By Akhigbe Dominic.M.
MON, JANUARY 23 2017-This is a typical case of an arrogantly lost opportunity in the Real Estate subsector. A colleague of mine occupies a three-bedroom in Ogba, Lagos. He took possession of that same flat in March 2012 as an Annual tenant with annual rent of N250,000 only. By three months to the end of the first year, the landlord had put him on notice of his intention to increase the annual rent by fifty percent. He wrote the landlord a reply declining such increment on the grounds that he was just barely a year old in the house and was yet to recover from the payment he made to secure the apartment as he had to actually cough out another N200,000 to cover Agency, Agreement and all what not. There were back and forth exchanges of letters in view of this. At the end of it all, the landlord reluctantly succumbs to his superior legal argument and allowed peace to reign (for a while) till 2014 on the old rate.
In January 2015, the Landlord through his Counsel served him two Notices; an increment notice and a Notice to Quit in the event he rejects the proposed one hundred percent increment in rent, an introduction of Service charge of N150,000 (One Hundred and Fifty Thousand Naira only) annually and other sundry charges putting his annual outgoing in the house at N729,000. (Seven Hundred and Twenty Nine Thousand Naira) Our friend thought this was bogus, provocative and unacceptable. He fired a reply and registered his refusal in very strong term. The Landlord’s counsel quietly left him to his choice as this was understood as an acceptance of the notice to quit.
Three months to the expiration of his rent, he did a letter via the counsel to the landlord proposing a counter offer of fifty percent increment and rejecting the service charge. The landlord’s counsel invited him for a meeting on receiving this letter. At the meeting, my friend was shown a letter of offer by a co-tenant in the lower floor of the house, who runs a thriving Electrical parts business from the group of shops downstairs. In the letter, the landlord was offered N800,000 and N150,000 annually for any other flat that would be vacant in the same house. He therefore made him see good reason why his counter-offer could not even be brought to the knowledge of the landlord. In fact, our professional colleague told my friend right there that the instruction of the landlord ab initio was to give him a Right of First Refusal based on the offer by the spare parts dealer or a matching order. He only decided to be moderate considering the fact that the tenant in question is a colleague. The long and short of this was, he had to either wait for the landlord to approach the court with a recovery suit or move out since in his own words; this offer is unrealistic and therefore cannot be accepted’. In his own wisdom, he opted to pack out of the flat and alternate his accommodation with a more affordable option. He spent over three months looking for a cheaper option within and close proximity without luck. It was clear to him that he has to take a long shot from his seeming cold comfort and face reality.
In February 2012, before my colleague opted for this Apartment in Ogba, I had introduced him to a Housing Mortgage opportunity somewhere in Mowe axis of Ogun State to enable him own a house of his own by installment on the sponsorship of the Federal Mortgage Bank of Nigeria. We went for inspection; he liked the Housing Units but complained of the then bad road and the distance. All he needed then was an initial deposit of 20% of the value of the N5.5m which translated to about #1.1m then. My friend obviously could raise that money effortlessly then. He instead opted to secure the rented accommodation in the heart of Ogba on the excuses of distance and bad road. The #4.4m naira would have been paid for ten years at less than thirty-five thousand naira monthly. For a practicing lawyer in Lagos, such a monthly stipend should not make him loose his sleep.
When General Buhari came into power, he dissolved the Board of The Federal Mortgage Bank of Nigeria. Activities are now on the hold in the Estate. Those who made Applications then already have Approvals and they live comfortably in their houses. My good friend had to pack out of the embattled 3-bedrooms flat to a rented Three Bedrooms Flat in this same Estate he earlier discredited with distance of bad road with an Annual Rent of N350,000 and yearly Service charge ofN75,000. His landlord is a bachelor furniture maker that occupies a room in Abule-egba with an annual rent of N42,000 who I also took along for inspection the same day with my colleague. While my lawyer colleague was seeing bad roads and distance, the Furniture Maker saw opportunity and painstakingly processed a three bedroom flat. The Furniture Maker’s annual Remittance to the FMBN N33,200 monthly which is N398,000 yearly. My friend’s (starting) annual rent is N350,000. The Furniture maker simply adds N49,000 to the rent to make up his annual remittance. In another one year, the rent is likely to move to N500,000 while the Mortgage Annual Repayment if fixed. In the final analysis, my colleague’s Furniture Landlord will start making profit from his Ten years Mortgage plan from the 2nd year while the lawyer has lost such an opportunity.
Being wealthy in Real Estate does not require rocket science. It takes seeing opportunities in every OPPORTUNITY. I remember telling my colleague; why don’t you jump into this boat now? If better income comes your way moving forward, you can buy a house in Opebi, put this on rent and move to Opebi. He was not persuaded. Today, he is full of regrets. The same road he lamented then has been made a dual carriage way by the Amosu administration. The Lagos-Ibadan Expressway is under-going massive reclamation. From the same Estate in Mowe, Obafemi-Owode local government, Ogun State, you make Igbosere in 40 minutes (on a good day). All my colleagues neighbors, who are Landlords in the Estate work on The Island. Where has the feared distance become a negative now? Why run away from the obvious? To me it is a panacea for poverty.
In my subsequent edition, I will profile major investment opportunities in the Real Estate subsector even in economic recession. Stay with us on this platform! It is full hardy to conceive that things would get better without taking pragmatic steps. The opportunities we would profile here are real and tested with practical proof. Join us without missing out.
Akhigbe Dominic.M. Esq., /Property Law Expert/CEO, H.I.E Properties & Homes Ltd/SENIOR STRATEGIC PARTNER, PropertyLogic Incorporated/Seasoned Business Coach/Columnist of The BusinessDay/Contributing Editor, govandbusinessjournal.com.ng