CHUDI KALU is the CEO, Middlechase Property Limited. He is also known as Coach Chudi, because he does real estate coaching by sharing information on how people can be successful doing real estate. In this interview, he explains why some real estate investors fail while others succeed. He also speaks on the year of the pandemic; real estate sector growth; activities of his company in the real estate market; challenges in the sector, among other issues. He speaks with CHUKA UROKO. Excerpts:
Investing in real estate means different things to different people. While some people see it as something to avoid, others say it is the best asset class to put money into. What do you think?
Most people don’t know how to play the game of real estate because most times they feel that it is a high end investment and capital intense. They feel they need to have a warehouse filled with money to participate. It is not so. People who are doing real estate today didn’t start with big capital. It’s not really about the money but the knowledge you have and the resources available to you.
Most people do not understand these, so they miss out in the knowledge part which involves getting themselves educated with information. Using myself as an example, before I started doing real estate, I took three months to study over 39 biographies of people, including Donald Trump, who have done real estate successfully.
2020 is a year to remember, and also one to forget because of Covid-19 which rattled global economy, and all sectors including real estate were affected. Some businesses are yet to recover from the impact. How did you cope? Why are still in business in spite of that?
The year 2020 was one that people thought everything was going to come to a standstill. But that did not happen. The question then is, during the lockdown, where did people stay? The answer is that everybody stayed in their houses. But landlords did not ignore the rents because of lockdown. We experienced the highest sales and rentals during the lockdown. People were no longer making money from their day-to-day businesses, so they were looking for alternatives.
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It was only essential services that people were going for. They began to look for how to live and housing became essential because everyone, including the touts on the street, had to retire somewhere. People realized the kind of investment they needed to make and real estate was one. After the lockdown, we experienced a shoot-up in terms of demand for apartments. So, between that time and now, we have done over 54 allocation of apartments. That has scaled us up in a way compared to any other year. Currently, construction is going on; we are doing 128-unit apartments.
During the lockdown, there was no movement; so how did you relate with your customers?
For every business, if the economy is locked down, it’s for the business owners to innovate and be creative on how to relate with people. Customers will always be there. They didn’t run away or hide during the pandemic. It is only your approach to reaching them that changed. So, we adopted a more advanced way of communicating with them.
We have over 36 CCTV channels on site such that from your phone, you could inspect our property. If someone is in Canada and wants to see how his property is faring, we had to adopt an innovative way to go about it so that the person could see what was happening on site from his phone. We had to adopt a modern approach; we have WhatsApp groups and other social media platforms that people could use to see our sites. So, a lockdown should not be your break down.
Nigeria has housing deficit which is a huge opportunity for investors, yet the housing sector is not among top performers in the economy. What do you think could be done differently to make the sector contribute more to the economy?
The problem with the housing market in Nigeria is that most players lack knowledge of the market value. Most people doing real estate are focusing on the luxury end. The question is, where do most of these construction activities take place? It is at the luxury end where most of the houses are not used and you only make money from your property when it is being used.
You are also servicing the economy when the property is being used. So we may not be seeing so much effect on the economy from construction because we are not focusing on the people who need the products more.
So we are not really affecting the population and that is where you find out that when you go to certain areas like Surulere, Igando or Festac, while you are still doing construction of apartment houses, you have tenants who have not yet moved into the apartment but have already paid rents ahead of time. This is because those properties are serving needs.
Investors need to look into that particular market, because it’s a market that no one is telling them about but it’s one where you can make money. You make money where you have more crowd participating. So, for the sector to grow and contribute more to economy, the mentality of investors need to change along with that of government. Also, the mindset of developers need to change.
You have been developing properties in the past 10 years. What are your foot prints in the industry; how many families have benefited from what you do?
Over time, we have evolved. I wish some of the things I know today, I knew them 10 years ago. Now, when I came into the industry, I came in to survive; I came in also as an entrepreneur doing business with interest in making profits. So, we focused on land sales. Right now, we don’t do that anymore because land doesn’t have a useable value. Land is what we call a lazy asset, because it is nothing if people don’t use it; that is if it’s not developed.
