Harnessing real estate investment through proper tenant selection in Nigeria

Abstract

Purpose

The main objective of investment in real estate is to derive adequate returns from its management; selection of suitable tenants is one of the challenges to attaining this in Nigeria. Many prospective tenants of residential properties usually appear good at the recruitment stage but often become belligerent with grave challenge to the property managers. The paper aims to examine the criteria set by property managers in selecting residential tenants in Nigeria with a view to establishing a proper process for identification of potentially bad tenants at the recruitment stage.

Design/methodology/approach

The paper opted for an exploratory study with questionnaires administered to estate surveyors (professional property managers in Nigeria). Respondents were randomly selected based on Bartlett et al.'s model with margin of error set at 0.05, p=0.5, and t‐value=1.96. Relative importance index analysis of the data was carried out to determine the ranking of the criteria.

Findings

The paper provides insight into tenant selection through proper process using a weighted scorecard. It suggests that an application of a scorecard will reduce the incidence of bad tenancy and enable investors to derive value from investment in real estate.

Research limitations/implications

The framework of tenant selection process adopted was based on criteria set by the respondents; researchers are therefore encouraged to test the applicability of the suggested weighted scorecard.

Practical implications

There are implications for development of computer software using the weighted scorecard to further ease the process of tenant selection and make it an inter‐disciplinary study.

Originality/value

This paper identified the need for proper tenant selection to enable investors in residential property to harness adequate and remunerative return.

Citation

Ayotunde Olawande, O. (2011), "Harnessing real estate investment through proper tenant selection in Nigeria", Property Management, Vol. 29 No. 4, pp. 383-397. https://doi.org/10.1108/02637471111154827