- What He Told City People Before He Died
The sad news came last week that Air Vice-Marshal Martins (rtd) died in a ghastly motor accident. Until he retired from the Airforce a few years back, AVM Olufunsho G. Martins was one of the top officers in that arm of the Military. He is from Lagos State. When he retired from service in 2003, the then executive governor of Lagos, Asiwaju Bola Tinubu wrote a lovely tribute in his honour commending him for doing Lagos proud.
Shortly after he retired, he started a little Real Estate business with a loan from one of the banks and obeying the basic principles which his father taught him about real estate business, when he was a little boy in Lagos. He has been able to grow the business, and today, AVM Martins is one of the biggest real estate players in Lagos with considerable investments all over Lagos. He recently, completed work on his new estate and was one of the faces of eminent Lagosians singled out for Lagos @ 50 billboards. He was also honoured by City People at City People Real Esate awards for his remarkable contributions to the real estate sector.
Below is the last interview he granted City People Publisher SEYE KEHINDE at his Ikoyi home in Lagos. He spoke about how his love for real esate started.
Many people don’t know you are into real estate business. Tell us why you decided to go into real estate?
I was introduced into real estate when I was young by my grandfather. Before I retired from service, we acquired this piece of land under Lagos State Private Estate Developer Scheme. That arrangement was by Mudashiru and Jakande at that time, on that Lekki axis in Lagos. They will give you land and you either do Site & Service or develop it into an estate. So, we decided to apply. And we got 6.3 hectares of land. We now discussed with some investors and the banks. We were able to secure finance through WEMA Bank to develop initial ones of 43 houses, comprising of 36 semi-detached and 7 terraces to put in the infrastructural facilities like roads, drainage, electricity, water for the complete estate.
What’s the estate called?
The name of the estate is Golden Park Estate, Kilometre 33 on Lagos-Epe expressway. It is at Sangotedo. Its on the main road. You will see it on the right when you are going to Epe. As I speak to you now, we have 43 families living in the estate. And we have just completed 24 units (3 bedroom flats) with boys quarters and all fitted appliances. The kitchen has cookers, fridge and everything, while all the rooms are properly designed with good wardrobes and lights. We now have the 24 units of 3 bedroom flats for sale. We have developed units and houses all over for sale apart from the Golden park estate.
What is the attraction that real estate has for you? And what made you go into the sector?
I spent sometime growing up with my maternal grandfather, who always encouraged us to invest in properties and buy land. He used to tell us that land can never be stolen from you. The idea he gave us then was if you invest in property and buy land, land can never be stolen from you. It will remain there as long as you secure it. Get your documentation right. Fence it. Start molding blocks. He used to tell us that when you have little money, don’t waste it on drinks and women, buy Sand and put it in on the land. No matter the amount of rain, the rain can never wash away the sand, instead, grass will start growing over the sand, protecting it, keeping it. If you want to use the sand in the next 10 years, you will meet the sand there.
Another thing he told us is buy either gravel or granite. He used to say if you have money get a load of granite or marble put it at the site. When it rains, the rain will be cleaning off the dirts or particles that settles on it. It means the granite will be there until you are ready.
Another thing he told us was whenever you have money try and buy Iron rods. He used to tell us that except you go and get loan to develop, nobody has money tied down to say I am building. He used to say to us, if you do that it will only remain for you to start molding blocks. When you start molding blocks call the people molding blocks and start stacking them. When there is rain and sun it makes the blocks to be very, very strong. So its not a matter of rushing to build. Its a matter of doing it peace meal.
Now, when you have little money you can begin to lay the foundation for the house. What you only require now is Cement. You have gotten every other thing over the years like Granite, Graval, Iron Rods. All you now need to do is to get the people who will cut the Iron Rods, so that they can prepare the foundation. So, its only labour costs of the artisans that you need to look for.
According to my grandfather when you are building a house it is better to do it gradually until you finish it. My maternal grandfather gave me the idea of properties and I will tell you that I developed my first property at the age of 28 when I was in the service just the way he recommended it. At that time, Cement was N1.50k and a load of sand was less than N50 naira. At that time the property I developed at Ogba cost me less than N25,000. Well, that was also good money then. That is what gave me the idea of going into property development. My initial idea about investment was to buy land. So, I was buying land and I was selling land.
Those were the things that motivated me to go into Property business. Property always appreciates. The best investments is in property and Real Estate. A house built 25 years ago with little money will definitely appreciate. When I bought this land in Parkview years back it was N2.5 million. But it appreciated to about N300 million, all in less than 25 years. You can imagine if you have the foresight to have acquired land years ago. See the cost now. See how the cost of land on that Lekki axis suddenly went up. So, you cannot invest in land and lose out.
