Investing in rental properties can be a lucrative endeavour, but it comes with its fair share of challenges. In this article, I will explore valuable tips to help landlords protect their properties and navigate the complexities of earning income from real estate investments. The article will highlight some mistakes Landlords make that place them at the mercy of tenants.
Before delving into the article, it is important to recognize the potential risks that come with being a landlord. There are many risks with letting out one’s property; from non-payment of rent, and property damage, to outright claim of owning the property. It is important to be prepared and proactive to ensure you get desired rental income without unnecessary hassles or destruction of your property.

• 1. Thorough Tenant Screening. One of the most effective ways to protect your rental income is by conducting comprehensive tenant screenings. This includes background checks, verifying income and employment, and contacting previous landlords. Selecting responsible and reliable tenants can significantly reduce the likelihood of rent defaults or property damage. This is the most important consideration in taking a tenant. DO NOT accept any tenant on face value (i.e. on how he has packaged himself). The most responsibly ‘packaged’ personality can turn out to be the complete opposite of who or how he has projected himself to be. DO NOT make your judgment on the basis of his profession, expecting him/her to be a responsible tenant. DO NOT use yourself as a yardstick thinking/expecting the prospective tenant to act as responsibly as you would act if you were in their shoes. As far as this rule is concerned, start by assuming the worst and do your investigations to eliminate such defective character traits. DO NOT use the information provided on forms, DO reach out and speak with as many references as possible. DO independent checks to confirm their character, especially from people who related with them in recent times. It may seem onerous and time taking, however, by investing time and effort into proper tenant screening, landlords can avoid the pain and costs associated with renting property to irresponsible and reckless tenants.
• 2. Stay informed and Execute Secure Lease Agreements. As a landlord, it is important that you stay up to date with tenancy laws regarding the location of your property. Be reasonably aware of your rights and duties as a landlord and ensure to have a water-tight lease agreement that includes these.
  A strong and well-crafted lease agreement is an essential tool for safeguarding your rental income. It should clearly outline the terms and conditions, including rent payment due dates, consequences for late payments, and maintenance responsibilities. Consult with a legal professional to ensure your lease agreement is enforceable and covers all necessary areas. DO NOT compromise on this requirement. No matter how desperate you or the prospective tenant is, take a cue from what happens in the Western world, DO NOT give the keys to the tenant until a clear, agreed, and signed lease contract has been duly executed. Protect yourself against emotional blackmail; remember your property is not the only option the prospective tenant has. Don’t feel guilty when you insist on this step before allowing occupancy. If you skip or defer this step, you will be at the mercy of the tenant once he moves in as you cannot unduly evict on the basis of disagreements over the lease terms.
• 3.Regular Property Inspections. Maintaining regular property inspections is essential for preserving the value of your property. It also helps you identify any potential issues early. When you proactively address maintenance concerns, you can prevent small problems from escalating into costly repairs. Additionally, inspections provide an opportunity to assess the property’s condition and ensure tenants are adhering to lease terms. DO include the terms of inspection in the lease agreement and ensure your tenant understands and is ready to abide by this.

4. Adequate Insurance Cover. Insurance is important and can serve two purposes; to provide cover for possible property damage and to protect your rental income. During period of temporary vacancy, insurance can provide a respite. Though insurance premiums will reduce your net rental income, it is a wise investment to insure your property. Consult with an insurance professional to assess your specific needs and obtain appropriate cover. If your property is in a mini estate, encourage other owners to consider taking insurance to enable the owners access discounted premiums. While insurance is important for all types of buildings, it is crucial for flats, terraced buildings, and closely built structures.

5. Establish Emergency and Maintenance Funds. Creating an emergency fund specifically for your rental property can provide a financial safety net during unexpected situations such as a major repair or a period of temporary vacancy, having funds set aside can help cover costs and ensure a consistent rental income. As a landlord, pay attention to renovating and repairing the property between occupants – i.e. once a tenancy is over, refresh and renovate as this will preserve the property and also attract competitive rent. DO NOT spend all the rent received without setting aside some funds for repairs. Pay attention to painting, plumbing, and electrical wiring as these often result in expensive replacements when ignored. In a place where work done by handymen is not properly regulated, you may include in the lease agreement clear instructions on the standard of vendors to be used when necessary.

6. Consider the use of Professional Property Managers. Using a property management company offers numerous benefits when leasing out properties in Nigeria. It provides expertise in tenant acquisition, screening, rent collection, maintenance, legal compliance, tenant communication, and industry knowledge. By hiring a property management company, landlords can enjoy efficient operations, reduced stress, and enhanced returns on their investments. Property management companies have robust tenant screening processes in place reducing the risk of problematic tenants. They can conduct thorough background checks and reference verifications to select reliable and responsible tenants. They are also more experienced to handle rent collection and enforce lease agreements. As a Landlord, DO NOT short-change yourself by looking at the short-term impact of the property managers’ fees but DO consider the long-term benefits of the stress they will take off your hands. DO engage reputable property management companies who can ensure that the property and lease agreements comply with legal requirements, reducing the risk of legal disputes or non-compliance. Landlords who engage managers for their properties can focus on other investments or personal commitments while knowing their property is professionally managed.

