Latest / Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint / NOI and Comps: The Real Estate Metrics That Make Money

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NOI and Comps: The Real Estate Metrics That Make Money · Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint

0:01
Today on the podcast, we're going to be looking at how you
0:04
can tell a good business opportunity.
0:07
Again today on the podcast, we're going to be looking at how
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you can decide is this a good opportunity to invest time and
0:15
money in? Is this also the kind of
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opportunity that you can take to potential investors and they
0:20
will also want to drop BA. That is what we're going to be
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looking at today. Now I'm making today's
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recording, of course, in the parking lot and you can hear
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some noise in the background because I am actually at my kids
0:33
school. The house is full as in very
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full because my in laws have been around.
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My father-in-law just turned 70. So plenty of J plenty of
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shopping, you know, stuff like that.
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And for those of us who are self-employed and who work from
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home, you know, sometimes in laws or family members who
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understand that, you know, I got to make these calls or else no
0:53
money coming in. So I find it easier at times
0:56
like this to, you know, like I just dropped off the kids and I
1:01
said, you know what, let me just bang out some calls before I go
1:03
back home because when you go home, you got to socialize.
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You know, you can't be antisocial when you're in laws
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around. So that's the reason why I'm
1:10
outside my kids school. And that's why there's all that
1:13
noise in the background. Now, this podcast is not about
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my family situation. Oh, by the way, please pray for
1:20
my father-in-law who just turned 70, and also by extension, other
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people in our families who are also turning 70.
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Let's keep praying for long life.
1:28
Let's keep praying for good health and also for those of our
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family members who are getting older to realize that they still
1:36
have value and this will have worth and they still have
1:40
contributions to make to society.
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Now, the reason why I'm saying that is because last week when I
1:44
was on the radio show, old Man called in, you know, she prayed
1:47
for me. She said that my show is great
1:49
and everything as I was talking about how she's in retirement
1:53
and, you know, she no longer has any vitality left in her.
1:56
You know, so hard to tell her that Mama is not like that.
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You know, yes, you're old or older, but it just means you
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can't do jump. You can't jump up and do push
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up, you know, like we young people, but that's still still
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there's youth. You know, there's not youth, but
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there's, there's still worth that you have, even though you
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are old, you know, there's wisdom that you can pass along.
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There are businesses that you can still start.
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There are charitable endeavours that you can still do.
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So please let us remember to pray for members of our families
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who are turning, you know, 707580.
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You know, some of them feel like they're old and they're washed
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out. So that's not my father-in-law.
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But I'm just saying, let's pray for my elders.
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They need our prayers and they also need our our love because
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I'm sure it's not easy getting old or older in age, you know,
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and then you know, your classmates are dying and things
2:46
like that and you know, must be a very lonely experience.
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So this podcast is not about old age and old people.
2:55
But what I do here is I solve business problems, especially
3:00
taking the best of sales and marketing advice and trying to
3:03
apply them to the Nigerian experience.
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That's what I do over here. So if these are the sorts of
3:08
things that you are concerned about, then welcome to the
3:10
podcast. I'm your host.
3:11
My name is Tavishima Aede and for years this is all I have
3:15
been doing. Practical, realistic, relevant
3:17
insights so that we can get results in the Nigerian market.
3:21
So if you're ready to start growing your business the
3:23
Nigerian way, then stay locked in.
3:25
Stay tuned into this podcast. Subscribe on Spotify, YouTube,
3:29
Apple or any player of your choice.
3:30
And if you'd love to connect, you can call or send me a text
3:33
message or a WhatsApp message on 08064662140.
3:40
Now today on the podcast, like I said, we're going to be looking
3:43
at how can you tell a good business opportunity?
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How can you tell if this deal is worth spending time, worth
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spending money on? And if you're shopping for
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investors, how do you know that this is the kind of deal that
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when you show your investor, their mouth begin to water,
4:00
they'll begin to salivate. They'll begin to say, how can I
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get in on this deal? Take my money, take my money,
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take my money. That's what we're trying to
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figure out now. How can we do that?
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Now this is the context and this is the reason why the support
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guys listener, his name is Emeka Ugochuku Anthony.
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Well, actually he wrote Emekam, you know, with an M and I'm
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wondering is that a typo? I'll be you know, Emeka is there
4:25
and then Emekam also, you know that one also there.
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So anyhow, I don't know those of you who are able speakers, let
4:30
me know. So Emeka Ugochuku Anthony, he
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runs a business GNR Real Estate, Green Nest Realty, you can find
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him on LinkedIn. Of course, he followed me on
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LinkedIn. Eventually he started chatting
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with me on WhatsApp. And this is just a series of
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conversations that have gone on, a series of chats rather that
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have gone on between me and Mr. Emekam Ugochuku Anthony.
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Oh, by the way, Emekam, thank you very much for listening to
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the podcast and please share the podcast with other people who
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are going to get value from the show as well.
5:07
But before I continue, one thing that I've been saying on the
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podcast, and let me repeat again in case there are some people
5:13
that have not heard it before, with the advent of Truecaller, I
5:18
repeat Truecaller, TRU. E.
5:21
With the advent of Truecaller, people having it on their phones
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and you know, social media, Google, things like that,
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potential customers are researching us all the time.
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They're researching us all the time.
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The reason why I'm pointing this out is because when America hit
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me up, of course he hit me up under his company name.
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But of course, for everybody, I always run you through
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Truecaller. Truecaller is installed on my
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phone because I want to get a sense of who it is that I'm
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talking to because I don't want to talk to scammers.
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I also want to make sure that I'm talking to people who are
5:56
worth spending time with. So if I run you through
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Truecaller, but you know, you package your WhatsApp as, you
6:04
know, the greatest, the greatest hotshot investor in in what now?
6:11
What are they investing in these days in Web 3 and crypto and
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this disease is that that. But then I run you through
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Truecaller and then I see your Troy identity and I see that,
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look, you're a kid who is still in secondary school and you're
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just trying this, trying this, trying that.
