Real estate investment in Kenya can be an excellent way to plan for early retirement. However, you must know everything to do to succeed in the investment. Kenya is a developing country, and there is more to explore, especially in the property industry.
You can invest in raw land or developed land. However, if you need faster returns, consider buying a complete property that will bring income soon enough.
Real estate investment in Kenya has risen over the past few years, but what are the causes?
Why Real Estate Investment In Kenya is a Good Idea
Demographics. Kenya boasts a population of approximately 50 million as of 2022. According to Wikipedia, the birth rate is higher than the death rate. And the growth is estimated at 2.12% in 2022. Such statistics show that there is a future in property investment in Kenya.
Good infrastructure. The Mombasa port puts Kenya in an advantageous position over landlocked countries such as Uganda, DRC, Rwanda, and Burundi. The port has enabled the growth of different business sectors due to the easiness of importing raw materials and alos finished products from abroad. Nairobi city has good roads, and the town is continually growing.
Kenya has the most robust economy in the East African community. Statistica estimated that the Kenyan Gross Domestic Income (GDP) would grow by 5.6% in 2021. That shows that Kenya is a good place where you can realize your real estate investment dreams. In addition, Kenya’s currency is among the strongest in East Africa, although it has been weak against the USD recently.
So, now that you have solid reasons for property investment in Kenya, how do you go about the plan?
How to Invest in Real Estate in Kenya
You are about to get a solid investment plan in Kenya in real estate.
Plan your finances
Real estate is not a small investment you can think of and do the following day. That’s why you need to plan your financing very carefully. You should start saving for a down payment, which you’ll need to book a particular property.
You’ll also need a good credit score to get a mortgage loan with lower interest rates. In addition, you should also ensure you create multiple income streams to help you with mortgage repayments until your investment stabilizes. Remember that the property stands as collateral. Therefore, if you don’t honor your repayment plan, you’ll lose the property to the bank., which is a bad idea.
Get a mentor and a real estate agent
A real estate mentor will help you get all the relevant information about the industry. They will reveal the dos and don’ts you should note in the sector. A good mentor should have gone through the real estate journey and succeeded.
A real estate agent will help you know the best investment locations in Kenya. For instance, if you want to grow your real estate in Nairobi, you should consider its metropolitan areas. A good agent will show you places like Ruiru, Kitengela, Mlolongo, Athi River, Kiambu, etc.
Such locations have a better return on investment, especially for Mixed-use real estate investment and residential rental properties.
What kind of real estate investment do you prefer?
Indeed, different properties have different returns in various locations. A good investment should bring you good returns resulting from the occupancy rate.
Choose the best real estate property
If you want to enjoy your investment for longer, search for a new property with less or no maintenance costs for the first few years.
In addition, with the help of a real estate agent, you'll get excellent property in busy locations. As a result, your property will have a high occupancy rate, and you'll get your ROI faster.
To know if a property fits you, ask the current owner about the average monthly income flow. Then take 50% to represent all expenses; remove the mortgage repayment installments from the remaining half. What is left after those deductions is the cash flow. If it can sustain you, then go ahead with the purchase.
Make an offer
After choosing the best property, send an offer to the owner. You can include the proof of funds letter to increase the chances of getting the property if there is competition.
If the owner accepts your offer, you can go to the next step of hiring a real estate attorney.
Get a real estate attorney
A real estate attorney will take care of all legal proceedings of property transfer on your behalf. The attorney can also represent you in court if anything goes wrong with your property.
At this stage, do a title deed search to confirm the property owner. At least that will save you from unnecessary issues in the future.
Plan for a property check-up
Before proceeding to pay for the property, you should first check everything in it. You should check water availability, electricity, and the house's overall condition.
If anything needs some repairs, alert the owner to do it before you make final payments.
Get your funds ready
After you've got the property that suits your needs, it's time to involve your mortgage lender. The lender might further assess the property's price and compare it with market prices of properties of the same quality.
You should also negotiate affordable rates and installment payments.
Make payments and sign the property transfer documents
You should have your attorney and witnesses when closing a real estate deal. The seller should also have their attorney and witnesses. That will ensure there is transparency in the transfer process.
Your bank will release payment to the seller if you are satisfied with the property and all repairs have been done.
Get a good property manager
If you are a first-time investor in real estate, getting a real estate manager will help you manage your new property.
In addition, the manager can pitch good social media advertisers to help you to reach more target clients.
Remember that the success of your real estate investment depends on how tenants have occupied your property.
Bottom Line
Real estate investment in Kenya is a great idea to see you achieve financial freedom early. It's also an excellent way to build security for the future.
Frequently Asked Questions
What is the best investment in Kenya?
Real estate beats all other investments in security and long-term financial goals. Investments like cryptocurrency and bonds are very volatile, and investors have no control over what happens to the money.
How do Kenyan realtors make money?
The common ways of making money as a real estate investor are buying to let, reselling property, leasing, and renting commercial and residential property.
Which is the best property to invest in as a beginner in Kenya?
Nowadays, mixed-use property seems to be better since it has a section for commercial and another for residential. In this property, it's rare to have a less occupancy rate.
Is it hard to invest in real estate in Kenya?
Everything is hard initially, but it gets easier through continuous efforts to learn. So, if you first learn about real estate investment, it will be easier to invest and succeed.
