Feasibility study on the investment and profitability of 1 bedroom self contained apartments.

1. Need for mid sized accommodations 

Ladies and gentlemen, let's explore the property market. Properties for rent has proven to be a sure way of reaping rental income from the large population of renters in a developing country like Nigeria. We will be looking at the prospects for the building construction of a block of 12 flats of one bedroom each. This is the type of rental unit that have proven to make a lot of rental income for investors in the last few years. 

Over the course of the last 10 years, investors have found out that building bigger accommodation like 4 bedroom, 3 bedroom flats are sometimes counter productive as the first renter sometimes stay in the same house for life. Up to 50 years living in that same house, housing relatives, children, grand children and sometimes great grand children till they become so fixed in the environment that it will be almost impossible to move them from the house. They have been to numerous occasions and events for the landlords, and may have become as close as family, if they have not become inlaws sef. Lol. 

Investors are looking for shorter let apartments, because the turnover will be higher as more people will leave smaller apartments for bigger ones as their families grow bigger. Shorter let apartments also have more demand because people on the move, corpers, contractors and other people who wont like the high cost of hotels prepare to rent for a year, and may depart the area due to future assignments. 

2. Need to fit more rooms into a building 

Lands are costly, and there are payments for approval of a building you can only pay once, like building approval, local government rates, community youths fees and other payments. You will like to put as many flats in a house as possible. Some build as many as 30 flats in a compound, others 24 or higher, but I think 12 flats is the optimum number. You dont need to worry about parking spaces, those who rent these kinds of houses most times dont have cars, so there wont be problems with parking of cars. 

3. Cost of the building 

This is where it gets scary, because every item of importance in this country is highly expensive. Due to the policies of the government, there has been massive inflation in the cost of everything. Building materials costs are not left out of the rise. Every item of building materials, including the labour and workmanship has increased over 3 folds in the last 1 year alone. Transportation of men and materials is also high. 

After carefully calculating every cost associated with the land acquisition, payment of approval fees, fencing and gate, complete building construction and finish, till this house is ready for rent, the realistic total cost of building this size of house is about N160,000,000.00 (all costs inclusive) 

4. Profitability outlay

But just as the costs of building houses has been soaring, every other cost is also rising, including rental costs. It wont be strange to hear that this size of building can rent fo as high as N600,000 to N800,000 per flat for a new house. If the house is in the centre of the city, expect to collect much more than this amount. Even up to N1,200,000 in good locations. That's a P/E ratio of 17.77. (160,000,000.00 /9,000,000.00.

5. Conclusion 

I think this is a very good investment in light of the very poor PE ratio prevalent in many other investment options, and this is almost risk free. I have a unit of this kind of house, and I will want to get more as time goes on. The numbers may be crazy now, because of the acquisition costs, especially the construction costs, but be rest assured that the situation will improve with time, with good house management, you will hardly miss a month's rent. Rental costs are set to rise further, as houses in the fringes start to get more developed as the government provide more infrastructure like roads, culverts and electrification projects. 

We are ready to help you secure good land deals, empty lands range

from N10,000,000 to about N20,000,000 in better locations. The better the location, the likelihood of higher rental income. We can also help you build the house from start to finish, this is what we've been doing for the past 14 years here. We have a collection of more than 60 completed buildings done online.  Contact us today. 

Spyder880 

0803 335 0750 (Voice or WhatsApp)