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You know, last month you are doing Forex, now you're doing
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crypto. You know, that's just how
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basically let us source people out.
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So basically our customers are doing the same thing.
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Maybe not all of them, but people are running us through
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Truecaller. They're running us through
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social media. So it's important.
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Now, the reason why I bring this up is because for Emeka Uchuku,
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if you run him through Truecaller, the name that came
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up actually was Tony Cruz, which is not a bad name.
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Things sounds real nice, nice, you know, sounds real cool.
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But the problem is this. Excuse me for sorry.
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Oh, you know, apart from podcast recording and consulting calls,
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there's also plenty of J over the weekend.
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So I've lost my voice a bit. So what was I?
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Now, those of us who are in business, those of us who are
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using our phone numbers for business, we do not have the
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same latitude. We do not have the same freeway
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that that other people have. So now my wife, for instance, if
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she decides to put her name on WhatsApp, on Truecaller or
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whatever, as Tony Cruz, you know, that's our own problem.
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You know, she's not doing a business.
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Nobody can judge her. But I can't put my own name on
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any of these things as Tony Cruz because you don't make me look
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somehow. You might make me look on
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serious, it might make me look unprofessional.
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It might make me look as a scanner.
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Scanner. I say scanner.
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So when you're going to go and register your name at Glow
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office, MTN office, Airtel office, if you are a business
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person, please put your full government name.
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When somebody runs you through social media, it is more
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impressive that they see a Mecca Mugochuku Anthony than they see
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Tony Cruz. Especially since you know,
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you're in the business of doing real estate.
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We don't want to do, we don't want to use any monikers or
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nicknames that make us look unprofessional.
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Excuse me, you know, especially since in the real estate space,
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people are afraid of scammers, especially in Abuja where
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people, they run real estate scam anyhow.
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So basically, you know, when it comes to our public profiles
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like appear legit. So for those of you who haven't
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heard this bit of advice before, I'm giving the advice again,
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please. Real names, strictly real names,
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no nicknames. I repeat, no monikers, no
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nicknames, either real name or business name.
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There is no halfway point, either real name or business
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name. So next time you're in law
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office and they say register Yasim, use either your full real
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name or use full business name. No slash.
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Nothing cool, nothing cute, nothing whatever.
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And this is for those of us who are in the business.
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So you're listening to this podcast.
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You don't care about starting a business?
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No problem if you call yourself Buttercup Hot Chick 69, that's
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not a problem. By the way, that was what my
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sister-in-law was using. Buttercup Hot Chick 69.
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I have to tell her, look, your young lady, you want people to
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take you seriously as a business woman.
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You're going around and when somebody research you, what
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they're saying is Buttercup Hot Chick 69 really My friend
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changed that thing. Of course, she argued, but now
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that she don't do for, you know, in business for like, like 6
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years now, she has seen the light.
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Everything is now becoming much more professional.
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So this thing applies to both young men and two women.
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You can't be running around as Tony Cruz and you can't be
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running around as Buttercup. Hot Chick 69.
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Real name, your full government name or business name?
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Full business name. There's no, no half, no half
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measure. All right, then let's see.
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What else? OK.
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Yeah. So thank you very much for Mecca
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Mojuku Anthony, remember again, GNR Real Estate, you can check
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him out on LinkedIn. At least I know he has a profile
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on LinkedIn. Then thank you very much for all
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the kind words because he said my podcast is great.
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He said it's interesting. He said it's knowledgeable and
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that I talk about things that apply to other aspects of life.
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So thank you very much, Mr. Emeka.
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That is really, really high praise.
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And yes, that's the goal of the podcast.
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So I'm glad to see that it's achieving the intended effect.
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So please, Emma, come, please share the podcast with other
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people as well who might find some great interesting or
10:52
knowledgeable things over here on the show.
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Now to the meat of the question, How can you tell if this is a
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good business opportunity? I want to get investors.
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How can I present it in such a way that when they see it, they
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will just be throwing dollars at me will just be throwing dollar,
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dollar, dollar. I'll just open my bag to catch
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the money, but then dollar will hit me on the head.
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Dollar will hit me on the chest being dollar will hit me on the
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back. That's the goal.
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People just throwing money at us.
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So general real estate American, the guy says he's a real estate
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investor and that his goal is to acquire properties that cash
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flow. Now this is a very good idea,
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very, very good idea. But The thing is it's an old
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it's a very old idea, but it's a good idea.
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Now this is what cash flow means.
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Cash will just means you're running your business and then
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cash is flowing in and cash is flowing out.
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We just want to make sure that the one that is flowing in is
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big. The one that is flowing out is
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small. The surplus on top that is the
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one that we can reinvest in the business and that is the one
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that we can use to flex and want each hour.
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I repeat, cash flow just means that money is always flowing in
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to a business. Our money is always flowing out
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of a business. We just want to make sure that
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the one that is flowing in is big, is full, is buckle, is
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plenty. The one that is flowing out, we
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want to make sure that it is small or smaller so that the
12:28
surplus that is on top will reverse back into the business.
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Who used to pay school fees We used to buy shawarma and they
12:36
were also used to do you know, vacay in December, you know,
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travel abroad and go somewhere nice.
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Also buy wifey something nice or buy girl girlfriend something
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nice. For those of you who are women
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listening to this podcast, you know it's also the same buy a
12:50
husband something nice. You know, we need love to buy
12:53
your boyfriend something nice. We need love to stop buying
12:56
singlet and boxer. Nothing is, you know, we're now
12:59
in the 20th century. I'll be 21st century.
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No, no, to shut unboxer. Buy us something nice too.
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We need love. Where was I?
13:08
So that's the idea behind cash flow.
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Now, like I said, cash flow in real estate is a good idea.
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I first came knew about it by Robert Kiyosaki and his book
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Rich Dad. Poor dad.
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But this is old. That book is like 30-40 years
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old. And then also in Lagos, my last
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landlord, Mr. Bello, God rest his soul, he's no longer with us
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anymore. That is also how he built a huge
13:34
measure of his wealth. So I think he was a professional
13:36
engineer somewhere and he got some money.
