Category: Buyer Guides

The government decided to withdraw the controversial Land Laws (Amendment) Bill 2023, fearing it would trigger public anger if it appeared to be amending the Constitution covertly. At the time of withdrawal, the Bill, which proposed an annual levy on freehold land and sought to reduce the National Land Commission’s (NLC) powers by transferring key functions to the Lands Cabinet Secretary, was under review by the House’s Lands Committee.

The Bill, sponsored by Leader of Majority Kimani Ichung’wah, aimed to amend six Land Acts: the Registration of Documents Act, Land Control Act, Land Registration Act, Land Act, Community Land Act, and the Sectional Properties Act. As the Kikuyu Member of Parliament and by virtue of his position, Ichung’wah signs all government Bills introduced in the National Assembly.

Read: How to Pay Rental Income Tax Through E-citizen

On June 13, aware of the opposition and public disapproval the Bill had generated, Ichung’wah formally informed House Speaker Moses Wetang’ula of the government’s intention to withdraw the Bill. “Having consulted with the relevant stakeholders, this is now to confirm that the majority party has withdrawn the Bill,” Ichung’wah wrote to the Speaker. He requested that the House Business Committee, chaired by the Speaker, be notified of the withdrawal and that “no further consideration of the Bill should be undertaken.”

The NLC, a constitutional commission responsible for spearheading land reforms in the country, stood to lose significant functions. The Bill sought to transfer the NLC’s responsibilities for land valuation and compulsory acquisition on behalf of national and county governments to the Lands Cabinet Secretary. It also proposed removing the NLC’s mandate to inspect land, conduct investigations, pay compensation to affected landowners, and participate in land lease renewals, transferring these duties to the Lands CS.

Public outrage was particularly intense over the proposal to introduce rates on freehold land, which would effectively turn landowners into lessees of the government, risking loss of their land if they failed to pay the rates. Most ancestral land in Kenya is freehold, owned without any government-imposed fees.

Also read: How to buy land on hire purchase /Installments in Kenya

The proposed new clause 54A of the Bill stated, “The owner of any freehold land situated within the boundaries of any urban area or city shall pay an annual land levy equivalent to land rent charged on a comparable leasehold land or property of the same zone.” It included a provision that freehold land used for agriculture might be exempt from the annual levy.

This proposal was contrary to the Supreme Court Advisory opinion of 2014, which confirmed that the Land Act’s provisions were consistent with the Constitution regarding the NLC’s mandate to protect public interests. NLC Chief Executive Officer Kabale Tache opposed the imposition of an annual levy on freehold land, calling it to double taxation, and stated that freehold interests are superior, with no landlord to whom rent could be owed.

The Bill also proposed creating a Land Compensation Inquiry Committee to take over the NLC’s role in determining compensation for compulsory land acquisition and sought to amend the NLC Act to remove time limits for reviewing grants and dispositions of public land, allowing historical land injustice claims to be heard beyond 2026.

Upon withdrawing the Bill, Ichung’wah noted the various constitutional and legal issues it raised and mentioned the need for these issues to be resolved before further consideration. He informed the Lands Committee not to prioritize the Bill’s consideration to allow for consultations with the Ministry of Lands and Physical Planning and the NLC.

The formal withdrawal of a Bill is usually followed by a communication from the Speaker, but there is no record of such communication from Speaker Wetang’ula.

See! 5 Simple steps to process a titles from an allotment letter

When it comes to renting a property, there are a few different options available to tenants. One option is to enter into a rent-to-own contract. This type of agreement can be beneficial for both the tenant and the landlord, as it allows the tenant to eventually own the property while the landlord receives a higher rent amount.

If you’re considering entering a rent-to-own contract for a property in Kenya, it’s essential to understand how these agreements work. This guide will provide an overview of what you need to know about rent-to-own contracts in Kenya. 

There are a few things to consider before signing a rent-to-own contract, so make sure you read this guide carefully.

Keep reading.

What is a Rent-to-Own Contract in Kenya?

A rent-to-own contract, also known as a lease-to-own contract, is an agreement between a tenant and a landlord in which the tenant agrees to rent the property for a set period.

