General Advice for Alternative Investment
Are you one of the many distressed customers of savings and loans companies and even banks? Are you tired of your bond and treasury bill investments?
You should put your money in real estate investing. It's as stable as a rock.
Before you take that first courageous step toward real estate investing, I'd want to offer you some useful advice and a few warnings. If you already own real estate, this information will also assist you in determining the worth of your present investment.
First and foremost, it is critical to understand that, because real estate cannot be lost or stolen, it is often regarded as one of the most trustworthy and time-tested means of accumulating wealth. This is why many billionaires and Fortune 500 corporations do real estate investing all around the world. Ghana is also lucky in that it is one of the top areas for real estate investing in the world. How did I come to this conclusion? Consider all of the major international corporations and a substantial portion of Ghanaians working overseas who are currently investing in the country's real estate sector. Another indicator is the rising cost of real estate as a result of increased demand from both Ghanaians and international investors. There has never been a better time for real estate investing.
How To Invest In Real Estate
Young people and newcomers can get into real estate investing by purchasing an investment property with the help of a loan, paying a percentage of the total cost ahead, and repaying the remainder over time. Becoming a landlord of a rental property is one of the most common ways for real estate investors to gain money. Flippers can make money by purchasing discounted real estate, renovating it, and reselling it.
A "buy-to-let" purchase is the simplest way of real estate investing. Simply put, you buy a great apartment in a good neighbourhood from a reputable real estate developer and locate a renter to rent it from you.
You get three different revenue streams with this type of investment:
· Rent Income
· Capital Appreciation
· Currency Appreciation
Let's look at each of these three revenue streams separately:
1. Rent Income
In most cases, you will be paid rent quarterly, biannually, or annually. The best part is that you'll always be paid ahead of time. Multiply the monthly rent by twelve months and divide the result by the cost of your apartment to get the return rate on your investment. The real estate investment yield is another name for this return rate.
As an example, suppose you are paid $1,000 per month in rent and your apartment costs you $150,000 to buy. The following is how your yield will be calculated:
US$1,000 X 12 months = US$12,000
US$12,000/US$150,000 = 0.08 = 8%
Your yield, or rate of return, is 8%. You can compare this rate to that of other investments to obtain a better idea of the worth of your investment property while keeping in mind the dangers involved with other investments.
2. Capital Appreciation
This is the natural rise in the worth of your home. You will almost certainly be able to sell your home for more money than you paid for it. This is why "the best moment to buy a house was a few years ago, and the second-best time is now" in real estate.
Although capital appreciation varies from property to property and year to year, it is safe to infer that exceptional sites have constant high rates of capital appreciation. Depending on the location and maintenance of your home, you can expect a minimum capital appreciation of 2% to 3% every year.
To further understand this, consider that a piece of real estate investment property you purchased two years ago for US$400,000 now has a market worth of US$418,000. The following formula is used to determine its capital appreciation:
Purchase price: US$400,000 (2 years ago)
Present value: US$418,000
Value appreciation: US$18,000
Capital appreciation = (US$18,000/US$400,000)/2 years = 0.025 or 2.25%
Your investment property has gained a capital appreciation of 4.5% in two years. As investors say, “Don’t wait to buy real estate: buy real estate and wait!”
3. Currency Appreciation
I'm sure you observed that the acquisition price and market price of the real estate, as well as the estimated rent from your investment, were all mentioned in US Dollars. This means that when the value of the dollar rises, you may anticipate receiving more Ghana Cedis for the same amount of dollars in the future.
For example, on January 1, 2016, a $1,000 rent from an apartment was worth GHS3,800. On January 1, 2018, the same $1,000 rent was worth GHS4,520. The equivalent rent in US dollars was GHS4,850 on January 1, 2019. According to historical data, the US Dollar appreciated by 19% from 2016 to 2019. It also emphasizes the fact that the later you buy, the costlier real estate will likely be, implying poorer returns. Your investment, on the other hand, allows you to beat inflation because it has a residual effect in US Dollars, which is minimal. Isn't that just wonderful? This is how landlords become wealthy while sleeping!
Allow me now to draw your attention to two critical variables: payback period and risk. With such a high rate of return on your investment, you should be able to recoup your principal (the cost of your apartment) within ten years on average. You'll also be living in an apartment that has appreciated in value over time. However, you must be aware of the dangers of selecting the wrong real estate developer and how this may affect your planned investment return. Dealing with the incorrect developer can lead to any or all of the following:
· You are given a substandard apartment.
· You pick a location where there isn't a lot of competition for tenants.
· You don't get your apartment until it's too late, or you don't get it at all.
Choosing any developer or a low-cost apartment is a significant risk, and I'm sure you don't have the time or the money to do so.
Benefits of Real Estate Investing
Here are six primary reasons which tell why people today believe that real estate investing is the best option available.
1. Inflation
One of the advantages of real estate investing is that it provides a kind of protection against inflation. When inflation is high, your rental income and property value both rise dramatically. Inflation is welcomed by real estate investors because as the cost of living rises, so does their cash flow.
2. Tax Advantages
The tax benefits of owning a rental property are one of the advantages of real estate investing. This is one of the primary reasons why so many people opt to invest in real estate. Rental income, for example, is not subject to self-employment tax. Tax breaks are also available for depreciation, insurance, maintenance repairs, travel expenditures, legal fees, and property taxes, among other things. For their long-term investments, real estate investors are also entitled to lower tax rates.
3. Consistent Income
The vast majority of the people do real estate investing for the consistent stream of cash that rental income provides. This steady stream of revenue is a powerful motivator to get started and purchase your first rental property. Depending on where you work, you might be able to earn enough money to meet your costs and generate some additional money on the side. You can assure a consistent flow of income for a long time and even save for retirement if you choose carefully.
4. Appreciation
Real estate is frequently regarded as a good investment because of its tendency to appreciate in value over time. This process, known as appreciation, allows real estate owners to profitably buy and sell properties. Renting out a home also comes with the extra benefit of capital appreciation. Not only will the value of your home rise as time goes on, but rental prices will normally rise as well. As a result, real estate is a good long-term investment.
5. Equity
If you take funds to execute a real estate transaction, you must repay it with interest. Each payment, on the other hand, moves you closer to paying off your principal. In the same home, you're accumulating both equity and wealth.
6. Direct Investment Control
Investing in real estate gives you the liberty to manage everything on your own and decide on where, how and when to invest. Whereas in the stock market, you hand over your money to unknown people who take control of your money.
I hope you've come to the conclusion that real estate investing is the best option for you, whether this is your first investment or you want to diversify your present portfolio. Investing in real estate provides a solid, consistent source of income while also allowing you to participate in a booming area of Ghana's economy. To begin with, they are an excellent investment opportunity for you, The Pelican Hotel apartment. First of its kind in Ghana. Developer Plus offers guaranteed returns on its hotel apartment investment. This is good news for foreign investors and multinational companies seeking to invest in the country. Real estate is the perfect investment choice if you are seeking a tangible asset that generates ongoing income streams over the long run, protects you from inflation, and keeps your investment portfolio afloat. Take the first step by purchasing real estate today. Please contact us at sales@devtracoplus.com or call 0270000004.
Jorge Osorio is Sales and Marketing Director at Devtraco Group (www.DevtracoGroup.com)
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