13:39
And so he started buying properties in Ibadan, where he's
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from, and buying properties in Lagos.
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And that was the guy's strategy basically he was buying things
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like cash flow. So you buy a property for XYZ
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amount, but The thing is cash flowing, the cash flow might not
13:56
be big. So see, it's like this.
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Some people say, why would I bother with real estate?
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You know, I buy this house at X million, I rent it out at Y
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million. The money that is coming in
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every year, if you look at it is not much.
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It's only like 1 million or 1.5. Why would I go through all this
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stress just for 1.5 M? Yes, in a way you're correct.
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But The thing is, people like Mr. Bello now who are owning
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dozens of property in a banner and dozens of property in Lagos,
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what they're doing is they're getting 1.5 annually on one
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property, but they own like 50 or 60 properties.
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So you see how that game works? You know, some of you are
14:38
thinking too small. Yes, you're only making 1.5 MA
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year on one property. You know if you leave it down
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only one property then you're wasting your time because I
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would like go through all the stress for only 1.5 S.
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The goal for this cash flow thing has always been scale and
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that's why in my car would you go after they reached out to me.
14:59
Because the small small couple you collect on one house is not
15:01
enough. Where you own a pool of houses,
15:04
a pool of developments, a pool of, you know, buildings, then
15:07
the thing starts to make sense. So this is a good idea, but it's
15:12
an old idea. In fact, there are some people
15:14
who are in the real estate space who say that this strategy is no
15:17
longer doable. See, The thing is, I'm not in
15:20
real estate, so I don't know. But I know that, you know, boys
15:22
don't begin to shout that this whole cash flow thing doesn't
15:24
work because of interest rates and money markets.
15:28
That interest rates are high, the cost of money is high.
15:31
And so because of this, you can't get any appreciable cash
15:34
flow on properties anymore. But like I said, I am not a real
15:39
estate professional. Let me say it again, I am not a
15:43
real estate professional. In case you didn't hear me, I am
15:46
not a real estate professional. This is just gist that I am
15:50
hearing. But this whole idea, investing
15:53
in casual properties is a good idea if you can make it work.
15:57
Whether that strategy no longer applies today and was only a
15:59
strategy that worked 40 years ago, I have no idea.
16:02
Talk to more educated and established real estate
16:07
professionals. So the opportunity now that has
16:14
fallen into a maker's lap that he wants to know if this is a
16:18
good investment opportunity. Excuse me, He has found a house.
16:22
The title is C of O. That means certificate of
16:24
occupancy. That is the highest title that
16:26
you can get in Nigeria. When you get it, it means that
16:29
this house is your own. So if you want to come and buy a
16:32
house from me and I show you C of O with my name on it, then it
16:35
means excuse me that I have complied with every single thing
16:42
and the Nigerian government is satisfied and I willing to stamp
16:46
and to show that me I'm the owner of this property so he can
16:49
buy the property from me in full confidence.
16:56
Sorry about that. Where was I?
16:59
Yeah. So the title on the on the House
17:01
now is COO. So that was good title, Good
17:03
title. But of course, if you have to
17:05
deal with America, go and check it first.
17:08
You know, I asked to see the COO one sided first.
17:13
Then where else? OK, so the property, he says is
17:18
in a good location. He says it's in New London in
17:21
Lagos State. And by the way, I want to say
17:25
something. I've noticed that there are all
17:28
these places cropping up in Lagos.
17:30
I've had like New London now and I want to say something as a
17:33
team man from Benwick State. There are only two Londons in
17:39
the world, right? There are only two Londons in
17:42
the world. The first London is of course
17:46
London in the UK. That's the original London.
17:49
The second London is in a town in Adipo in Benway State and
17:56
people call it Adipo London. I repeat, people call it Adipo
18:01
London. So one moment, let me just wind
18:04
up OK, Sorry. About that, I was becoming
18:10
really conscious about the noise.
18:11
I said let me wind up, you know, let me do, let me be
18:14
professional. Not every time.
18:15
Noise, noise, noise. OK, what was I?
18:18
So I was saying, he said this place is in New London in Lagos
18:22
State. And I was telling people that
18:23
look, there are only two Londons, There is London in the
18:27
United Kingdom, in Britain. Then if you go to Benway State
18:32
and ask for Adipo London, they will take you to a little town.
18:37
So as me, they'll take you to a little town in Benway State
18:39
called Adipo and the nickname for Adipo is Adipo London.
18:44
So those of you in other parts of Nigeria, stop naming your
18:47
places New London because there is already a London in Nigeria
18:53
and that is Adipo, London. If you're not from Benway State,
18:58
you're not from Adipo. Stop calling your place London.
19:02
It is not London. There are only two Londons,
19:04
London, UK and then Adipo, London in Nigeria.
19:08
Any other London in Nigeria is a counterfeit.
19:11
You can call yourself New Dubai. Like I hear that, what's it
19:16
called? Eco Atlantic.
19:17
They say Eco Atlantic is the new Dubai.
19:18
You can call it new Dubai, you can call it new America, but
19:21
please no more new Londons. There is only addictable London
19:26
in Nigeria. So that's my rent.
19:29
Then the asking price for this piece of property is 200 M and
19:35
the mechanical trying to look for financing, but everybody's
19:37
asking him to drop 20 or 30% of the value of the property.
19:42
And when I was talking about raising money, raising finance
19:45
from banks, you know, this is something that I told you guys.
19:48
Now, if it is for land and property, nobody will just give
19:51
you money free like that. They'll ask you to drop
19:52
something. And he said some people say 20%,
19:56
some people say 30%. And yeah, it's like that.
19:58
That's what I said on the podcast.
20:00
People will ask you for 20 or 30%.
20:02
So if the property is worth 1 billion, they want you to have
20:06
some skin in the game. They want you to drop 20% or 1
20:08
billion or 30% of 1 billion. Now here there is some places
20:12
they will even ask you for 40%, but the bank is not going to
20:17
give you money without you dropping something.
