How to invest in real estate Kenya to make money

Posted on February 06 2020
in # Commercial Real Estates# Finance and Investment# Market Insights
3 min read
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How to invest in real estate in Kenya

Make your dream house a dream come true with a Barclays mortgage Image: diditangroup.com

In the next three or four decades, the Kenyan population will drastically increase to somewhere above 60 or 70 million. This might probably result in increased demand and pressure on housing which will definitely outstrip the supply. With these expected projections, the real estate is viewed as a lucrative business.

While this is entirely true, this lucrative investment requires a lot of patience, commitment, and most essentially cash. Keep in mind that a lot of risks are also involved just like any other business. Below is a guide on how to invest in real estate in Kenya.

How to invest in real estate Kenya to make money

1. Get your finances in order

The first step should be establishing an emergency fund, retirement benefits, and pay off consumer debt. This is a highly expensive investment. Hence you will need to have cash for down payments and another kitty for dipping into in case you need to fix something.

You can also acquire a house through mortgage financing from your bank. You should be aware that this excludes majority of middle-class citizens as some lenders ask for a minimum monthly net income of Ksh. 100,000 to qualify. The total amount issued will also accrue an interest depending on your lender.

Barclays Bank charges ~ 11.99% per annum where you will need to commit about 50% of your income for repayment. The bank will finance ~ 90% of the whole costs. This means that if you want to acquire a property, say in Juja costing Ksh. 5 million, you will pay Ksh. 71,707 as monthly installments for 10 years. You can also pay Ksh. 59,979 for about 15 years or Ksh. 55,019 for 20 years.

2. Property evaluation

Next, before buying any property, start by getting to know more about the local market. You can talk to real estate agents or people living in the area to find out about the price history of the property, demand, and other factors. This is an essential step as it enables you to understand the viability of your project.

3. Make payments

If the conditions of the property meet your standards, begin a due diligence to ascertain whether it is encumbrances free. If so, then go ahead and make a down payment. Don’t forget to ask for documents that prove the transaction such as receipts and so on. The property will be handed to you right away. Go ahead and rent it out. Chances are that the total monthly rent from tenants will exceed your mortgage.

4. Build a team

The next thing on how to invest in real estate business should be building a team. Your success will depend on what and who you know. So, you need to focus on a good relationship with people. Remember that this is a relationship-based investment; an aspect well-articulated at by real estate developers such as Tilisi Development PLC.

Get a team of estate agents, attorneys, contractors, and accountants who will help you grow and run your business smoothly.

5. Adopt a simple strategy

A simple strategy might go a long way in this type of investment. Don’t be fooled by believing you need to make it big for success. It is wise to start small, so you can have minimal expenses. The aim here is to get your property free of debts so that you have a lower risk and higher returns. This, in turn, ensures you have an adequate pool of money to go clubbing, have fun, invest again or even leave your current job.

6. Equity build-up

While keeping a little cash for emergency purposes, use your rent earnings to pay the down payment for another house. Through this practice, there is no limit to the number of properties you can purchase, provided you have the right management team in place.

How to invest in real estate Kenya to make money: Image: NewRetirement

Well, this is how your journey to acquiring a mini-real estate investment will start. To grow your financial muscles, you can also engage in buying and selling of house units.

Investing in the real estate business in Kenya is that simple. You only need to get your finances in order, evaluate the property you are about to buy, make payments, build the right team, adopt a simple strategy and finally, use your earning to acquire other units to expand the business.

At Hao Finder|| For All, we are dedicated to helping determined investors like you acquire, establish, manage and dispose properties. This is only possible through our country-wide network that makes sure your units get the right tenants/buyers and most importantly, managed accordingly.

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