Here are areas to invest in Ghana real estate sector:
- land investing,
- investing in yourself,
- house flipping,
- investing in income producing asset
- real estate brokerage,
- house hacking.
I will discuss each in a minute. The benefits of investing in real estate are enormous than any other investment instruments.
1.Investing in Land also known as land banking
You can invest in buying lands at good locations, hold for long period of time and then sell it for a hefty profit. You should have someone to constantly visit the land to keep away encroachers, especially if your land is in greater Accra region. Any bare land, undeveloped land with no activities going, can be inviting for encroachment and claims. I must let you know that, land is one of the most disputed asset class in Ghana. You must make sure you got it right, and by that i mean make sure all the process of buying a piece of land and registering it is spot on. Read here about the 12 step-by-step guide on how to buy land in Ghana without litigation. You don’t want to miss it, do you?
What is the best investment to make in Ghana?
Real estate investing is the best investment in Ghana because it is liquid and it is tangle asset. No matter the state of economy, real estate will still thrive. There will always be houses for rent in Ghana and homes for sale in Accra. That said, because of poor land tenure system in Ghana, chances of loosing your money on land acquisition is high. You just have to buy it right. If you don’t know how, consult expects like real estate lawyer to guide you through the acquisition process.
2.Investing in yourself
When it comes to investing most people think of how to make money in Ghana – the quick bucks. What they often ignore is personal development. It is often underrated but very important. In fact, there is no real estate or gold or bitcoin or stock investment that can give you a higher return than investing in yourself. I know that sounds cocky. I heard you saying, how do i invest in myself? There are zillion ways to invest in yourself, but i will stick to just a few which include reading books by successful players in the industry you are into or want to step into, attend networking events to build connection and meet new faces of influence. Somebody knows somebody who knows somebody. Everybody is somebody. Get a mentor – every great entrepreneur, business leader, even public servants have a mentor. A mentor will save you lots of errors in judgments, poor decision making, and give you an edge ahead of the competition.
Read also: REAL ESTATE INVESTING BUSINESS IN GHANA
Why investing in real estate in Ghana is the holy grail?
While somebody might be searching for how to invest in Ghana stock market, which is fine, the reality is that you have no control over the events which affect price dynamics. With real estate, you control the deal and the outcome. In fact, you could actually force a property to appreciate in value through value-add components such as doing some interior upgrade or renovation or adding some exterior appeal features or amenities to the property. It is called forced appreciation. I’m not a big proponent of REIT(real estate investment trust), as it is a paper asset.
Before, COVID-19 there has been debates in real estate space as to the best asset class to build your portfolio on. When the world was brought to a clock down, commercial real estate such as Hospitality, offices, retail, industrial, almost collapse, most are still struggling. Post COVID-19, most employers made policies that allow their employees to work virtually. Hospitality space for instance took a heavy hit that most operators had to re-zoned their hotels and motels into residential or multifamily apartment units especially in the US market. In fact, Warren Buffett’s quote “It’s only when the tide goes out that you learn who has been swimming naked” pretty much sum it up. The residential market invariably can withstand any economic down because people need a place to live no matter what is going in the world.
How is real estate market in Ghana?
The real estate market is gaining momentum after COVID-19 downturn. The mid-to low income bracket properties are under supplied which means the demand is skyrocketing, whereas high-end residential developments are oversupplied in Accra. But demand begins to pick up gradually as international borders eventually opened up. The high-end properties are mostly purchased by a cross-section of the growing middle-class, expats, as we as well-to-do public figures and locals who want a taste of luxury and lifestyle to match.
Is buying lands in Ghana a good investment?
The prices of land in Accra keeps increasing exponentially, year in, year out. You will always recoup your investment plus profit if you buy right, even in flood prone areas alike Weija and its surroundings. Every year, these locations always get flooded whenever there is spillage of the dam. Logically, you think that will discourage people from moving to that location? You are wrong. In fact it actually encourages them. Sounds funny, isn’t it? Here is the unexpected, the prices of land at Weiji keeps increasing, a piece of plot being sold between 100k GHS to somewhere around 400k GHS depending on the seller. And people are buying. Land will always be in demand and in Ghana the prices of land always increases. Remember the old saying, he who own your land controls you. Ghana’s like owning their lands and building their homes, it is a tradition which has been passed down from generation to generation. Investing in lands will be a smart investment provided you are buying cash. Using mortgage and paying debt service every month out of your pocket on a bare land is not a smart move.