20:20
So another option now that he's looking at is how he can raise
20:24
money from investors by promising them 5% return on
20:28
their capital. And so his question to me was,
20:30
is this a good deal or not? And then how to find investors?
20:35
So this is the detail of the conversations that followed
20:39
between me and him. So the first thing that I
20:45
pointed out to him, because if you notice the property is here
20:49
is 200 M, but he's looking as if tenants no D for the property
20:53
yet because he was asking me what should I do with the
20:56
property, You know, should he rent it out?
20:58
Should he do short letting or things like that?
21:00
So it looks as if there's no property, there's no tenant in
21:04
the property. Yet.
21:08
Oh, sorry about that. All the noise, you know, I'm in
21:09
the car now, so things are just anyway, what was I?
21:13
So no investment, no tenant in the property yet.
21:17
So I had to tell him that first of all, your intentions are
21:20
good, but you are not yet a cash flow investor.
21:25
So sorry if I'm using strong language, my brother Emeka, but
21:30
you know, real estate people reach out to me.
21:32
There's even one last week, sorry, two weeks ago that we
21:36
were supposed to do some consulting together, but it
21:39
didn't quite work out. Guy was not able to raise the
21:43
raise the pay for my fee. But just like how I'm giving you
21:47
value, I still gave him value. There's nobody that crumbs
21:50
across my table that goes away empty handed.
21:53
I will answer one or two questions, but by the time
21:55
handshake is entering elbow, I will say, look, you know what?
21:58
Cough up some money. You've been listening to free
22:01
podcast episodes. I've already given you some
22:03
value free of charge. So the way this thing is going
22:06
now, you guys drop something. Let's make this thing official.
22:09
You know, don't be like boys in a dating relationship.
22:13
You know, you want to be enjoying the fruit, but you
22:14
don't want to buy a ring, you know, so commit.
22:18
So anyway, what was I? So bottom line is, America, I'm
22:24
sorry if I'm using very, very strong language, but I'm just
22:26
trying to be blunt with most of you who are coming across my
22:29
table for someone in this situation.
22:32
You are not yet a cash flow invent investor because your
22:36
property has no net operating income.
22:40
Let me repeat, you're not a cash flow investor yet because your
22:44
property has no net operating income or NOI as you will in the
22:50
field like to call it. Now, this is also another very
22:55
old idea that I've heard from Grant Cardone and I've heard
22:59
from Robert Kiyosaki. You know, Rich Dad bought that
23:01
series. And also I've heard about it
23:04
from my wife. That's because my wife is a CFA.
23:07
Well, she's not a CFA yet. She has finished Level 1 and
23:09
level 2. So I let me take off my glasses.
23:15
Sorry about that. Yeah, I use glasses for work.
23:18
But, you know, I started the podcast and I forgot and it was
23:22
just awkward. You know, I use my glasses for
23:24
work. I don't use them for podcasting
23:26
and where was I? So I heard a bad from my wife.
23:29
So my wife is she's not yet the CFA.
23:32
She has finished level 1. She has finished level 2.
23:34
Each time she passed one hand smooth, very smooth over, you
23:41
know, top like 1020 percentile. So I know that Level 3 she will
23:44
smash it and you know, she'll be fine.
23:47
So these are where I heard about these sorts of things.
23:51
See, this is the reason why you should be paying attention.
23:53
Open your ears wide, you're interacting with people, open
23:56
your ears, you're seeing books, open your eyes.
23:59
You know, because you never know when any kind of information
24:02
might come in handy. And this simple thing, now that
24:05
I've heard from Gran Kardon, Robert Kiyosaki and discuss with
24:08
my wife, The thing is becoming important on the Party Has
24:11
episode today because I'm trying to answer somebody else's
24:14
question. Even though this is not my
24:16
field. I repeat, I am not a real estate
24:19
professional. I will say it again, I am not a
24:22
real estate professional. One more time, I am not a real
24:26
estate professional. So please do not act on my
24:28
advice without confirming from someone who is a real estate
24:32
professional. So, if your property does not
24:37
have net operating income, you are not yet a cash flow
24:45
investor. Before I continue, for those of
24:47
us who are bad at mathematics and bad in finance, you see the
24:51
reason why it is good to marry a woman who knows all these
24:55
things. He will help you out.
24:57
So it's not just fine face and fine figure.
24:59
Does she know mathematics? Does she know one or two things
25:02
about math above finance? You know, these are the things
25:05
that we we look for as well. In fact, if you've watched this
25:08
film by a, what's her name? Omani, Omani bully.
25:13
What's it called? Love, Love and something.
25:17
What is it? Love in something something the
25:19
one that about Odogo Odogo para, although good that he saw this
25:25
girl in the village and you know he fell in love with her started
25:29
chasing her up and down. So you know it's the same thing
25:31
now that girl trauma. If you watch this film, you know
25:35
trauma is a beauty to behold. If you see our face fine babe.
25:39
The guy calls a child logo Abby a child logo or something like
25:43
that. I'm not able please so evil
25:45
speakers forgive me. So Chuma now fine face, frank
25:50
figure, everything, but then Chuma also has a business
25:53
someone is involved in selling perfumes and she's selling the
25:57
perfumes profitably even though she's trying to run a career.
26:00
So young man is the total package is not just face plus
26:04
figure is face plus figure plus finance, right.
26:08
You know we're looking for a help meet as we do Hosu somebody
26:11
that will be helping us, somebody that will compliment
26:14
us, you know any limit what was I so net operating income now.
26:22
Now the idea behind net operating income or NOI, is this
26:26
the NOI or the net operating income is just a number that is
26:29
trying to tell you how profitable is this real estate.
26:33
I repeat the NOI have the net operating income just tries to
26:37
answer the question how profitable is your real estate?
26:44
I'm sure you guys picked up on something.
26:45
How profitable? Profitable.
26:48
Therefore we're even going to consider the question, is your
26:50
real estate even generating property?
