: Are you buying to earn rental income, to resell at a higher price, or to build long-term equity?
In global property investment, these three strategies define the starting point for every investor.
If your goal is to earn rental income, your focus should be on areas with strong demand and stable tenancy rates.
For example, Lagos Mainland has an average rental yield of 5.7% to 8.5%, according to PropertyPro Nigeria(2024).
On the other hand, investors seeking long-term capital appreciation might look toward developing areas such as Epe or Ibeju-Lekki, where government infrastructure projects are rapidly transforming land values.
Globally, markets like Dubai, Miami, and Lisbon are experiencing annual property value appreciation between 6% and 10%, driven by migration and short-term rental growth.
These trends show that understanding your “why” helps you focus on the “where” and “how” of your first investment.
Assessing Your Financial Readiness
One of the biggest mistakes new investors make is jumping into property investment without assessing their financial readiness.
Real estate is capital-intensive, and while it can generate stable income, it also requires upfront funds and ongoing expenses.
The smart approach is to evaluate your finances like a business plan.
Start by determining your total available capital.
In Nigeria, the average cost of a 2-bedroom apartment in a decent Lagos neighborhood like Yaba or Surulere ranges between ₦50 million and ₦75 million.
If you’re investing globally, the average entry price for an investment property in the United States is $250,000 to $400,000, depending on the city.
Beyond the purchase price, you’ll also need to account for closing costs, legal documentation, agency fees, taxes, and renovation expenses.
The most effective way to start is by building a strong savings base or leveraging financing options.
Nigerian banks and mortgage institutions such as FMBN and Stanbic IBTC offer real estate investment financing with repayment plans extending up to 20 years.
For those in global markets, mortgage rates have averaged around 6.5%(U.S.) and 4.2%(UK) as of 2025.
However, financial readiness isn’t just about having cash; it’s about having liquidity after purchase.
If your entire savings go into the down payment, you might struggle to manage unexpected costs.
Understanding the Market Before You Buy
Globally, property appreciation is tied closely to population growth and employment opportunities.
In Nigeria, for instance, areas near economic corridors like Lekki Free Trade Zone, Abeokuta Industrial Axis, and Abuja’s Airport Road corridor have seen average annual appreciation of 10% to 18% in the past three years.
The same trend holds globally; in the U.S., states like Texas and Florida recorded over 20% appreciation in emerging suburban areas between 2021 and 2024.
Choosing the Right Location
In property investment, location remains the single most important factor that determines profit.
A great property in the wrong location is like a diamond buried in the desert, beautiful but useless.
First-time investors should prioritize locations with growth potential, stable demand, and accessibility.
Globally, city centers and emerging suburbs are the top two performing zones.
City centers guarantee rental demand, while emerging suburbs offer appreciation potential.
In Nigeria, areas like Ajah, Epe, Gwarinpa, and Asaba are recording rising investor attention because of ongoing urban expansion.
According to Estate Intel(2025), Lagos alone attracts over 60% of all real estate investments in Nigeria, with ongoing projects worth more than ₦12 trillion.
Property Selection
Legal due diligence ensures that the property title is valid.
In Nigeria, this involves verifying documents like the Certificate of Occupancy(C of O), Governor’s Consent, Survey Plan, and Deed of Assignment.
According to the Lagos State Real Estate Regulatory Authority(LASRERA), over 25% of property transactions in Lagos between 2018 and 2024 involved disputes arising from incomplete or forged documents.
Globally, due diligence is equally vital even in developed markets; misrepresentation or zoning issues can derail property investments.
Financial due diligence, on the other hand, involves calculating your expected return.
If you’re buying for rental income, analyze potential yield.
For example, a property that costs ₦60 million and earns ₦4.8 million annually gives an 8% rental yield, which is above average in Lagos. Anything lower than 5% may not justify the risk unless the appreciation potential is strong.
Financing Your Investment
Most global property investors don’t pay 100% cash; they leverage loans or partnerships to scale faster.
In the U.S., about 73% of investment properties are financed through mortgage structures.
In Nigeria, however, only about 11% of investors use mortgage financing, largely due to high interest rates and a lack of awareness of cooperative financing models.
First-time investors should explore multiple funding paths from bank loans to real estate cooperatives, joint ventures, and even developer payment plans.
