How to Save Money for Your Real Estate Investment as an Employee in Nigeria

Investing in real estate is a strategic and lucrative way of generating additional sources of income as an employee in Nigeria.

However, how to save and invest is the most common question on every earning person’s mind.

In this article, we will provide valuable insights on how employees in Nigeria can save for real estate investment.

Here are some tips to help you save enough money for your real estate investment as an employee with a limited budget in Nigeria.

1. Have a clear goal for real estate investing

The savings journey starts when you define what you want to accomplish. You will have to decide what type of investment you want to key into.

Is it residential, commercial, land banking, or Real estate investment trust (REITs)?

Establish a realistic timeframe. This timeframe explains how long it should take to reach your goal based on your income and savings potential.

2. Establish a spending budget

It’s important to be aware of your expenses before investing in real estate. 

From your important expenses such as food, transportation, and utilities (water, electricity) to optional expenses, list them in detail. After that, you can create a budget to know how much you can save for investment.

Also Read:

• 5 Fastest Developing Locations for Real Estate Investment Southwest Nigeria
• 10 Questions You Should Ask Before You Buy Land in Epe
• How Court Judgment Differs from Other Land Titles in Nigeria

3. Cut out unnecessary expenses

Once you have figured out the list of necessary expenses, it is time to cut out unnecessary expenses.

Start by reviewing your daily expenses, subscriptions, and services, you will find out that some of them can be replaced with cheaper alternatives. 

Opting for cheaper alternatives will reduce your expenses and lead you closer to your first investment.

4. Get into the habit of automatic savings

Automatic savings make it easier for you to save money without thinking. You can make use of fintech apps like PiggyVest or Cowrywise to automate your savings. 

Alternatively, you can explore the traditional savings method like Ajo. With this, you can save in bits for your real estate investment as an employee in Nigeria.

5. Settle your debts

To save money, first of all, you should reduce your borrowing and manage it properly.

It can be very helpful for your savings if your debts are under control. Take loans only for essential things; do not take loans for non-essentials.

Make a plan to repay your loan so that you can reduce the interest burden.

6. Look for opportunities to earn interest

In addition to saving, you can also look for ways to grow your money. Look for available options that offer favorable interest rates.

Some of these options are high-yield savings accounts or fixed deposits. These financial products allow you to earn interest and improve your earnings.

7. Open a savings account

By opening an account other than your salary account, you will have the opportunity to save and keep your money for investment. 

You’ll be able to set aside a certain amount each month, right when you receive your paycheck, which will make this task much easier.

8. Engage in side hustles

Supplement your income through side hustles to accelerate your savings journey. 

Consider freelancing, consulting, or starting a small business that aligns with your skills. This a smart way to generate additional income specifically for your real estate investment goals.

9. Use extra income wisely

When you receive a work bonus (gratuity, work bonus, etc.), use it wisely. 

If you have outstanding debts, it is advisable to use those funds to pay off your loans instead of saving the money. 

By allocating your extra income to paying off debt, you’ll be reducing the amount of interest and getting closer to saving.

Mistakes to Avoid When Saving for Real Estate Investment as an Employee in Nigeria

1. Changing saving patterns

One of the major mistakes is inconsistent patterns of savings. A lot of people save intensely for a while, then stop saving altogether when they have to cover unplanned costs. 

Shift your mind to a more rigid discipline and approach by making your savings an automatic expense every month, like paying utilities, no matter what.

2. Saving in accounts with very low interest rates

As much as it is important to have a savings account, keeping all your money in accounts with very low interest rates means the money is not working for you. 

Look into placing your savings in shares or liquidity of mutual funds with better returns than your average savings account.

3. Failure to acknowledge inflation

Over the years, Nigeria has had a relatively high inflation, which affects the purchasing power over time. 

If you don’t calculate how inflation will affect your savings, it means you are spending money today that in the future will be worth a whole lot less. Update your savings targets to at least equal the impact inflation will have on the money.

4. Giving into lifestyle

Resist the urge to spend as your pay increases, although it is tempting. 

Some employees live on the edge by spending more of what they earn and saving close to nothing to prepare for future expenses. 

Instead, just funnel a portion of the salary increase into an investment account you set aside just for real estate investment.

5. Ignoring market research

It is important to know the market dynamics before saving for your real estate investment.

To help achieve reasonable savings objectives, begin with research to identify where you want to purchase properties.

Price ranges are dependent on location. Knowing the location will help you save sufficiently. 

6. Ignoring key expenses

Legal fees and agency fees, along with other costs such as registration and survey fees, are often ignored when first-time investors are evaluating a property.

Consider properties from a cash flow perspective and forget about the purchase price alone. 

For first-time investors, placing these expenses into the purchase plan allows you to save the needed funds for your investment.

7. Investing too soon

Becoming a property owner elicits strong emotions for many investors, causing them to ignore their savings and plunge them into financial problems.

Do this too soon and you risk being crippled by expensive loans while still not achieving your goals.

Don’t put your mind through that emotional roller coaster. Stay reasonable and wait until you have saved enough.

Also Read:

• Different Land Use Plans Available in Lagos: A Complete Guide
• 5 Businesses You Can Start on Commercial Land in Lagos State
• Everything You Should Know About Freehold Land Title in Nigeria

Conclusion 

In short, to save money for your real estate investment as an employee, you need to change and improve your financial habits. Look for opportunities to earn extra money and avoid unnecessary expenses. If you follow these steps to save money, you’ll achieve your goals and soon invest in real estate.