Investing in Real Estate in Ghana: 5 Tips to Help You Win

Investing in real estate in Ghana can be a worthwhile strategy to grow your investment wealth. It can also be a prudent diversification tool – whichever comes first. 

But like any investment vehicle, you need a few guiding tips. Real estate is a strategic investment, and every location is unique. If you want to invest in real estate in Ghana, these helpful tips will guide you to invest wiser.

Know the property types you can invest in

Many property options/types in Ghana will compete for your investment cash. But which options do you go with? And which other ones do you hold off on – or even ignore altogether? There’s no wrong answer, as your decisions will depend on a few factors you hold close to your chest.

That said, though, you’ll put yourself in a position to make better investment decisions when you know the types of properties worth your attention.

1. 1. Investment land with appreciation potential
   2. Single-family residential properties
   3. Multi-family residential properties
   4. Recreational properties
   5. Mixed-use properties
   6. Industrial properties
   7. Retail space
   8. Office space

It’s easier to invest in some of these options than others. For example, you can buy a unit in a multi-family residential property and rent it out. Conversely, it’s harder to rent a space in an office complex and let that space out for profit rent. It’s even harder to develop that office building to rent out to tenants.

While considering the various investment types, it’s lifesaving to learn about the risk factors associated with each. That will influence what returns on capital you should be looking at. 

For example, if you invest in a recreational property like a hotel, know that short-stay apartments could pose a market risk. Also, since travel/tourism is seasonal, you’ll battle vacancy risks associated with travel. Becoming a better investor in real estate in Ghana starts with knowing the various property types available.

Know what kind of investor you want to be

You can be an active real estate investor with a hand in the day-to-day running of your investment. Or you can settle for a more laid-back approach, watching from a distance but keeping tabs on what goes on.

You can both, but it helps to know what you want to be so you can focus your energies and strategies. If you focus on the former, you’d have to keep track of goings-on with your assets and the markets. Yes, it’s not the worst thing you can do as a serious real estate investor. 

But would your other commitments allow you to do all that? On the other hand, you can appoint a real estate management company to handle the day-to-day running of your assets. Yes, you’ll still receive reports from them, but they’ll do most of the heavy lifting for you on the ground.

And let’s face it – daily real estate management is hard work that appeals to few.

Know the costs of real estate investing in Ghana

Investing in real estate in Ghana comes with some incidental costs. And as a real estate investor, it helps to stay abreast of these changing costs. While they may vary depending on the investment type, there’ll also be some overlaps.

For example, if you’re into flipping, it’s easy to rack up lots of agency/brokerage fees. You’d often have to retain the services of a trusted real estate broker or agent for some of these services. And that comes at a cost, usually between 1.5%-5% on sales and around 10% on rentals. Yes, these rates are negotiable. If you choose against picking an intermediary but want to go solo, you’d incur some marketing expenses.

Again, depending on the property type, you’ll have to handle operating expenses/management expenses. 

You’ll need to spend money on repairs and maintenance, insurance, or management, if you have a company managing those assets on your behalf. Lastly, but crucially, you’ll have to deal with financing costs. Real estate isn’t the cheapest commodity on the market, and often, you’ll need to lock in some financing to help you close those deals. 

But also, if you’re financing a deal on 100% equity, what are the opportunity costs? These are all relevant factors that feature in your real estate investing decisions.

Have a projected yield for your real estate investment

Every prudent real estate investor wants their investments to return a profit at a rate that’s worth the investment. 

So before you put a dollar into any real estate investment in Ghana, it helps to estimate a yield. You may not always meet that target, but it’ll guide you on what you can realistically expect. Better yet, year-on-year, you can see how your investment has performed. The yields vary by property type, though. Also, while sellers may quote their “attractive” yield rates, you should do your independent homework to see if the numbers add up. 

Or at least, they land in the ballpark of what you expect. That’s what will give you a green or red light. True, but you can’t get all real estate investment projections right. Don’t be surprised if these numbers change with time. At best, the yield numbers should only be a guide but not a hard-and-fast rule.

Learn about real estate taxes in Ghana

Real estate investments offer tax advantages in many parts of the world. Investing in real estate in Ghana comes with a few tax factors. For example, as a property owner, you’ll be required to pay a property rate, an annual levy charged by the local authority to property owners. 

Further, when you successfully sell a property that bags you a nice appreciable income, you must pay a 15% capital gains tax on your profit. As a company, this tax is “included in the company’s annual returns and taxed accordingly,” according to the Ghana Revenue Authority. If you’re buying, you have a stamp duty tax to settle. If you’re a landlord, there’s a small rental income tax you have to pay for collecting rent: 8% for residential and 15% for non-residential properties.

The tax rates in Ghana may be lower than in other parts of the world. But considering the value of these real estate transactions, the amounts you have to pay quickly add up.

Yes, you absolutely should consider investing in real estate in Ghana

There’s never been a better time to invest in real estate in Ghana. As an up-and-comer, Ghana presents many opportunities to anyone willing to grab a slice of real estate. And with more investor dollars trickling into the country’s real estate sector, it doesn’t hurt to join the action. Or at least it’ll help to start researching real estate investment options in Ghana.