26:55
I say a property. Is your real estate even
26:58
generating profit? If we have not even started
27:02
generating profit really you can't say you are a cash flow
27:06
investor. You could be a, what are they
27:11
called now? People who fix and flip, people
27:16
who buy low and sell high, What are they called now?
27:19
You can be engaged in arbitrage. That is, you buy a piece of land
27:22
for 100 M, you do small development, and then you sell
27:26
it for 900 M. Maybe the development that you
27:29
did on it was 100 M, You sold it for 900, so you now pocket 700
27:34
M. That is not cash flow investing.
27:36
It's a different business model. So what you're doing is you're
27:40
looking for arbitrage opportunities, which is not bad,
27:46
but I'm just saying know the game that you're playing first.
27:48
If you're looking for real estate arbitrage opportunities,
27:52
know that that is what you're doing so that you can search
27:55
Google search ChatGPT or talk to your other industry
27:59
professionals and they will advise you on the best way to
28:04
look for arbitrage opportunities.
28:06
But then if you're investing for cash flow, know that that is the
28:10
game you're playing. So you can search Google, you
28:13
can search at GPT, and you can go and talk to your senior
28:15
colleagues so that they will advise you on how to play the
28:19
cash flow game. So we need to know the game that
28:21
we're playing. So the way that we determine net
28:25
operating income is we look at all the revenue, all the money
28:31
that the business is bringing in.
28:33
You will now remove all the necessary expenses, OK.
28:38
So you start first with how much money is coming into this
28:41
property. Then you now look at how much
28:44
money do we use to maintain this property, to run this property
28:53
and that will now give you your NOI.
28:55
So some of the things that we're looking for first of all is
28:59
we're looking for gross operating income.
29:02
Gross just means total. It means every, every, it means
29:06
share, put it anything that the money is generating, that the
29:11
property is generating, just put it gross operating income.
29:15
So in this case, gross operating income because we're in Nigeria
29:17
now, gross operating income will be rental income.
29:21
How much are you charging as rent or if you're using it for
29:25
short stay or short time, how much are the staying people or
29:29
how much are the short time people, how much are they
29:31
paying? Put that income there then other
29:34
income excuse me, like vending machines, you know, because
29:41
those one time one of my cousins came, she had a place to stay.
29:44
My house was full. I told her look sis I beg you
29:46
know no vex ah and she really vexed.
29:48
She was really really annoyed. If I till today she has not
29:50
forgiven me and she came to town, I should go stay in her
29:53
brother's house. But I told her look sis I beg
29:55
this house is full. No man cause problem for me and
29:57
my wife. You, you understand like if you
30:00
stay here as in like me and wife, you quarrel and we even
30:03
finish one big world two weeks ago.
30:05
I beg, I'm not ready for another quarrel.
30:07
But my sister begs, she begs seriously.
30:10
So we have to look for a place for her to stay.
30:12
And she said somebody told this one hotel here, we went to that
30:15
place and or more that place was short time, short time joint.
30:18
In fact, when we entered inside, the person asked us how many
30:22
hours. I said how many hour How this is
30:24
my sister Abuja people self no customer service.
30:29
You didn't even greet us like oh, good morning, blah, blah
30:32
blah. Welcome to so so so how can I
30:34
help you today? We just enter inside and now ask
30:36
us how many hour? So yeah, wow.
30:39
Anyway, so in our place now they had vending machines at the
30:43
bottom, this place that has a coke and this in the house Coke
30:46
and Fanta inside. And then you know, you put your
30:49
money inside and then you get your Coke and Fanta.
30:52
So even though the place was a short time place, at least they
30:55
made it look, you know, fancy as well.
30:57
I like Abuja people and Lagos people, we know how to package
31:01
short time, but still you have vending machine there.
31:03
So the money that is coming in from vending machine, the reason
31:06
why I just gave the example is I don't want you to know that some
31:09
of these ideas, it's not just theory, theory like it's
31:11
practical, it's happening, it is happening.
31:14
There are these kinds of establishments and they're
31:16
putting vending machines there. So the money from vending
31:19
machines then some people also use their property for, you
31:23
know, storage. Sometimes it's a business and
31:27
sometimes it's how for do like this guy was supposed to leave
31:30
your house. He claims he has left bought TV
31:32
and fridge and this and this and that is that is there.
31:35
And you tell him that look, oh boy, because these things are
31:37
there. I'm still going to be charging
31:39
you X amount monthly. You know something.
31:41
So any which way shall sometimes storage.
31:46
So excuse me. So that is the gross operating
31:50
income. How much money is this property
31:52
bringing? Anything that is bringing just
31:55
put it there. So rent, put it there, short
31:57
time put it there, short stay put it there.
32:00
Vending machine, put it there. Storage, put it there.
32:03
Let's say boys come to your place to come and watch a
32:07
football in the evening. Everybody that comes to charge
32:09
them hundred 100 naira to watch AU how much?
32:12
Put it there. Or that is why they say gross,
32:15
gross operating income, every, every as everything, put it on
32:19
paper. Then operating expenses, because
32:23
houses cost money. Unfortunately, property tax, you
32:26
pay money. In fact, Abuja Municipal
32:29
Council, they've been going everywhere, threatening all of
32:31
us. Come and pay this tax, come and
32:33
pay that task or else we'll take you to court.
32:36
Tenement rate, You know, this, this, this the same sort of
32:39
rubbish that we used to meet when we're in, when we're in
32:41
Lagos, Look at councils, you know, everybody's looking for
32:44
money nowadays. So property tax, write it down.
32:47
How much for insurance, put it there.
32:49
Utility, Nepal bill, water bill, this bill that bill, put it
32:53
there. Repairs and maintenance, 50
32:58
toilets got broken in the building, The tenants refused to
33:00
replace it. You as property manager, you
33:02
replaced it, put it there. Property management fees, how
33:05
much are you paying your property management SHA?
33:07
Everything you are spending on that property, put it down.
33:12
So that's the first exercise you take.
33:13
Gross operating income, how much is this building generating?
