To us, it is not just enough to tell you about the juicy opportunities that exist in Africa’s real estate market. Knowledge alone is not enough.
Because we believe the key to entrepreneurial success lies in action, we shall share with you some very important tips about investing in African real estate. Here they are…
Like we mentioned before, there are two main ways to make money from any real estate you buy: sell at a higher price or rent (or lease) it to earn steady flowing monthly/yearly income.
Which of these will be your goal? What’s your plan?
Are you planning for retirement and need a source of income to sustain you when you are no longer working?
Do you plan to quit your job one day to pursue your real passions but need a regular source of income other than a job?
Maybe you really don’t need a steady income. It could be that you are looking for low risk and long-term investment opportunities that appreciate in value over time and give a better return. You want something with investment returns that are better than a savings account and more predictable than stocks.
Whether your plan is to buy, keep and sell later or to earn steady rent income, it is very important that you have a plan and stick to it. This is the first and most important thing to do before investing in real estate.
2. Who to Buy From And How to Find Them
There are usually two groups who sell most of the real estate you want to buy – let’s call them public and private.
The main player in the public group is the government. Governments often sell real estate to ordinary people and companies for residential or industrial development.
When governments sell real estate, it usually sells at a lower price compared to the prevailing market prices.
Government housing estates are a good example of a real estate opportunity where ordinary people can buy and own housing units (single homes, duplexes etc) at below market prices.
The private group is primarily made up of individuals and corporate organizations.
If you look in the classifieds section of your local newspaper, you are likely to find adverts for real estate properties on sale.
People are always on the market to sell property for all sorts of reasons. Maybe it’s land that they inherited which they want to sell or it could be that they have an urgent need for cash. Other times, sellers could just be investors like you who want to realize their profit/investment.
There are always a wide variety of properties on the market for sale – bare land, partially completed buildings, old properties that need to be renovated and brand-new (finished) houses. Depending on their condition and location (developed or undeveloped parts of town), the prices will vary significantly.
How can I know of these opportunities you ask? Well, there are a couple of tips we would share with you in this regard. And they are:
▪ Be observant and pay more attention to your environment. Look out for all those ‘For Sale’ banners that often hang on properties that you have been blind to all along. For all you know, there may be a juicy real estate deal on your street that you haven’t noticed.
▪ Follow real estate ‘For Sale’ listings and adverts in newspapers and magazines. This is the traditional way for sellers of real estate to find buyers. In some cities, there are newspapers and magazines that carry only real estate news and listings. Most of these listings describe the properties, the seller’s asking price and a phone number you can call. Easy and convenient!
▪ Ask around. Let people know you are in the market looking for properties to buy. Your neighbours, office colleagues and friends can be rich sources of real estate information. All you have to do is ask!
▪ Enlist the services of a real estate agent. These agents are professionals who help ordinary people like you find the kind of properties they want. Whether you want a property to live in or as an investment, it’s their job to find it for you, and of course, earn a commission for their services. It’s a win-win for both you and the agent.
▪ 3. Before You Buy, Do Your Research Very Well!
I’m sure you do not want to get involved in a property that is the subject of a fight or legal battle.
There is a lot of real estate fraud going on and you need to be sure that you are buying from the right owner of a piece of property.
You must be sure of the correct condition of any piece of real estate you are interested in.
Depending on your location, there is often a way to verify the ownership title of every property.
Most cities have a Land Registry with records that contain up-to-date information about every kind of real estate in the area. Your lawyer would definitely know about this. Pay him/her to obtain a report from the relevant government department.
This is one of the most important but often overlooked things inexperienced real estate investors never do.
Most times, there are important pieces of information that you may be unable to get from formal or government sources.
Ask around the area for any things you may be missing. There may be softer issues about the property that may reduce (or improve) the value of your investment.
For example, if there are frequent security threats in the neighborhood (like robberies, kidnapping etc), it may discourage tenants from your property and likely reduce its value should you plan to sell it in the future.
4. What If You Don’t Have The Money?
Many people think they need to have a truck load of money before they can invest in real estate. In fact, we often wrongly believe that the property market is reserved for rich people and large companies who have deep pockets. This is so not true.
Like every other business or investment that exists, there is room for everybody in real estate, no matter the size of your capital.
As we always advise, start small.
Start with your savings. Set a target for yourself every year to set some money aside for real estate investment. It may take you months or a couple of years to save enough money to buy a piece of property.
Start with what you can afford. Start with empty parcel of land on the outskirts of a developing and expanding city. These are usually cheaper than properties in developing areas but the potential for high returns is huge.
Apart from using your savings as a source of capital, there are a couple of other interesting ways to raise the money you need to start investing in real estate.
5. Make sure You Get the Necessary Titles and Government Approvals
Due to poor regulations and inadequate controls, real estate scams are rampant in many of the cities with hot property markets in Africa.
There are incidences of fraud where the same piece of property is sold to several people. This is just one example of the different kinds of fraud and scams you could become a victim of if you are not careful.
After you have paid for any piece of real estate, you should ensure that you register your ownership (or ‘title’ as it is legally known) with the appropriate government office or department. Your lawyer can advise you on the relevant registrations and approvals to obtain.
After successfully purchasing property or real estate, many people ignore this very important step. By the time they wake up to the realities of the situation, it may have become too late.
By registering your title and getting the necessary approvals, the government recognizes your ownership of the property and protects you from any fights or disputes that often show up in this part of the world.
Getting your title registered may cost you some money and effort but it is usually worth it in the long run. Investing in good real estate is not enough. You have to do what it takes (legally) to protect your investment.
Now you know how to invest and make money in real estate in Africa…
While Africa’s real estate market now sits at a very interesting time in its history, the opportunities that it holds will not last forever.
Investing in real estate is usually a long term journey; the rewards and profits take time to accumulate and the impact on your finances grows over time.
Time is the only element of real estate investing that you don’t have. This is why the best time to start is NOW!
It’s never too early to start. Like we advised early on, start keeping away some money every month as savings to buy a piece of property.
Set a target for yourself at the beginning of every year to invest in real estate. Get hungry for real estate deals and information. Start working on your ‘property hunting’ and negotiation skills. Since real estate investments need time, the best time to start is today!
In this article, we have looked at the situation of the real estate market in Africa and the many opportunities that lie within it. We have also explored the strong reasons why you should consider investing in real estate and five great tips that will help you succeed.
We believe that all the opportunities we have shared with you in this article will be taken further by your creativity and energy.
Please leave a comment, share your views and ideas or ask any questions you may have concerning real estate investing in the Comments section below.
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To your success!
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