Real estate investing does not come with a map which tells you where to go. Perhaps, listening to real estate professionals and successful investors is a great place to start. These are few tips you should take not of if/when you decide to venture into this sector.
- Asses your capital; you must first of all asses how much capital you can raise whether in equity, debt or a combination of both.
- Decide on which investment option you wish to adopt; Do you want to invest directly in the core real estate or you prefer to invest via a vehicle?
- If it is the latter you want, then you may be looking at Real Estate Investment Trusts (REITs), Mortgage Backed-Securities (MBS) and the likes in the secondary market. But of course, in Ghana currently, there is no secondary market properly so called. So, you may have one option here, invest directly.
- If you decide to invest directly in the ‘core real estate’, then this is what you should know. You must have a fortune of capital in your account because investing in real estate is very capital incentive. Or perhaps, you may approach your bank for some loan which of course the bank will go through standard underwriting procedure to determine your qualification for such loan. Take note that, once you decide to invest directly in real estate, it comes with some other specialised skills and expertise in terms of management. Other associated cost like maintenance, administration and taxation will need to be in your mind as well.
- Choose the segment; bear in mind that the real estate market has several segments including, Residential (Housing), Commercial (Retail, Office), Warehousing, Hospitality, HealthCare among others. You must decide on which one you intend to invest in.
- Do proper market research into the segment you will like to invest in; do not hesitate to contact a Professional Real Estate Investment Consultant preferably a Licensed Surveyor for help. Remember that the real estate market is highly segregated and location specific; so, the fact that a particular property market is booming in Takoradi do not imply that same property market will be booming in Kumasi. Also, the fact that Office market in Accra is yielding higher returns will not mean that Warehousing or Retail market in same location (Accra) is also similar returns. The property market is location and type specific.
- Invest in property with some potential tenants in mind or even possibly let them commit to it. You should try as much as possible to avoid speculative investing especially if you are a risk averse person like myself.
- Diversify your investments; do not put all your eggs in one basket. Try to diversify your investment into probably different segments so that if one segment fails, the other can save the situation.
- After being clear of your direction, you have a lot of investment options in terms of strategies available to you for your direct real estate investment. Some of these strategies include but not limited to; the Property Sector Investing, the Contrarian Investing, the Market Timing Investing, Growth Investing, Value Investing, Arbitrage Investing, Investing in a ‘Blue Chip’ property among others.
The next feature will delve into how you can navigate through each of these strategies to become a successful real estate investor.
Source: Mohammed Bomanso Issah (Real Estate Times Africa)