33:19
Then operating expenses, how much money are we using to
33:23
maintain this property? When you gather it, now you just
33:26
do simple mathematics, you know, you just do plus and minus this,
33:29
plus this, plus this plus this, minus all of this.
33:33
By the time you are finished, if you see something in black, that
33:40
means if you see that something is on top good, you have net
33:44
operating income. The extent of the weather is
33:50
good or bad would depend on the extent of the NOI.
33:54
So the NOI is small then is not good, the NOI is big then OK,
33:58
that sounds good. Now there are some of you who do
34:02
this mathematics, you will try to figure out how much is this
34:05
business, this house bringing and how much are we using to run
34:08
this thing. Unfortunately, some of you that
34:10
you do this thing, what you see is minus something.
34:15
That means you do not have net operating income or you have
34:18
negative net operating income. That means you're you're, you're
34:22
in trouble. It means you bought the house
34:24
for one million. No, it means the house is
34:29
bringing in 1,000,000 every month, but then you're spending
34:32
1.5 million to maintain the house.
34:35
Sorry, he's bringing in 1,000,000 every year, but you're
34:38
spending 1.5 million every year to maintain it.
34:41
So essentially what it means is you're losing 500 K every single
34:45
year. So what you now need to do is
34:49
you need to look for ways to start making more money to
34:51
improve your NOI. So some people do that by
34:56
increasing rent. So that's the reason why
34:58
landlords in Lagos, you know, any small thing, increase rent,
35:01
increase and increase rent. So increase rent, when you
35:03
increase rent, you excuse me, when you increase rent, you
35:07
increase your revenues. Then you can also charge amenity
35:11
fees like parking for instance. And one people that have done
35:16
nothing well is Abuja Investments Company over here in
35:19
Abuja, I can't remember, it's Abuja Investments Company or
35:22
Abuja Market Manager. Something, something, something,
35:25
they are the ones that manage all the parks, all the markets
35:29
that we have here. So we say market, they manage
35:31
it, we tackle market, they manage it.
35:34
Which other market share, All these markets that we have all
35:37
over Abuja, they're the ones that are mark managing it.
35:41
Now in the beginning, back when I was a small boy in the 80s, if
35:45
I was going to market with my auntie, for instance, and our
35:48
man could stress my life because she was not a straightforward
35:51
person. She won't go to one shop and
35:53
then buy. She'll go to the first shop and
35:55
then price for like 10 minutes. Then she won't buy and move to
35:58
the next shop and then price and won't buy, then move to the next
36:01
shop and then price and won't buy.
36:04
Then she'll now go back to the first person.
36:05
I say the person in shop 3 offered me, you know, 59 less or
36:09
whatever, you know, match that price for me.
36:11
Then she now buy from shop A. Nothing used to vex me as a
36:14
child because me, I'm the one, I was the one, I was carrying the
36:16
load. I'm like Auntie can you just
36:18
walk into one shop and buy and let us leave.
36:21
This market is dirty, it is muddy, it is smelly, there are
36:24
flies all over. I'm walking in blood and dead
36:28
vegetables and stuff like that. Auntie please just buy it and
36:31
let us go. That makes you stress my life.
36:36
You go to market and spend 3 hours dirty, sweaty, smelly
36:40
market. Anyway, so back in those days,
36:43
now Abuja Investments Company or Abuja Property Management
36:47
Company or whatever car park was free, you come in, you drive
36:52
your car, you park, you go and buy something, you leave.
36:54
So maybe they used to make money from the people that own the
36:57
shops. But then one day, the market
37:03
managers, they became wise. Maybe people from Lagos came to
37:07
come and teach them and they realized that they were losing
37:09
money. They now started charging us to
37:13
park inside those places. You know, money was not much,
37:17
you know, 559-1010, you know, that was that was back then.
37:20
But now the money has gone up like, you know, 3300 naira per
37:24
car. You know, some of you think
37:27
there's only 300 naira. But listen, this is how people
37:31
increase their net operating income.
37:35
Remember net operating income, how profitable is this piece of
37:38
land, how much money is coming in, how much money is going out?
37:42
What is the difference, The difference there, that is our
37:46
net operating income. And you will hear live how Abuja
37:50
investments, are they making plenty of money or other Abuja
37:55
investments management company or Abuja Investment market
37:58
company or something like that. The next time I go to market,
38:01
I'll check, excuse me, I'll check the receipts and then come
38:05
back on the podcast and let you guys know.
38:08
So they're now just 100 now per car.
38:10
You say 300 now, what is 300 now?
38:12
But just we just listen. Let us assume that only 100
38:16
cars. Will.
38:17
Pass the market today and by the way, now 100 cars that is small.
38:22
I don't think there's any market in Abuja that only 100 cars will
38:25
drive through and in Lagos, I do not think there's any market
38:29
that only 100 cars will drive through.
38:31
So let's say 100 cars coming, if you're charging them 300 naira,
38:35
that is 30 K day. Now Abuja investments management
38:43
company or marketing company or whatever, they are already
38:45
collecting money for rent, money for stores and money for all
38:50
kinds of things from the people that are inside.
38:54
But then they also collecting 3300 naira from all of us who
38:57
driving. So let's say that they're taking
38:59
30,000 naira daily. So you say 30,000 naira per day.
39:02
That's not much. I'm coming.
39:05
What that equals to is 600,000 naira monthly, assuming that it
39:09
is a market that only operates from Monday to Friday.
39:12
It doesn't open Saturday and Sunday and that is not the case.
39:16
But I'm just trying to show you guys something.
39:19
So on on top charging people 300 naira, you're now ending 600K
39:27
monthly. But that 600K monthly is just
39:31
for one location. And Abuja is a big ass place.
39:36
I don't know how many markets there, but let's just guess that
39:38
we have 100 of these markets in Abuja.
39:41
Let me just guess, this is me guess.
39:43
You know, please, I'm not saying that there are 100 locations,
39:47
but I'm just trying to show you how these things scale, that if
39:50
you can get 600 naira monthly from one location, right?
