Who doesn't like to earn money, even when they do get to work? That is exactly what it means to earn money passively. However, you need to make more initial efforts to invest in a passive income stream that will help you earn money in the future. One of the best passive incomes is through rental properties in Kenya.
Once you build rental properties, you require a lot of funds and plan execution at the beginning, but after you set everything up, you'll start earning money throughout. This blog will show you how to earn passive income through rental properties in Kenya. Keep reading.
We are always glad when you make the right investment choices. That is why we give you many investment tips on starting and managing a rental property business. We also have real estate agents who can help you get the best rental properties where you can start earning passive income immediately.
3 Ways To Earn Passive Income Through Rental Properties in Kenya
Through Rental Income
Most real estate investors in Kenya have ventured into the building to rent properties. This strategy allows them to build properties that they can rent to residents or commercialists monthly or annually.
We have three ways to earn passive income through rental properties in Kenya. However, before you become a landlord, ensure you understand the Landlord Tenant Bill in Kenya.
Although rental properties are passive income generators, you should continuously improve your property to attract tenants.
Residential properties
Residential properties are a great way to provide accommodation for people. They come in all shapes and sizes and can be found in most cities and towns. People who want to rent out their property can do so easily without the need to have an estate agent involved.
In Kenya, residential real estate properties have been numerous around the CBD area. Such areas offer tenants access to good public transport networks, schools, and hospitals. Security is also important when building these properties, as it allows tenants to feel safe within their home. Moreover, renters expect adequate water supply and electricity services, which can be easily accessed within the locality of the residence. In essence, landlords must ensure that their residential properties meet these standards to attract potential tenants, thereby helping them generate revenue through renting out their premises.
Commercial Properties
Another way you can earn a rental income is by investing in commercial properties. With these properties, you rent them to business people who set up their businesses. The location you choose to set up commercial properties largely determines their success.
However, industrial properties have a designated area where you should build them. But you can always build property for other businesses like retail stores, offices, and small businesses in town centers. Commercial properties usually have higher returns compared to residential properties in Kenya.
Mixed-use Developments
These developments have both commercial and residential sections, all in one building. A good scenario is when a building has retail and office spaces at the front and residential spaces at the back. Another instance is having a commercial section on the ground floor and a residential section on the other floors of the building.
In rural parts of Kenya, mixed-use developments are particularly common as it allows them to get higher returns on their investments due to its ability to provide multiple revenue streams. As opposed to a single-use property where return on investment tends to be lower, with mixed-use developments developers can obtain better yields through rental income or capital gains from both residential and commercial uses in one place. This has led to an increase in new development projects that combine residential and commercial space without sacrificing quality or convenience for either type of user.
Property Appreciation
You can also earn passive income through property appreciation. Once you buy or build real estate, you can wait for years and resell it. Property appreciation mostly occurs when the demand for houses increases. It can also appreciate when inflation occurs in the country's economy.
Over the years, the property's value increases as you wait without much involvement. Whether it's a rental property or a home, appreciation occurs constantly.
Invest in REITs
Real estate investment trusts are companies that pool funds from interested people and invest them in properties and other digital assets. Once you invest in REITs, you'll earn passive income through rental properties without being actively involved.
Investing in REITs is a great way to start real estate investing and earning returns without facing the risks involved. In addition, you can invest in REITs with less money than building or buying property.
What to Consider Before Investing in Rental Properties in Kenya
Location
In any property business, whether selling homes or renting out apartments, you must consider location as the main factor determining your success. When you buy or build rental properties in a more desirable location, you will get tenants faster, and your houses will always have low vacancy rates.
Property's condition
Another thing to consider when investing in rental properties in Kenya is the property's condition. Most people like properties with high ceilings, tiles, big rooms, etc. To succeed in rental property, ensure you continuously improve your property's condition to match tenants' needs.
Costs involved
Real estate investment needs a lot of money, and that's one thing you should consider when investing in property. You should set your finances right before you start your investment.
For instance, you can save money to buy or build rental property in cash. Or you can take out a mortgage loan to buy the property. However, you still need some cash for the mortgage down payment.
The Bottom Line
Earning passive income is a dream of many, probably a retirement plan. However, remember the initial costs involved in investing in these rental properties. To get a continuous flow of passive income through rental properties in Kenya, you should always improve your property.
We help realtors like you start and invest in the real estate business. We also have a group of real estate agents who help you get nice properties at desirable locations.
Frequently Asked Questions
1. Can you make passive income through the rental property?
Yes. You can make money without actively getting involved in rental property. You only need to set everything right and market your property to get tenants.
2. How do I start a passive income rental property in Kenya?
You can buy and build on raw land, provided it's in a location that's likely to grow. Alternatively, you can buy a complete rental property and start earning money from the property.