In Ghana, house flipping is another way to get your foot into the real estate space. Now, i heard you saying what the heck is house flipping? In simple language, it’s buying a house in most cases a beat up property far below market value and then add value by fixing it in the form of full renovation, then turn around and sell it for a hefty profit. that brings is to the next question:
Is house flipping a great business?
Yes, it is rewarding if you buy it at the right price and keeping your expenses low. That said, flipping houses should be short term and not long term business. When you flip a house, you are out of job until you find another house to flip. That said, i have seen people flipping houses and making millions doing that. It is good business depends on how you play your cards. I suggest that instead of flipping, keep it for rentals. The drawback however, is that you need money to fix it up, to mitigate that you can use leverage by using OPM (other people’s money) which include the banks, money partners, family and friends as well as your network or connection.
While some investors and individuals are making a fortune flipping houses it is definitely not for everyone. Don’t take my word for it, just check big player like Zillow house flipping disaster. Zillow lost billions in their ambitions $6billion house flipping business. Redfin also shot down outright its house flipping business and cut over 13% of workforce. In summary, your end goal should be to own, not flipping houses for immediate profit.
4.Invest in income producing assets
Investing in income producing asset will put you ahead of the curve. Supposing you have a choice to buy an uncompleted building in a prime area of Accra and a completed or existing two or three bedroom in a less prime area like East Legon Hills, leveraging mortgage, which one will you go for ? Of course, completed building, it is a no-brainer. Even though, the uncompleted structure is in a prime location, using mortgage, you will have to pay debt service from your pocket but with existing asset, you can rent it out from day one, collect rents to make your monthly mortgage payments. Your property should pay for itself and leave you some changes at least.
What are investment opportunities in Ghana for students?
One of the ways to get your foot wet in investment opportunities is to become an intern working for real estate company to gain experience. Pre-tertiary and post-graduations, there are no jobs for you. I will say without a single doubt that the best investment opportunity in Ghana for students is real estate investing. Is it easy? No. Will it be easy? No, but is is worth it.
5.Real estate brokerage
Unlike in the states and other countries where you need license to be able to list a property for sale, In Ghana, you could jump into becoming real estate agent by setting up your own brokerage or joining a reputable real estate firm or brokerage to educate yourself about real estate in general, build network of sellers and buyers and most importantly learn how to process a transaction smoothly without any future land litigations issue haunting you. Nobody will like to work with you in the future if the land you sold to them is disputed. You could start a life using the commissions you earned to acquire properties, one step at a time.
What the heck is house hacking? It is basically buying a house using a bank loan with favourable terms and rent out a room(s) to tenants and use that rent collection to pay down your mortgage monthly payments while living in the other room for free.
Here is a breakdown of how it works:
- Buy a rental property, 2 or 3 bedroom
- Use leverage —20% as down payment, borrow 80% from the bank or any lender.
- Fill in a tenant(s), collect rents and use it to pay down your debt services.
- Improve the property, raise rents, refinance.
- Pull out your home equity, use it to buy a bigger rental property, or get a money partner to join you to take it down.
- Repeat the process.
I know, someone will say it is impossible in Ghana, if you think it is possible or impossible, both ways you are right. People are doing it, so can you.
Is Real Estate profitable in Ghana?
According to Ghana investment and Promotion Centre, residential yield is somewhere between 10 to 13.5% and 5% on home appreciation annually. One of the highest returns in Africa. One thing you need to understand is that real estate is a tangible asset. It appreciates in value over time. For example, a 4bedroom house bought today at Spintex road for $75k will be worth more years to come. The same can be said about land investment. The best time to invest in real estate is now, tomorrow will be too late and too expensive.
Read also:Real Estate Rental Yield in Accra, Ghana
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