39:54
You manage markets, you own markets and then you have 100
39:58
locations, that is now 60 million naira monthly that you
40:03
get from just charging people 300 naira per entrance.
40:10
So those of you who are on that place, there's this place on
40:15
Lagos Island, it's next to this like Uba building is close to
40:19
like where the water is and. Is only cars that park there
40:24
right now back when I was in secondary school the last time
40:27
that I went there, I think they're already charging A-100
40:29
naira per car. I look at all those cars, you
40:32
can now see how with that job, if you're able to do this sort
40:36
of thing in Carmo market in Abuja now just a local market.
40:43
So it's. Free for all.
40:45
So there's no parking space. There's somebody there that owns
40:47
a piece of land. The person is something
40:50
brilliant, they cut down all the grass, they arranged everything
40:54
and they leave the place open. And what they do is you want to
40:57
park your car here, you pay that guy 100 naira.
41:01
So those of you who have property lying around, you can
41:04
see how charging amenity fees can be gaining you something and
41:09
can be increasing your net operating income.
41:14
So that's the way if your NOY is negative, those are some of the
41:19
things you can do, increase your rents.
41:22
Start charging. What are they called against of?
41:26
I just said the word that I forgot.
41:28
Start charging how many fees ahead like parking or whatever.
41:32
You can see that you can lead to good money.
41:35
And this is the reason why I tell my wife that the only
41:37
people that I enjoy in Abuja are the people, the shareholders of
41:40
this Abuja investments management company.
41:44
They're the only ones that are enjoying because I look at all
41:46
those markets and I see the three 300 and they're collecting
41:49
from us every single day. And I know that these are the
41:52
only people that are balling in Abuja.
41:55
So summary, how do you know if you have a good deal on your
42:00
hands and you're in the real estate space and you're looking
42:02
at investing for cash flow? The answer is very simple.
42:07
Do you have net operating income?
42:09
Do you have any way or do you have any financial metrics?
42:12
When I say financial metrics, I mean naira and Cobu.
42:16
The problem with you real estate professionals is you come and
42:18
say it's a good deal, it's a good deal.
42:20
You'll be saying is based in Luby, is based in this place, is
42:23
based in that place. This part is opening up, is
42:26
opening up. This is business here.
42:28
You want somebody to be throwing dollars at you.
42:32
You need answers to the questions that you answer in
42:34
terms of naira and cobo. Saying something is a good
42:39
location is one thing, but saying that this thing has good
42:43
net operating income because it is cash flowing 2 million naira
42:47
every single month. An investor cannot be listening
42:51
and say what this building that I'm looking at like this, You
42:54
say yes, Sir. You say you're generating 2
42:56
million naira every month. I say yes, Sir, that 2 million
43:00
naira is profit. I say yes, Sir.
43:01
That 2 million naira is profit, Sir.
43:03
That's the reason why I'm in front of you today, because I
43:06
need to borrow some of your money to do this, to do this, to
43:08
do this, so I can acquire this building these two million that
43:10
is coming every single month. I'll be able to sort you by
43:14
giving you 5500K per month until we pay you in full and then we
43:19
add interest or you know, whatever.
43:21
But sure, when the conversation now enters Naira and Cobo, it's
43:25
a different ball game, same organ investor.
43:29
Give me this money, uncle. So, so, so you give me this
43:32
money because this piece of land is in Metama.
43:34
Metama is a good location. That's not a very strong answer
43:38
to give the person. We should always look for
43:40
answers that are naira and Cobo financial metric.
43:45
That is something that everybody understands.
43:48
You say, young man, are you telling me that if I give you
43:50
100 M now, over the course of the next four years, you're
43:54
saying that you will pay me back 300 M?
43:58
That kind of conversation, Naira and cobo, those are the kinds of
44:02
conversations that we should be having.
44:04
So in other words, like my Uncle Sam advised me, Sam Osan,
44:10
anyway, not really my uncle by the way, but went to the same
44:13
church. So I thought his name was Osara
44:15
and Koi until we're getting married because my father-in-law
44:19
is from Azisha A dostit. So that's not when I told him
44:26
that Uncle Uncle Sam or Sarah Koi is coming say or sorry what
44:30
I say oh sorry Koi. He said no spell it.
44:31
I spelled it. He said no, their name is not
44:34
Osani Koi, it's Osani. When I say what Sir, I say Sir,
44:37
it is Khoe. He say like Khoe is not Koi.
44:42
It is when in my mind I'm thinking Khoe, how is that when
44:47
no Koi? But anyway, that's OK, no
44:50
problem Sir. So I started saying Sam was that
44:53
anyway. Then when I saw Kusam, I saw
44:55
Kusam. I saw my future father-in-law
44:58
and the guy said your name is not on sale in Koi.
45:00
He says what's anyway Uncle Sam laughed to say yes, he actually
45:02
is correct. I said what really He said yeah,
45:05
it's correct. It's all said anyway.
45:06
I said how come you don't tell anybody?
45:08
He said because people can't pronounce it.
45:10
So I just let them keep calling me Sam or Sarang Koi.
45:14
So just in case you're in my situation, you're toasting 1
45:18
Beanie Babe and you know her surname is Osan and Kui doesn't
45:24
know that surname is not Osan and Kui, it's Osan and Hui.
45:27
You pronounce it well when you're going to meet your in
45:29
laws. So these are the ways that you
45:32
figure out if you have a good deal on your hand, especially on
45:36
the real estate space and you are trying to invest in
45:39
something that is cash flow positive.
45:43
Also to answer this question, is this a good business deal?
45:45
We also have to keep asking ourselves some questions.
45:47
We have to run some comps, as Americans like to say.
45:51
Americans like to come up with really, really fancy terms.
45:55
Why you saying comps is comparisons?
45:57
Just say comparisons that all of us understand.
46:01
You're just need to 1 syllable to do what to save breath.
46:04
So run some comparisons. So every single time you're
46:07
listening to your podcast and you hear somebody say we need to
46:09
run some comps, that's what they mean, comparisons.