• 7. Create an inventory as an addendum to lease agreement. There are numerous benefits of maintaining an inventory when leasing out properties in Nigeria. These benefits include proper documentation, dispute prevention, protecting the landlord’s investment, facilitating move-in and move-out processes, promoting tenant accountability, streamlining maintenance/repairs, and assisting with insurance purposes. By having an inventory, landlords can safeguard their property, maintain transparent relationships with tenants, and effectively manage their leased properties. In addition to this, consider taking pictures and recording a video of the state of the property at the commencement of the lease tenor. These will be very useful at the end of the lease tenor to ensure your property is returned in a good state.

• 8. DO NOT leave a non-paying tenant in your property.
  It is important for landlords in Nigeria to address non-payment issues promptly and take appropriate actions to protect their interests. This may involve legal recourse, seeking professional advice, and maintaining clear communication with the tenant. There are many dangers of ignoring and leaving a non-paying tenant in your property. As bizarre as it may sound, there are real-life examples where defaulting tenants have tried to fraudulently take over ownership of rented properties. In other circumstances, they have colluded with property grabbers to move in and fraudulently take over the property. This risk is more pronounced when the landlord lives abroad or is not physically present in the same location as the property. No matter how comfortable or kind you are, remember a defaulting tenant is an investment risk, and as a minimum DO STAY in touch with the tenant asserting your ownership and demanding rent payment. DO NOT IGNORE a non-paying tenant at all. DO NOT say, ‘they will go when they are ready’.

• 9. Ensure you have the required government documents to prove you own the property.
  In Nigeria, several legal documents are commonly used to prove ownership of a property. The specific requirements and procedures may vary depending on the state or location but there are some generally considered necessary legal documents for proof of property ownership. These include:
  a) Certificate of Occupancy (C of O): This document is issued by the state government and serves as proof of ownership for land or property. It is obtained through the relevant state land registry or ministry of lands and signifies that the property has been legally acquired and a lease granted to the owner by the government.
  b) Deed of Assignment: This document is a written agreement that transfers ownership rights from one party to another. It is commonly used for the sale or transfer of land or property and must be executed by both the seller (assignor) and the buyer (assignee) in the presence of witnesses. This deed of assignment is deemed binding after approval from appropriate government agency.
  Other documentation includes Survey Plan, Building Plan Approval, and Purchase Receipt or Agreement. This means that making financial payments for the acquisition of a property is one step out of numerous steps in establishing and taking full ownership of landed property in Nigeria. This is one mistake many investors make. Transfer of money IS NOT sufficient to prove ownership. My recommendation is that prospective investors should work with experienced professionals when buying property. DO NOT rush to pay money until you have done due diligence to ensure that the seller is the legal owner of the property under consideration. There is a big risk of losing your payment if you transfer funds before you obtain and examine the legal documents. If you initiated a purchase transaction and have transferred money without documents, begin to pursue the documents immediately. Remember you can only give what you have. If your ownership is not established, you cannot bequeath the property.

• 10. Minimizing Personal Attachments
  Real estate investors in Nigeria seeking to maximize returns and minimize risks must
  emotionally detach from the leasing process and view the property as an investment rather than a charity project or personal asset. This will allow the landlord focus on commercial terms of leasing. Emotional decisions, such as renting to friends or family without proper evaluation, can pose financial risks and strain relationships. Taking a business-oriented approach helps protect the investment and maintain professionalism throughout the leasing process. Landlords who become emotionally entangled in whatever form will find it challenging to make necessary decisions objectively. This includes setting appropriate rental rates, enforcing lease terms, and addressing maintenance issues promptly. Emotional attachment can cloud judgment and potentially lead to suboptimal choices that ultimately affect the landlord’s financial well-being.

Conclusion

Being a landlord in Nigeria requires diligence, preparation, and a proactive approach. By implementing these tips, landlords can minimize risks, protect their rental income, and maintain successful and profitable rental properties.
Generally, thorough tenant screening is vital for landlords and must not be casually handled. This is because it is fundamental to securing reliable rental income and protecting their property. Implementing all the suggestions in this article will require intentionality and some effort. Still, it will be a valuable investment that pays off in the long run, providing peace of mind and financial gains for landlords.

***Bimbo Komolafe FCA, FCIB writes from Lagos. She is a Certified Financial Education Instructor, a Fellow of the Institute of Chartered Accountants of Nigeria and a Fellow of the Chartered Institute of Bankers. For more tips from the finance coach follow her on:
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