Some developers in Nigeria now offer payment plans spread across 12–36 months.
The key is to balance leverage with affordability.
Borrowing can multiply returns if done wisely, but it can also create financial stress if repayments exceed your rental income.
Globally, real estate crowdfunding is also becoming a modern financing trend.
Platforms like RealtyMogul and CrowdStreet allow investors to pool funds and invest in properties collectively.
In Africa, this model is growing through platforms like Risevest and Coreum.
For Nigerians with smaller capital, this digital model provides an entry point into international property investment.
Managing and Maintaining Your Property
Owning property is one thing; managing it profitably is another.
Property management determines how sustainable your investment will be.
Globally, poorly managed properties lose up to 25% of potential rental income annually, according to the JLL Global Real Estate Report(2024).
Management covers everything from rent collection to tenant screening, repairs, and compliance with local laws.
In Nigeria, where rental default and maintenance challenges are common, hiring a professional property manager is often worth it.
While management fees range between 5% and 10% of annual rent, the peace of mind and efficiency they provide outweigh the cost.
Globally, investors use data-driven property management tools to track performance.
Apps like Buildium and TenantCloud allow investors to monitor income, expenses, and occupancy in real-time.
Calculating Your Returns and Adjusting Strategy
The final step in buying your first investment property is to measure performance.
Investment is not a one-time purchase; it’s a living strategy.
You can regularly calculate your return on investment(ROI) and adjust your approach.
If your rental yield is below market average, review your pricing or explore renovation upgrades.
Globally, property renovation increases rental income by an average of 15% to 22%, while in Nigeria, simple upgrades like painting, fencing, or furnishing can increase rent by 10% to 18%.
Is investment property worth it?
Let’s look at the global performance trends.
According to Statista(2025), the global real estate market value surpassed $33 trillion, growing by over 7% year-on-year since 2020.
In countries like the United States, investors enjoy average annual returns of 8% to 10%, factoring in both rent and appreciation.
Meanwhile, in emerging markets like Nigeria, property value in growth corridors such as Lekki, Epe, and Abuja’s Airport Road has increased by 15% to 25% annually over the last three years.
These figures are not projections; they are realities showing that property is one of the few assets that grow even when inflation threatens cash value.
One of the biggest reasons investment property is considered a good move is its ability to produce passive income.
When properly managed, real estate can generate a monthly or quarterly cash flow that cushions you against inflation.
For example, in Lagos, the average 2-bedroom apartment rents between ₦2 million and ₦4.5 million per year, depending on the location.
That means a well-placed investment can deliver rental yields of 6% to 9% annually.
Compare that with savings accounts that barely offer 2% to 4% interest, and you’ll see why investors are shifting focus to property.
Globally, similar trends exist.
In London, rental yields average 5.2%, in Dubai, they reach 8%, and in Johannesburg, about 7.1%. Beyond the yields, property also provides leverage, the ability to use borrowed funds to multiply returns.
For instance, a 20% down payment on a property that appreciates by 10% in a year effectively gives a 50% return on your equity.
This is one of the unique strengths of real estate that other investments rarely offer.
Hedge against inflation
When the cost of goods rises, so do property prices and rents.
The World Bank reports that global inflation averaged 6.8% in 2024, yet property owners in major cities experienced capital growth of 10% to 14%.
Essentially, while inflation erodes the value of cash, it increases the value of assets like real estate.
In Nigeria, inflation has remained above 27%, which means those holding naira in savings accounts are losing purchasing power.
Property, on the other hand, often appreciates in tandem or faster, allowing investors to preserve real value over time.
In Lagos, over 25% of property disputes recorded by LASRERA in 2024 were due to incomplete ownership verification or fraudulent land sales.
Globally, market downturns can also affect short-term profits, as seen in Europe’s 2023 housing correction when property values dropped by 3% to 6% in select cities.
But long-term investors who held onto their properties saw recovery and even higher appreciation later.
Investment property also allows for portfolio diversification, which is vital for financial stability.
Successful investors combine real estate with stocks, bonds, and digital assets to balance risk and reward.
Real estate provides the anchor of stability in this mix.
According to Wealth-X’s 2024 report, over 90% of global millionaires hold a significant portion of their portfolio in real estate.
They do this not because it’s trendy, but because it offers a predictable return curve that compounds steadily over time.