For much of our history, the black community has used real estate as the primary tool of investment for wealth creation. Many of us grew up watching our parents buy properties which they rented for income and later sold to create a retirement nest egg or kept to leave as an inheritance.

This has been a strategy for many black families across the globe. While financial instruments are now aplenty and have proven to be viable options for anyone interested, there are those who stand firmly with the idea that real estate is the one true, tried and tested means to create and sustain wealth.

On the other hand, there are those who oppose the idea that real estate investment is the safest and ultimately the best investment option for the non-upper-class segment of our societies.

The ongoing debate about this issue is of little value as investment choices come down to an individual investor’s preference, personality and comfort level.

Much analysis has been done and the overall general result is that real estate and the stock market, for instance, will provide similar results if done correctly.

Outside of return on investment, there are other factors to consider when choosing where to put one’s hard earned money. The top three pros for choosing real estate are:

1. It is often a comfortable mode of investment because it has been the main wealth creating mechanism for the lower and middle classes on the continent. Nearly everyone dreams of owning their own homes. This makes many a parents happy and proud.

2. There is a psychological effect which comes with owning property that does not come with other investments. One can go by to see and touch their real estate investment while stocks and bonds are more conceptually abstract especially for those of us who did not grow up with parents investing in these instruments.

3. Very few, if any, banks in Africa will provide a loan to individuals to purchase stocks and bonds but loans for real estate investments are available along with loans to start new businesses. Not everyone though, wants or has the skills to be a successful entrepreneur.

In Rwanda where the investment market is in its teething stage and the real estate market is saturated, the question is often asked as to what is the best means for growing and securing wealth if entrepreneurship is not a preferred choice.

At the moment with over 300 homes on the market for rent, building more houses may not be advisable unless it is apartments, smaller townhouses or affordable homes. The tourism industry is growing but there are numerous empty hotel rooms across Kigali and outside the city so building more hotels may not be the way to go either.

To invest in real estate at this time and to expect good returns there is need for a more scientific and research driven approach. Real estate options worth considering include:

1. Building affordable houses. That means houses that the typical Rwandans can afford to own. The earning per home may be small but with volume the earnings can surpass that of building more expensive homes to rent to expatriates. The market is wide open for this specific segment of the market while that of rentals to expatriates is saturated.

2. Buying, refurbishing and re-selling or renting existing houses. Of the over 300 houses currently on the market for rent, more than half of these have design and execution flaws which make them unattractive to the targeted rental market. There are landlords who put their properties for rent and within a short time these homes are rented. The quick turnaround is often based on two factors. Firstly the asking rental price is reasonable and secondly, the quality of the workmanship and finish on the property meets certain standards. Rather than building a new house it makes sense to buy an existing one and make it market friendly. The closing costs to buy and sell properties in Rwanda are still low and as such makes this option possible.

3. Buy land on the outskirts of Kigali or in any of the possible lakeside tourism areas. To quote Mark Twain, "Buy land, they’re not making it anymore.” The city of Kigali is growing and the policies of the country lean towards establishing and growing secondary cities. These secondary cities still have prime lands available at affordable prices. The options include buying and holding with the intention to resell in the future or to buy and hold and build once the cities begin to develop further. For lakeside properties, build small bungalows and guesthouses with attractive dining options and entertainment options.

4. Establish Real Estate Investment Trusts (REITs) which are modelled similarly to mutual funds. REITs finance and/or operate income-generating real estate. They can exist for commercial or residential properties or a mix of both.

The dream of building wealth through real estate has to be approached differently but is still viable for those who do it right.

Twitter: @NatsCR

The views expressed in this article are of the author.