Knowing your market – Debo Adejana

Knowing your market is synonymous to playing a game of soccer, with the rules of the game acting as a determining factor to how well you understand the game while your knowledge of the tactics adopted by your team and your ability to flow with changing trends will serve as a prelude to your overall success.

Therefore, for you to succeed in that real estate business whether as an investor or an entrepreneur, it is important you know your market.

When I was much younger, I found myself engaging in the game of soccer with my grassroot folks or should I say my goons in the hood as was the trend then. Not playing soccer will mean that you are a sissy, so I went with the tide. For me it was a case of going with the crowd without understanding the rules of the game which is key to football like every other game. If that had been my only flaw, I probably would have found a way around it, but I had other shortcomings; I lacked skills, I had no knowledge of the rudiments of the game, I didn’t even know what side of my foot I had to play with, which resultantly got me injured on my toe and feet severally. I even ran on the pitch without direction, never took note of positioning and I didn’t know where to score a goal from.

In summary, I had no business playing football because I was entirely a poor footballer and venturing into goalkeeping changed nothing about my perspective on football, as easy as goalkeeping was, I still didn’t know what it took to be a goal tender. I bounced the ball aimlessly in my goal area like I was playing a game of basketball. Sometimes if I had to shoot the ball, it gets as far as my 18-yard area or I take a much longer course of shooting the ball out of play and if I wasn’t doing any of that, I would just throw the ball to a defender to save my face; I was that calamitous as a footballer. I probably didn’t even know the difference between playing football and basketball.

On the long run, I was never an effective footballer neither would I have made it as a goal keeper and all these happened simply because I didn’t know the rules of the game, never took time out to understand the rudiments of the game neither did I absorb the intricacies, techniques and psychology of football; all I needed to succeed in the game was missing from my arsenal.

Therefore, If you must succeed in real estate you must know your market, the rules of the business, what you do that is profitable and that which doesn’t break even. You need to know the trend of the business in relation to the market in other to avoid issues and situations that can ruin your real estate business.

Let me share an experience we had sometimes back; we invested in a locality with the intentions of building and selling properties. In 2007, there was a boom in the market just before the dip of the same, virtually every building erected got potential buyers even before completion, mortgages came easy. We took the initiative and rode on that euphoria, we began erecting buildings, though we purchased a completed house that we had to remodel and renovate to our own taste. But not too long after the start of our project, the market began to crumble.
Consequently, there arose a challenge which could have been avoided if we had studied the market or better still if I had known then what I know now, the ugly circumstance we found ourselves would have been avoided or managed effectively.

One of the vital attributes of a real estate investment is having a ‘Plan B’ which we didn’t think about while embarking on the project. If we had done a market research we would have realized that in the neighborhood our project was embedded we needed to have come up with a different plan from what we started with. If our ‘Plan A’ was to sell, then our ‘Plan B’ would have been to rent and we would have considered what we were selling versus what we were renting in relation to the market.

In the neighborhood in question, what was obtainable and realistic for a good fee were flats and what we had were duplexes; it was a case of putting the cart before the horse. Alas! The market crumbled and we couldn’t sell for a good price so we decided to let out the property. And like it is for every business, we bore the consequences of our actions; the property was empty for over a year before we got the first tenant who we almost practically begged to acquire the property. You can imagine a situation where 3-bedroom flats were being let out for 800,000 naira and we had to let out a 4-bedroom gated apartment with a compound to itself for 1 million naira amid pleas, simply because people were not buying properties, prices were beginning to drop and getting someone to rent a duplex in that neighborhood was like advising President Jonathan to withdraw from the forthcoming presidential elections.

We were in a fix because we had no know-out of our market before we started the business. It took us few years to eventually sell the property and terminate the project in that neighborhood.

However, if I knew what I know now, we wouldn’t have built duplexes instead we would have erected flats such that we would have been able to rent out at a convenient rate or we would have built the duplexes in a manner that if we were going to rent them out as a flat it won’t have been a bad deal.

Ideas about the type of structure to erect and what plans to make for such, comes with knowing your market; be accustomed to what you are putting up for sale, know the people you are selling it to and how to get it across to them. These items are key in your knowledge of the market. Selling the property on the other hand entails knowledge of the type of documentation in the area of interest, how to secure such and knowledge of the property that is up for sale, how to acquire and sell at a profit and for developers, how to get structures erected in the quickest possible time is also paramount. You also need to know the behavior of your target market; you need to have a range of people in mind because you can’t sell a particular product to everyone. Some products are for some specified group of people, imagine marketing cerelac to a full grown man

Bottom line you need to know your target market, get across to them and offer their wants to them.

Hence, knowledge of your market is a vital tool in succeeding in real estate business.

Debo Adejana
MD/CEO Realty Point Ltd