Before I left Ghana a few weeks ago, one of my wealthy friends came to me with a confession. He said, “Chris, you’re absolutely right when you always tell us to run the numbers.”
This friend of mine has a thing for buying land and building hostels and houses for rent. And honestly, in Ghana, where safe investment opportunities are limited, real estate seems to be the default option for anyone with money to spare.
But I’ve never fully bought into that idea. I always tell him—and anyone who cares to listen—to run the numbers before jumping into any investment. You have to consider not just the potential returns, but also the stress, risks, and hidden costs that come with it.
So, this friend of mine recently completed a hostel near one of the university campuses in Ghana. He told me the entire project, including land, and basic furnishing, cost him around $400,000.
In February, he collected the full year’s rent for 2025, which came to $26,000. That was his return on the $400,000 investment. At first glance, it might seem like a decent deal, but when you dig deeper and run the numbers, it’s actually not as good as it appears.
In fact, it’s a pretty bad deal. At this rate, it would take him over 15 years just to recover the $400,000 he initially put into the hostel—and that’s assuming there are no repair costs or other expenses along the way, which, of course, there always are.
Out of the $26,000 yearly rent on this $400,000 investment of 30 rooms hostel, he has to pay workers, tax and repair costs—so he wouldn’t be getting the entire $26,000 even.
Here’s where it gets interesting. When he came to me, Ghana’s government was offering around 27% annual return on Treasury Bills. He had realised that, if he invested the same $400,000 cash into Treasury Bills (cedis equivalent), he would receive $108,000 per annum (cedis equivalent)—and in just 4 years, he would have doubled his money.
There is no way that hostel would be worth $800,000 or even $600,000 in 4 years.
In fact, he came to this realisation because he went to buy about $100,000 (cedis equivalent) of Treasury Bills and he realised out of this $100,000, he would get $27,000 per annum—more than what his real estate investment of $400,000 will give him.
Even now that the Treasury Bills’ rate has come to about 20%, it is damn still better for him to invest his money in Treasury Bill compared to that hostel.
This is why I always stress the importance of running the numbers. So many people jump into investments—especially real estate—because they’ve seen others do it or because it’s the “safe” option. But they don’t take the time to do the math or compare it with other opportunities.
They don’t consider the stress of managing properties, the risks of vacancies or repairs, or the fact that their money could be working harder for them elsewhere. It’s not enough to just follow the crowd.
You have to think critically, calculate carefully, and make decisions based on what the numbers are telling you. Otherwise, you might end up with a “safe” investment that’s actually costing you more than it’s worth.
I do not know anywhere in the world where real estate increases in value of about 20% per year—not even 10% per year. Therefore, if you have real cash to invest, real estate is never a good choice when you can find instruments which will give you about 20% annual returns.
–Chris-Vincent Agyapong