What are the challenges you have faced so far?
The main challenge is Mortgage. For instance when we got the loan to develop The Golden Park Estate we were given a Short term loan for a long term project. As at that time, that was what was available, that was what we could get. We approached a lot of banks. But Wema Bank gave us the approval to develop what we wanted to do, but at almost 29% and it was a short term loan for 270 days, renewable. When they say renewable it means after 270 days you will apply for an extension and you will pay all the charges. And they will tell you it is 30% now and you will pay management fees, processing fees again.
It’s like starting all over again. They can even tell you that the MRR has gone up. You are at their mercy. If care is not taken you might end up with 32 percent or so. And you know it is Compound interest. We complained to the bank when we started that there is no way we would complete 43 houses in 270 days they said well, we should just go ahead it will be renewed. We almost had serious problems at the completion of that 1st phase but we thank God the issue was resolved.
So, the issue of mortgage must be looked into for developers. They should look at the mortgage issue generally. For example, in Britain, the mortgage arrangement is 1% interest. That is the problem we have here. Like I told you, we have about 24 flats to sell we have gotten a lot of people who are interested, young couples.
One of the couples who are interested in one of these 3 bedroom flats said sir, we have gone to the banks they are ready to give us this mortgage for 20 yrs, but sir at the end of the 20 yrs we would be paying almost 10 times what the loan is all about. That means if you sell it for N25 million now they will be pay N250 million at the end of the tenure. They said the interest is also high.
That is the problem we are having. I think Government should arrange with the banks such that lending rate for real estate can be brought down. This will assist a lot of young men to own their houses. Go to Lekki axis, there are so many estates where the houses are empty. It is because people cannot afford it. The banks are ready, but at what rate? See how they do it in the UK. If you want to lend money for something else, you have a different interest arrangement, but if its mortgage they have a different arrangement.
Some people can say but , government has helped, under what it calls Private Estate Developers Scheme. They have given you land. Yes. You pay, maybe you pay stipends. Yes, Government has assisted you. But how do you move forward. You still have to provide Infrastructure. Even if you are doing what they call Site & Service which means the land has been provided by government. But you still have to get the planning approval, do the drainage, water, electricity and infrastructural facilities.
So you will now divide the plots and people can now buy plots. You can now develop whatever you want. In some cases the developers will have a standard design, like what we have at Golden Park Estate. Some people decided to build but there are standard specifications. Now, we are trying to start what we call Off-Plan within this same estate. We still have a lot of land. You will pay for the land and construction instalmentally. You will see the land and the design (what it looks like) we would now develop it with you. You will pay instalmentally as you are developing. We would give you the cost. We would now start developing. You will now start paying. So at the end of the day when we finish it, it would have saved you a lot of cost.
You might be saving about 20% off the cost of sale by the time we are ready. So, the developer is okay, you are also ok. Instead of the developer going to look for money to develop and he has to put the Interest to be charged by the Bank and also his own profit. So you will put everything together but if you come in under OFF PLAN you will start paying from the beginning. If the cost of development is going to be 20 million or N25 million, we can now sell for N30 million after putting a little on it.
By the time we complete it, the total cost might be N40 million. But we can’t charge you again. You are gaining. There is no cost of funds. We are not going to the bank to raise money. You are using your funds to develop it. You can still come in to decide what to still do with the internal aspect of the building. Its your house. You can say I want tiles or marbles. We would give you the difference in the cost of the two. There will be no need putting down anything once the building is ready. That is the advantage of Off Plan.
What has been your experience with local artisans you work with? Is there a scarcity of good hands?
Well with what Lagos State has put in place, there can’t be problems. From the day you start building you will be monitored closely so you can’t use materials that are inferior. At every stage now they have to inspect. We now have different institutions in Lagos State. When you are starting they must come and see. And they will have to give you approval to start. When you are mixing your concrete they will come and see. When you buy Iron rod now you must send a sample of the Iron rod to the laboratory for testing. They have to certify that this Iron rod is ok for use. All these regulatory bodies are now now working well.
They are effective. They want to put a stop to housing collapse. For every construction now, you will need to have your engineers, on site. You can no longer use an apprentice engineer. You have to have your Site architect in place that will always ensure that the construction is going according to plan. At every stage people come from all the regulatory bodies to come and check.
These days now, before you do decking, they will come and see your concreting, what you have laid, they will check everything before they give you the go ahead to do the decking. It is the same thing with your foundation laying.