During the term of the agreement, the tenant will make monthly rental payments. A portion of each payment will go towards the eventual purchase price of the property.

Rent-to-own contracts are becoming more popular in Kenya as a way to buy property. The recent development of rent-to-own is the government residential house plan in most counties.

How Rent-to-Own Works in Kenya 

This type of contract allows you to rent a property for a set period, with the option to buy it at the end of the lease. This criterion is a great way to get on the property ladder if you can’t afford to buy outright. Or if you need clarification on whether you want to commit to a property for the long term.

The property seller quotes the price before the buyer agrees to sign the contract. In addition, the contract entails the monthly payments of rent and how long the buyer should pay before they own the property entirely. 

Buyers should do market research to compare if the current market favors them or the seller. They should also compare rent-to-own prices and mortgage loans.

At the end of the contract term, the tenant can purchase the property for the agreed-upon purchase price. 

The Benefits of a Rent-to-Own Contract in Kenya 

To the buyer

A rent-to-own contract can be a great way to get into a home without putting down a large amount of money upfront. 

This type of contract can also help to build up your credit score as long as you make your payments on time.

Another benefit of a rent-to-own contract is that you may have the opportunity to purchase the home at a lower price than the current market value.

You eventually become a homeowner without taking a mortgage loan. And it’s a great way if you have a lousy credit score. 

The flexibility of payments helps you in managing your monthly budget. In addition, if you don’t want the home again, you can edit the rent-to-own contract since it’s flexible in nature.

You grow your home equity faster, and with a clear record, you can take a loan against your home equity. 

You also move into your dream home faster. And you can customize it the way you wish it to, like, adding extra rooms, boards, or a kitchen garden.

To the seller

A benefit to the seller is that the tenant will take good care of the house because they are the end owner after completing payments. 

The seller enjoys a lump sum monthly rent income from their rent-to-own tenant. They can use it to pay their mortgage and build their credit score.

The Disadvantages of a Rent-to-Own Contract 

A rent-to-own contract can be a great way to get into a property with a smaller up-front investment, but there are some potential disadvantages to be aware of.

First, the monthly payments during the lease period are typically higher than they would be for a traditional rental since a portion of the payment goes toward the eventual purchase price. This can make it challenging to save up for the down payment on the property.

Additionally, if you decide not to purchase the property at the end of the lease period, you may forfeit any money that you have already paid toward the purchase price.

Finally, it is essential to be aware of any potential hidden costs in a rent-to-own contract, such as maintenance or repairs that may be the responsibility of the tenant. In a typical rental property, sellers are responsible for maintenance costs, which change in a rent-to-own property. The buyer usually foots all costs involved in maintaining the property, which will eventually add to the purchase price. 

How to Create a Rent-to-Own Contract in Kenya 

A rent-to-own contract in Kenya is a contract between a landlord and tenant that gives the tenant the option to purchase the property at a set price within a specified period of time.

The contract should outline the purchase price, the rental terms, and the length of the option period. It is important to have a lawyer review the contract before signing it to ensure that it is fair and legally binding.

Both seller and buyer should have an attorney and witnesses during the contract signing.

The Bottom Line 

Renting to own contracts is a great way to own property in the most lenient ways possible. You don’t have to take a loan to finance your first property. And that’s a good way to stay debt-free and build your net worth.

However, ensure you follow legal procedure to draft the contract that can be presented in court. 

Thinking of buying or selling a property? Schedule a free consultation with our team.

Frequently Asked Questions 

Is rent-to-own a good idea?

Yes. Since the contract is flexible, you can give it a try to own a home using this method. It’s good since you don’t need a mortgage loan to buy a home.

What do I need to participate in a rent-to-own agreement?

The most important part is the ability to pay both rent and the monthly capital payment. Remember that skipping payments teaches the contract, and the seller can evict you from the house.

Who caters to the maintenance costs of a rent-to-own property?

In most cases, the buyer foots all bills related to the house. And that’s the greatest limitation of these properties.

