Real estate is one of Nigeria’s most profitable sources of income and has made investing seem easy. In 2025, the real estate market is said to have a surge of over US$2.61tn with a market value of US$2.25tn, and this is a result of the increase in demand for luxurious apartments, especially in the major cities worldwide. However, just like in other industries, there are real estate investing mistakes that can affect your investment portfolio.
This might assure you that the real estate industry is a goldmine, but as a beginner who is just getting started with real estate investing, you need to keep in mind that you cannot become an expert overnight. And there is no doubt about making your way in real estate; not knowing what mistakes to avoid will set you back among your peers. This is why, as a beginner, it pays to know some of the common real estate investing mistakes made by others when investing in properties. That way, it is easier to avoid them when you start.
While getting more than you invest is the goal for investing, it is best to know the real estate investing mistakes to avoid when starting out as an investor in Nigeria. By understanding these 7 common mistakes below as a beginner in real estate investing, you can set yourself up for success and avoid costly errors.
Continue reading to find out what these mistakes are and how you can avoid them.
What are the mistakes to avoid when starting as a real estate investor in Nigeria?
It is very easy to fall in and out of debt as a beginner in real estate investing. But by equipping yourself with the necessary knowledge, you can learn the seven real estate investing mistakes to avoid as a beginner in Nigeria. Below are the seven common real estate investment mistakes that you should avoid:
1. Inadequate research and due diligence
This is one of the biggest real estate investing mistakes you can make as a beginner. Researching and conducting your due diligence before investing is the first. Before investing in any property, you need to check out the market, the property, and its surrounding area. This research includes all the history you can find, reviewing the property records or the documentation that entails the certificate of ownership or occupancy as the case may be, obtaining the property inspection, the liens or title issues, the trends with the local market by verifying the local rental income and expenses, and most importantly, the crime rate in that area.
2. Improper management of debts and resources
In real estate investing, it is very easy for you to fall into debt. Being the owner of the property is not all there is to it; there are also many other factors to consider, such as property taxes, insurance, and utilities. No matter what you do, you should not underestimate the expenses; hence, you will need to factor in all the costs when calculating your budget for the property.
3. Inadequate choice of property and its location
Another common real estate investing mistake you can make when starting as an investor is ignoring the importance of location and the property you invest in. Location is one of the most crucial factors you must consider because it determines the value of that property, its appreciation potential, and whether it has a high demand for rentals. You should also look out for its proximity to important places like schools, shopping centres, transportation, and the quality of the neighbourhood.
4. Mismanagement of cash flow and inadequate budgeting
Another real estate investing mistake you can make as a beginner is with your cash flow. You cannot manage your debts if you cannot track your expenses and income. Adequate budgeting and knowledge of cash flow will give you a better understanding of how to balance your payables and receivables. You need to be able to identify the potential risks in your finances. You must be able to make informed financial decisions when managing your acquired properties. Cash flow problems can easily be addressed by gaining control of your income and expenses; this also means you should never make a decision on a whim or agree to any investment plan without proper knowledge.
5. Failure to diversify and manage risk
This refers to the strategy of your overall investment plan. To be able to manage your risk, you should be able to balance your finances, and goals and make sure they all align. Diversification of risks is a strategy every investor must have, it gives you an insight into a variety of financial assets and this can help you reduce the exposure to any kind of risk your investment may incur. If you are unable to do this, you may be regarded as a negligent investor and you won’t be able to avoid unpleasant surprises.
6. Ineffective property management and maintenance
Bad management of property is another common mistake you can make as a real estate investor. To avoid this kind of circumstance, you need to be able to recognize the signs that are attributed to poor management, especially if you are going to use additional workmanship. To avoid this, you need to work on your communication skills with your hired personnel, and always do your best to communicate on matters that need immediate attention.
7. Lack of tax planning and compliance
Planning your taxes is a very important aspect of real estate investing. It offers you a variety of opportunities to allow you to optimize your earnings. Hence, you need to at least have a basic understanding of real estate tax, as it also ensures that your investment decisions are cost-effective and compliant with existing tax laws. Noncompliance with tax laws can result in interest charges and penalties that would cost you.
These mistakes listed above are the most common real estate investing mistakes; however, there are some others that you may encounter along the line. Investing in real estate as a beginner also means that you need to be able to seek advice from people and peers. This would ensure that you make sound financial decisions, and to do so, you can also seek help from a real estate agent, a real estate lawyer, and an accountant. You cannot do everything alone; the risks and gains involved can sometimes be handled if you can delegate roles.
Conclusion
Real estate investing mistakes can be easier to avoid if you know what to look out for when considering investing options. Factors like tax planning, knowledge of the investing world, efficient property management, management of debts and resources, and dedication to increasing returns on investment are crucial in the world of investment.
Remember that the entire point of investing in anything is to make money, and by familiarising yourself with the 7 real estate investing mistakes to avoid as a beginner, you increase the likelihood of your money not vanishing into the void of bad investments.
Ensure that your losses and profits are well aligned to avoid the feeling of inadequacy as you venture into the world of real estate investing.
If you are unsure of when to start your real estate journey, now is the best time. With the more time you spend as an investor, you gain more experience and knowledge, which makes it less likely to make sure clumsy mistakes.