Investment in real estate has been increasingly getting popular over recent years. Most people are now saving up to invest in this lucrative business.
However, its worth to note that despite this sector is a booming business, there has been an alarming rate of frauds. For instance, According to the National Bureau of statistics in 2016, more than 6,000 cases of land fraud were reported.
Therefore, it’s essential to learn a few things about real estate before getting into it. In this article, we will discuss tips for investing in real estate in Kenya.
So you want to Invest in Real Estate in Kenya?
Maybe over the weekend, you sat up with a few friends/family who convinced you that investing in real estate is the next best thing to investing in Gold in Kenya.
So you woke up today and you are all pumped up to quit your job and jump into this bandwagon. Maybe you even think that you have been ready all your life. But not so fast friend, there are a few things to note first.
For instance, do you know that investing in real estate is not a get rich quick scheme? Or that quitting your job to get into it is not the best idea as it takes some time to get people moving into your flat? Being successful in the real estate arena requires skill and precision. Once these are mastered, then you can be the Chris Kirubi’s of tomorrow. Therefore, this article will equip you with tips to help you grow your skillset and be successful in real estate.
1. Your Investment in real estate in Kenya should not be your primary business
People take time to get into your flats or apartment once they have been fully finished. This means that it is a bad idea for one to quit their job and indulge themselves entirely in this business. Sometimes it might take six months to get the first tenants while other times it might only take a month. However, to manage this situation, you might need to engage the services of a professional property manager.
2. Research on the type of real estate investment you want to invest in Kenya
There are many real estate firms operating in Kenya now. Most of them have worked in different countries and understand all there has to be in real estate. Most also offer workshops and training in being successful in the real estate market. Before making any decision on whether to invest in land, commercial or residential property, it’s important to attend those training. Indulge yourself into learning from experienced professionals about their journey and how they have been able to make it. Who knows, you might be able to get yourself a partner as well as investors in those meetings.
You can also join the Kenya Association of the investment group. Here you will even learn best practices from more experienced investors. You might even meet sellers who you can buy property from with no down payment.
3. Have the right team
It is essential to have a board of trusted professionals in your organisation who will guide you in making the right decisions. This team will be able to steer your choices in such a way that you mitigate your risk. Some of the main people to have onboard include:
- Conveyancer – s/he is the person responsible for transferring property legally from one person to another
- Loan advisor – A loan adviser will help you decide on the most affordable loan options available to help you complete your project in case your capital runs out.
- Property Valuer – Will help you buy property at the right market price or even lower price
- contractor – A contractor will assist in drafting legally binding contracts with your tenants.
Most people may see this as an extra financial burden, but this team will ensure that you do not incur over-inflated expenditures in your project.
4. Buy the worst house in the best neighbourhood
Location is the most important and maybe vital thing when it comes to investing in real estate in Kenya. Moreover, its worth to note that it is not the cost incurred in developing a property or acquiring it that determines its value. What determines the value of the property is where it is located.
Therefore when making real estate investment decisions, it is essential to ensure the neighbourhood you are investing in is the best. Here are a few places where you can invest in the real estate market today.
The areas around Lake Naivasha are the most listed on most real estate property listing. Even though Naivasha is a dusty town, it is also a tourist attraction town with wildlife and scenic landscapes. Most people are buying here to build vacation homes. However, it is just as good to buy and invest in a hotel or even residential properties. Therefore, do not be left out, buy now and wait.
2. Kisumu City
Just like Naivasha, Kisumu is also a tourist attraction town. With its lake, and islands, who would not want to get a piece of it? In the recent past, however, many people in this region have been buying property on the outskirts of this city.
There has been an increased number of investors on this side of the country too. Moreover, it’s not only Kenyans who are swiftly moving to buy property here, but also other East Africa nationals.
3. Satellite towns in Nairobi
Nairobi itself is overcrowded with real estate properties which have no tenants yet, years later after their developments. However, its satellite towns are now experiencing growth. These towns include:
- Juja road
- Kangundo road
- Athi River
Mombasa city is the place to be. As the resident says, ‘ Kuingia furaha kutoka matanga’ BUying a property here is the best option that one could ever make. You could even build an apartment and furnish it for AirBnB purposes only, and you will reap from it. The best thing about is that since tourism is doing so right at the moment, there is no reason not to invest in Mombasa.
5. Make sure that the Monthly rent from the property once let out is more than 1% of its cost
Implementing this 1% rule will ensure that if you had taken a loan, you could repay it on time. That is why it is imperative to have a team of professionals advising you on the best places to buy a property or invest in.
Investing in Real Estate in Kenya Conclusion
In conclusion, it is crucial to keep in mind the tips discussed above before making a rash decision in investing in real estate property. One last tip is always to understand that if you are getting into real estate as a business, you leave emotions at home. This is because getting sentimental over a piece of property that you had bought and remodelled may lead to users spending more on it than it can be purchased. Which then translates to one making loses.
Hope the tips shared above will lead you to make the best investment decision.