Saving for a house in Kenya can be difficult, but it is possible to do with the right planning and budgeting. To save for a house, you should first understand your financial situation and what you can realistically afford to save.

Once you know your budget, you can start saving by setting aside money each month into a savings account. Make sure to shop around for the best saving interest rates in banks and financial institutions and look for any government schemes that can help you save.

It is also important to have a realistic timeframe for purchasing a house, as this will help you stay on track with your savings.

This blog gives you tips to help you save for a house in Kenya. These tips can help you become a first-time investor with little but consistent monthly effort.

But why should you save for a house in Kenya?

Why Should You Start Saving for a House in Kenya?

There are many reasons why you should start saving for a house in Kenya.

For one, it is a great investment. The value of your home will likely go up over time, so you can sell it for more in the future if you need to.

Additionally, owning a home can provide you with a sense of stability and security. You will always have a place to live, even if your financial situation changes.

Frequent and timely mortgage payments can improve your credit score, which places you in an excellent place to build wealth with other loan types. 

You’ll get tax deductions once you keep clear records of expenses regarding the home, like the mortgage and insurance.

You’ll have a stable monthly payment of a mortgage, so you’ll know when you can fully own the home. This helps you properly budget your income and invest in other money-making ventures. 

Finally, it can be a great way to build equity. If you make payments on your home and eventually sell it, you can pocket a large chunk of the sale price.

How to Standout From Your Competitors in Real Estate Investing

Tips on How to Save For a House in Kenya

There are many ways to save for a house in Kenya. Here are four tips to help you save:

1. Make a budget and stick to it.

Determine how much you need to save each month to reach your goal. Then, make sure you don’t spend more than that amount.

A budget will help you get the most out of your monthly income. Saving for a house in Kenya will require you to create a realistic monthly budget.

2. Invest in a good savings account.

Look for an account with a high-interest rate so you can earn more on your savings.

Most banks in Kenya have excellent fixed deposit rates, which can help you build more money over a specified time. In addition, some banks will deduct the amount you allow them first thing after your account is credited with your salary. As a result, that limits temptations if using your savings. And that follows the save-first criterion.

3. Start small.

Start with a smaller goal if you can’t afford to save a lot each month. Once you reach that goal, you can start saving for a larger house.

Setting a high amount of savings will result in forfeiting the whole thing. When you are uncomfortable saving a certain amount of money, just reduce the saving amount. After all, the other bills are constant, not unless you want to break into your savings kit.

4. Stay disciplined.

It can be tempting to spend your savings, but if you want to reach your goal, you need to be disciplined.

Stick to your budget, and don’t dip into your savings unless it’s an absolute emergency. However, this should not be the case. Actually, you should have a separate savings kit for emergency needs since no one calls them, but they eventually come. 

Being financially disciplined is one way that can help you save for a house in Kenya. 

5. Cut expenses. 

You have to realise that saving for a house in Kenya is a great goal that needs lots of cash. Therefore, ensure you are ready to sacrifice your luxuries to save more each month.

You can dig deeper into your budget and remove unnecessary items. Find ways you can buy items at discounts. For instance, Jumia, Kilimall, and other online stores offer discounts from time to time. In addition, you can follow influencers who give you shopping coupons with discounts.

6. Have a target.

Saving without a target or a goal is very tough, and in most cases, it doesn’t work out in the end. Therefore, you should set goals on what amount of money you should save within a specific period. Targets help in fueling you to achieve them. You can reward yourself with a small treat if you achieve your monthly, semi-annual, or annual target savings. 

How to Actualize Your Home Ownership Dream in Kenya 

Saving for a home can seem impossible, but there are ways to make your dream of owning a home in Kenya a reality.

Start by creating a budget and saving as much as you can each month. You can also look into government programs that offer assistance for first-time home buyers and look for ways to reduce your monthly expenses.

With some planning and perseverance, you can save enough to buy your home in Kenya.

Conclusion 

Saving for a house in Kenya is a great way to own your dream home or commercial property. It’s a good idea to start as early as possible. 

Remember that your discipline in restraining your budget greatly contributes to how much you save for a house. 

