There’s only a handful of ways to make money from real estate investments. The concepts however very easy to understand but don’t be fooled, the implementation will be tasking to execute.
Real estate investments may have actually produced more wealth than any other industry in Kenya but people still remain sceptical about entering into this space.
In this article, I will walk you through the basic ways of making money through real estate.
Also read about Top 13 Real Estate Companies in Kenya
How to make money from real estate investments
1. Vacation rentals
This real estate investment is a very lucrative path to profits if well executed.
Not only will you make money from vacation rentals but you can also earn from them even though you don’t really own the property.
First things first, you need to look for a good locale where tourists visit, in this case, you will want to invest your resources in tourist destinations like Mombasa, Naivasha, Kisumu and other suitable places.
If you do not own rentals, you need to source for the vacation homes and provide high-end consumer experiences.
Leverage your vast knowledge of the business with the owners of the rentals, build bonds and create a system that works for you to ensure utmost satisfaction to your clients.
If you have property, list it on sites like Airbnb, HomeAway or FlipKey before managing vacation rentals for other owners.
2. Long-term residential rentals
Leveraging long-term buy and hold residential rentals is one of the most common methods of making money in the real estate investments business.
People in Kenya are always looking for a place to live hence making this business very lucrative.
Due diligence is key in this type of business, you need to make sure the location of the rentals is suitable for your clientele.
Location is everything when it comes to looking for housing in Kenya, people want that convenience.
You need to secure the ability to quick rent property to long term tenants. This means that you have a steady income from that specific rental.
Positive cash flow in a residential rental is always a great investment.
3. Starting a parking garage
Let’s start by looking into Nairobi for example, there are so many car owners, yet so little parking lots.
In this case, you will want to look at supply and demand.
People want parking slots in town and will pay a pretty penny to have their cars safe within the CBD.
If you have idle land lying around the CBD, all you need to do is just get relevant county authorities to give you proper documentation to run that particular business.
From there, put up a sign and hire muscle to look after the cars. Also, charge a reasonable fee for the parking space.
In a day, you will get to make money from your idle piece of real estate.
Also read about What to know before investing in real estate in Kenya
4. Charge people for your real estate investments knowledge
This is a great opportunity for you if you have been in the real estate investments scene for a number of years.
If you have a proven track record of real estate transactions, people will definitely feel confident to seek for your opinion at a fee.
You can also write a book or develop training programs to pass on this knowledge to interested parties.
If you have the means, you can also come up with a consultancy firm where companies or individuals come to you for advice.
5. Home renovations
While there is potentially a lot of money to be made here, starting off in this part of real estate can be tricky.
You need the knowledge and know-how of how to run this kind of business otherwise you will lose out.
Home renovations will never run out of style in Kenya. Why? This is because people are moving left right and centre, houses getting foreclosed and others just want a whole new look for their homes.
You also need to be well connected in the real estate investments business before you can embark on home renovations.
How much will the home be worth once you’ve invested in fixes and repairs? To accurately determine that, you need a strong relationship with a general contractor and an on-site tour of the property.
You need to fully understand the underlying costs of the flipping as well as the potential value of the property to avoid making losses.
Never bite off more than you can chew, be creative in solving problems that arise and make connections that work for you in the business.
Also read about Ways of financing real estate development
6. Short sales
When an owner of a home is behind on their mortgage but the property hasn’t yet entered into the foreclosure period, it can be sold off. That is referred to as a short sale.
For a short sale to happen, both parties need to have agreed prior to the transaction because the property is usually sold off at a loss.
If you play your cards right, you will definitely make a quick profit without investing in the project as well as renovations.
Succeeding with a short sale might however be a little difficult because you usually need to pay for the house in cash.
Short sales as compared to auctions are better because you can view the property in which you are purchasing.