Oga Chinedu’s story is one every Nigerian hustler can relate to. After years of saving and dodging “urgent 2k” requests from cousins, he finally bought a 3-bedroom flat in Surulere in 2022. The property was his pride, but Chinedu wasn’t one to sit on his oars. He wanted more, another property to secure his family’s future and maybe even start that real estate empire he’d always dreamed of. But how? His bank account wasn’t smiling like it used to after the first purchase. That’s where leveraging comes in, and today, we’ll break it down so you too can turn one property into two.
What Does It Mean to Leverage Your Property?
Leveraging your first property means using its value or income to fund the purchase of a second one without selling it. In Nigeria, where “landlordship” is a flex and real estate is a trusted wealth builder, this strategy is gold. Your property, whether it’s a flat in Lagos, a duplex in Abuja, or a plot in Enugu, can be your ticket to expanding your portfolio. Here’s how to do it, step by step.
Step 1: Know Your Property’s Worth
Before you start dreaming of that second property, you need to know the value of your first. In Nigeria, property prices can increase faster than fuel prices during scarcity. That increase is called equity.
Step 2: Use Your Property As Collateral For A Loan
This is where the magic happens. Banks and financial institutions in Nigeria, like First Bank, GTBank, or even mortgage firms, can give you a loan using your property as collateral. Approach your bank with property documents (C of O, survey plan, and all). After proper evaluation, they’d offer you a loan with a reasonable interest rate repayable over a period of time. With this, you can afford a down payment on a second property.
Pro tip: Negotiate the interest rate and loan terms. Compare offers from at least three various sources to avoid stories that touch.
Step 3: Generate Income from Your First Property.
Turn your property into a source of steady cash flow by renting it out instead of living in it. Options include long-term leases to tenants, short-term rentals like Airbnb in high-demand cities (Lagos, Abuja, and Port Harcourt), or using the space for co-working or events.
You don’t have to manage it yourself; many real estate companies now offer property management and rental services, helping you earn hassle-free rental income while they handle tenants, maintenance, and payments.
Step 4: Explore Joint Ventures or Partnerships.
In Nigeria, there are now property development companies that are exploring co-ownership. This option of buying real estate has been accepted far and wide, why? It lowers the financial barrier. You don’t need to empty your life savings to earn profits.
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Step 5: Manage Risks
Leveraging is powerful but risky. If you default, the bank can seize your property. Property values may drop in crowded markets, so invest in growth areas. Bad tenants can delay rent so you can screen occupants well or hire a property manager. Don’t rely on one income source; diversify or start a side hustle to support your investment.
Final Thoughts.
Leveraging can accelerate your path to wealth, but it comes with risks that require careful planning. Loan defaults, market fluctuations, and tenant issues can all impact your returns and financial stability. That’s why it’s essential to research your investment areas, manage your property wisely, and protect yourself with multiple income streams. A side hustle or alternative source of income can provide the cushion you need to stay afloat and make the most of your real estate journey.