Frequently Asked Questions 

How much does it cost to own a home in Kenya?

This depends on what size of house you need. For instance, a 1 bedroom house in Nairobi could cost at least Ksh. 3 million. 

When do I start saving for a house?

As soon as you have enough income to cater to your needs plus savings, don’t hesitate to start saving for a home. 

How much should I save in a month for a house?

This depends on the house you like to buy and when you would like to buy it. In addition, your monthly income should determine how much you should save for a house on a monthly basis.

What is the fastest way to save for a house?

The fastest way to save money for a house in Kenya is by creating more than one income stream. This will help you have more to save at any given time. 

You will agree with me that there is no more significant purchase an ordinary person will make than that of a house. Talk of personal cars or land, nothing exceeds the buying price of a home. But why is it so? Why are houses so expensive?
Well, in this post, you’ll know the reason behind the tremendous price of houses. Over the decades, homes have been a bit cheaper compared to current times. So, what has happened over the last decades that has made houses very costly?
Prices of single homes have greatly increased over the years. If you want to be a homeowner, you should have a lot of money to make your dream real. If you are not buying cash, you can find an affordable mortgage that you’ll pay between 15 and 30 years. 

Factors Leading to Costly Houses in Kenya

1. Skyrocketing population growth 

Over the years, the Kenyan population has been increasing rapidly. As a result, most people move to urban centres in search of jobs and greener pastures, and they must rent or buy residential houses. 

Since demand for housing is increasing, the builders are also growing, but at a lower rate than population growth. That’s why you will find that buying a house is so expensive nowadays.

2. Housing regulations 

When building a house, whether residential or for commercial use, there are several documents you must sign and adhere to several state rules.

As a result, more people tend to avoid all the processes by just investing in other things like cryptocurrency. Therefore, that reduces the number of houses, given that the population grows daily.

Afterwards, the available real estate investors raise their house selling prices because the demand will always be there.

3. Increased land price 

As you all know, the land is an appreciating asset, but the building itself depreciates as years go by, though it may take centuries if well maintained. 

The land is an appreciating asset, and prices grow every time. As a result, those seeking land to build houses for sale will have to go deeper into their pockets. And that will result in an increased price of the completed home so that they can gain their profits.

4. Increase in construction costs 

We’ve seen the price of construction materials increase over the years, with the most increase recorded after the Covid-19 global pandemic. The imported materials had to come to a standstill/ decrease at some point because of international travel restrictions in fear of spreading the pandemic.

That led to a higher scarcity of materials, increasing the prices of the available ones. Once the cost of the materials increased, the investors had to increase the house prices to maintain their profits.

5. Brokers have exaggerated house prices 

Nowadays, it’s rare to buy a house without the involvement of an intermediary broker. The brokers liaise with the actual investors to sell the houses on their behalf. Once there is an agreement, the broker gets their share of income, and the owner gets their share too.

As a result, you’ll find that the house is more expensive than if you could have bought the house from the original owner.

6. High advertising costs 

TV channels charge real estate investors millions of money to place adverts on the screen. The more they want their advert to reach more people(depending on most watched programmes), the more they’ll pay. 

Alternatively, if homeowners use public figures and affiliates for marketing their houses, they’ll still pay high advertising costs.

So, the final price of the houses will be high. 

7. Political instability 

No one has forgotten how houses and people’s businesses got affected during Kenya’s 2007/2008 political saga. 

Many people went bankrupt then after losing their most significant source of income. 

It’s now over a decade, but investors are freaking out about investing in building houses in big towns. As a result, the demand for homes is growing, and the investors are few.

So, the available houses are sold at a very high price. 

8. Low-interest rates of mortgages 

The average interest rate of mortgages in Kenya is 10.9%, which is not that high. People with stable incomes have sought to own their homes since they can manage to repay the mortgage.

That increases the overall demand for houses. Hence, the home sellers increase the prices to achieve more out of their property. 

The Bottom Line 

Owning a home sounds good, but the cost involved pushes many away. That’s why you need to consider several factors before you get a mortgage.