At that point we were not a developer because a developer is not someone who sells land, but someone who comes in and changes the entire land structure, such that you do not see land anymore.
But, talking in terms of land, we have over 1,000-2,000 plots of land. But do they have any impact on the lives of the people who are buying the property? The answer maybe no. The real deal is focusing on satisfaction. I feel more satisfied when someone can point and say this is my house I bought from Middlechase, or that is my apartment I got from Middlechase. That is much more impactful.
As a company, you are committed to connecting people with investment properties and also helping buyers become cash flow landlords, tell us more about this?
I have a mentor known as Baba Adeyinka. I was doing real estate, and he also was doing real estate. I bought my first property at the age of 19. I traded on the road and other things so the income I made from all that, I used it to buy my first property. It was not just exciting. Over time I realized that you can buy a property and go broke because you are not going to make money from it. I was confused at some point. I didn’t know what to do to generate income, yet I saw people make money from real estate and wondered how they made their money. How can I participate?
I realised too that people who have become big boys in the industry are those that are developing; those called developers. The people investing and buying properties were not as rich as I thought they were; so the question was, what was happening. In the course of time, I met Baba Adeyinka and he showed me what kind of investment you can make for cash flow: Invest in rentals; don’t just buy a property for yourself alone.
A group of persons can come together, buy a property and develop it without giving ownership to a particular person. That’s not important, what is important is cash flow. When some of us have money to buy a property, we go to places like Ibeju Lekki or Badagry. We go to areas we are not sure we can make money from, but guess what, when the smart guys who are cash flow investors want to invest, they invest in areas where people are currently living in; where you can guarantee that if you put a two bedroom apartment, people are going to come for it.
You are a rental income developer. Nigeria has 200 million population and over 60% of this population are renters. How does this impact your bottomline?
The minimum wage in Nigeria is 30,000 and the question is, how many people are under the minimum wage? You are talking about 60%, it’s more than that. The question will be, how long will it take these people on minimum wage to own their personal houses? 40 years. That means they have to work for 40, years if there is such provision, to own a house. Nigeria is a rental market; it will always be an active rental market.
We operate a rental market, and that’s where some of us are getting it wrong. We are focusing on the luxury end whereas the real deal is at the bottom. You are creating a service that you know there is no guarantee for you as an investor.
When somebody asks me how sustainable short-let apartments are, I tell him that within the next six years, it will not be sustainable. A situation where people pay N100,000 per night is not sustainable because we operate a rental market. We are leaving a certain market and focusing on the middle class. The middle class will not be in the middle forever. One day they will either move upwards or they come down. So when they come down, what happens to that market you operate? It will shrink.
You operate in a very unfriendly business environment like Nigeria. Despite all you have told us, there could still be some challenges. What are the challenges for you as a developer?
There are a lot of challenges and we wake up to new ones every day. I am sure it is so for everyone and not just those of us in real estate. The major challenge is about getting your priorities right, because there are a lot of things that will want to distract you from your objectives as a company or entrepreneur. There are certain things externally we can’t control.
I see problems as a distraction towards your goals. So, when people talk about their challenges, I really don’t want to dwell on whatever it is, because they are meant to be there. There is never a perfect situation. Whenever we experience challenges, I find out that we move forward. When challenges come, we don’t just focus on them, we look beyond them. As an entrepreneur in Nigeria, you must always be smarter than your challenges, because those things are meant to distract.
Companies, like human beings, are organic. They always grow and growth takes us from point A to B. Where do you see Middlechase as a company in the next 5 years in terms of growth?
The focus of Middlechase from 2019-2024 is to develop at least 10,000 housing units apart from apartments. That’s the goal. We are not there yet; a bit far, but we are not where we were when we set out in 2019.
We did not have any project in 2019 and the reason was that we needed to perfect the system of doing well. Now that we have done well with one of our projects, we are expanding to be able to meet that objective. We are far from our goal, but every day we are taking steps towards achieving it.
