Effectiveness of rent recovery strategies on residential real estate in Ibadan, Nigeria

Abstract

PurposeThe upward rise of the prolonged payback period and the inability of the project to generate estimated income that has been linked with the irregular rent payments has been a major problem confronting real estate investment. Given the fact that real estate investment is a risky investment venture with a highly uncertain future stream of income, this paper examines the effectiveness of rent recovery strategies in the emerging Nigeria residential real estate practice.Design/methodology/approachThe study employed an exploratory research design. The study identified the five recovery strategies adopted by the estate surveying and valuation firms in Ibadan Metropolis, Nigeria. The study adopts a purposive sampling method to select 52 registered estate firms in the study area and a questionnaire using a five-point Likert scale was used to elicit information. The data obtained were analyzed using descriptive and inferential statistics.FindingsThe result showed that the rent recovery strategies adopted by the respondents include email approach, rent reminder notice, adequate maintenance, eviction notice and dialogue approach. The perceived top-rated strategies that could influence estimated income were dialogue and rent reminder notice. Also, the findings showed the factors that influence the choice of strategy are property type, company policy and the proportion of rent to the tenant's income.Practical implicationsThe study has an implication for real estate investors and property practitioners regarding the willingness of the investors to invest in real estate investment.Originality/valueThis paper is relevant given the fact that the rental property market is prone to risk that could impede the regular streamflow of income. This serves as a need for examination of the effectiveness of adopted rent recovery strategies as it relates to real estate property management practice and investment viability.