46:12
It just means compare A&B. There's nothing fancy.
46:16
So run some comparisons. Other houses in the location,
46:20
how much do they charge for rent?
46:22
Other properties in the neighborhood, what is the
46:24
occupancy rate? Occupancy rate means how many
46:25
people live in the house. Because there's one thing we
46:27
have seen in Abuja now, the game is not the same in Lagos because
46:32
in Lagos, everybody's charging million, million, million Basha
46:35
people are in the house. The house is not empty.
46:38
On the other hand, in Abuja, people are charging million,
46:40
million, millions and they look at the house and you see that
46:42
this house is not only empty, it has been empty for the last five
46:44
years. That's also another thing to
46:47
help, you know, the real rent of it, the real worth of this
46:50
property. People say this property is
46:52
worth 500 M OK is worth 500 M, but nobody is living here and it
46:57
has been empty for the last seven years.
46:58
Is it truly worth? 500 M is the mark I tell you
47:01
that is really worth that amount.
47:03
So run some comps, run your comparisons.
47:09
The properties in the neighborhood, do they rent?
47:11
How much do they rent for? Are they empty or are they fully
47:14
occupied? That's what occupancy rate
47:16
means. Compare when and then the other
47:20
houses. Do they use them for
47:21
residential? Do they use them for short stay,
47:23
for short time or is it for business?
47:25
This is how you compare and know whether your own is a good deal
47:30
or not. So if other houses are worth 500
47:34
million, but the houses are full, if our people are begging
47:37
them, please give U.S. House, give U.S.
47:38
House, give U.S. House.
47:39
OK, now it's beginning to make sense because it's 500AM, but
47:45
still people are rushing. OK, maybe there's something good
47:48
on our hands. So unfortunately, this is what I
47:54
told Emma Cam. The only way to answer this
47:57
question is your investment opportunity.
48:00
A good one in real estate, unfortunately involves homework.
48:03
You have to go and do the homework.
48:06
You have to figure out these numbers.
48:07
You have to ask these questions. And then you also, like our
48:10
Americans, like to say you need to run some camps, run your
48:13
comparisons. By the time you do all these,
48:17
you now know whether you have a good deal or not.
48:22
Now, the whole part of asking these last sets of questions
48:25
about running comparisons, looking at the locations and the
48:28
other houses in the neighborhood, is we're looking
48:31
for market signals. We also want the market to
48:33
signal loss whether this is a good deal or not.
48:37
Look, maybe I'm just a novice. Well, I am a novice because I am
48:40
not a real estate professional. But I really think all those
48:43
bodies, places in Abuja where they will say worth 500 million,
48:47
worth this million, worth that million, but then the house is
48:50
empty, the estate is empty, The estate has been empty for the
48:53
last 10 years. I really don't think it's a good
48:55
sign of market value because if the market really value
49:00
adopting, people will be rushing it like in Lagos.
49:04
In Lagos, if you go somewhere and they call 8 million for you
49:08
and you say this is too expensive, it happens lots of
49:11
times. You go away, you say let me
49:13
think about it, you come back in 2 days and I know somebody has
49:16
paid. That is a signal from market
49:21
about the real worth of the property.
49:23
So we're looking for market signals, we're looking for
49:26
market validate validation, We're looking to something
49:29
external to tell us whether this is a good deal or not.
49:33
And anyway is a good place to start.
49:35
If you have bad NY, your NY is minus.
49:40
And if the comparisons are bad, then my brother, I do not think
49:45
you have a good deal. But then again, speak to other
49:48
real estate professionals and they will put you through.
49:53
So let's take this away from real estate and look to other
49:55
people, other sectors. It's still the same.
49:59
If you're going to present something to an investor and
50:02
you're going to say give me money, throw some dollars at me
50:06
investing my opportunity, you have to be able to answer this
50:11
question in terms of naira and Kobo, Mark Zuckerberg and all
50:16
the others that have raised plenty of money.
50:18
It was a question that they answered in naira and Kobo,
50:21
sorry, in dollars and cents that we need X $1,000,000 to achieve
50:28
this level of traction. If we achieve this level of
50:31
traction and cover X percent of the market, we should be able to
50:35
explore advertising opportunities and be able to
50:40
start making money 10/15/20 years down the line at so, so,
50:44
so and so rate. And then we should be able to
50:46
pay you back so, so, so and so or the worth of your share will
50:50
now be equal to this and this and that and that.
50:53
So you can see there is not a matter of I believe I, it's not,
50:57
I believe, I believe it is always naira and cobble.
50:59
It is always dollars and cents. In fact, you know what I
51:05
brothers and hip hop say? They say if you don't make
51:07
dollars it don't make sense. So the answer should always be
51:13
financial, should always be naira and cobo.
51:16
It is at that stage that you can tell your rich uncle, the uncle
51:19
give me you know $5,000,000 or whatever and he'll throw the
51:25
money at you. He will only throw the money at
51:27
you when he sees that there is good financial sense here.
51:33
So that's it. OK, Yeah, let me wrap it up.
51:38
This is almost one hour. So that's it.
51:39
And that's all. Remember, if you'd love to
51:41
connect, you can call, send me a text message or WhatsApp message
51:43
on 08064662140. And if you're ready for more of
51:49
this stuff, especially as it relates to the Nigerian market,
51:51
then you're in luck because we have over 1200 episodes as at
51:56
the date of this recording. Just Scroll down.
51:59
Scroll down, we have thousands of episodes, OK, Well, not
52:03
thousands, hundreds and hundreds and hundreds of episodes because
52:06
we have 1200. So I can't say we have
52:08
thousands. By the time I have like, who
52:11
knows, maybe like 5000 episodes, I can now say we have thousands
52:13
of episodes. So Scroll down, keep listening
52:15
to the good stuff. Please make notes and go and
52:19
practice some of the things that you hear about over here.
52:21
And I hope like Mecam, you're getting value from it.
52:24
And please share the podcast with others who will get value
52:26
from it as well. So I will catch you all very
52:28
soon.