You can consider investing in real estate that will bring profits instead of buying an expensive home. Actually, you can retire at 40 with real estate investment. In some instances, a costly house is just a liability.

Frequently Asked Questions

1. How much is an average house in Kenya?

An average home of 1 to 3 bedrooms is around Ksh. 15 million. While 4 to 6 bedrooms can cost above Ksh. 40 million.

2. How much is a house in Nairobi?

Houses in Nairobi can be expensive, costing Ksh.87 million and above, with the most expensive costing around Ksh.650 million.

3. How much can it cost to build a two-bedroom house in Kenya?

Building a two-bedroom house in Kenya can cost between Ksh. 500,000 and Ksh. 1 million. But that range can go high if the price of construction materials keeps increasing.

4. Can I buy a house in Kenya as a foreigner?

Yes, you can own a home in Kenya as a foreigner under your name. The 2010 constitution grants anyone to own a home, although some restrictions are involved.

Being a homeowner can save you from unnecessary disappointments when you pay your house rent late. It’s a good feeling to own a home, primarily due to the flexibility involved.

When the Coronavirus pandemic hit our country and the world, homeowners had more advantages over renters. Why? Because after losing jobs, it must have been a challenging experience to pay rent on time. Although homeowners struggled with mortgage repayment, they were far better than non-homeowners.

The pandemic has been an eye-opener, and more people are focusing on owning a home where they have the freedom to stay and do other things like agriculture.

Now, before investing in owning property, you need to understand the benefits involved.

10 Motivating Benefits of Owning a Home 

1. Freedom 

Everyone likes the freedom of space and the ability to do what they want without disturbance. For instance, if you’ve got your compound, you’ll plant flowers or vegetables to save on grocery costs. In addition, you can also rear chicken and other domestic animals that contribute a lot to your diet. 

I bet you won’t have that freedom in a rented apartment. 

2. Homeownership saves you from future inflation 

When you take a fixed-rate mortgage loan to buy a home now, the payment won’t increase if interests increase in the future. With the current economic trend, especially with the influence of external factors such as pandemics and war, the cost of living may never return to where it used to be. That said, homes increase in price, and so is the mortgage loan you take plus the interests.

So, a fixed-rate loan can help you avoid future inflation.

3. You save on taxes 

Saving money through taxes is one good thing that happens when you become a homeowner. You can deduct property taxes involved in installments.

You can include private mortgage insurance in your expenses, which will reduce the annual tax you could have paid.

4. Appreciation 

Home is a long-term asset that appreciates value as time goes by. Houses lay on the land, which will never depreciate. 

All you need is to keep the house in good condition by maintaining it all through. 

You can buy a home at 15 million and, after like ten years, sell it at 25 million. That’s a cool 10 million profit. 

5. Social stability 

It feels good to stay in an area you know you can stay there forever. That can only happen when you have a home. Of course, you cannot stay in a rented apartment forever because, at some point in life, you’ll need to settle.

Owning a home assures you of future security. If you lose your job, you still have a place to stay. You can strategize on what to do next without much stress from the landlord. 

In addition, owning a home serves as a good retirement plan where you settle away from all the noise and so your things privately. Your home compound can be a business unit if you invest in agricultural activities like dairy farming.

6. Build equity 

When paying a mortgage, it’s like you are forcefully saving money. That home you are paying its mortgage later becomes your net worth.

So, you are building your home equity while paying monthly mortgage installments. 

7. You build a strong credit history 

A good credit history can help you get millions of money to invest in other businesses. Once you pay your mortgage installments on time, you even build your credit score.

After some time, you can also refinance your mortgage and get a fresh one to buy commercial property. 

Remember that you’ll always need an excellent credit score to make it in quality investment plans.

8. You have your privacy 

You don’t have to deal with noisy and rude tenants when you are in your home. You have your space to do what you think is suitable for you and your family.

In addition, there won’t be anyone to track your progress once you have your home. You can comfortably leave and come back home without bothering anyone.

9. You are a step ahead 

Indeed, you can’t compare a homeowner without a car to a car owner without a home. A car is a depreciating asset, unlike a home, which always appreciates.

Owning a home is one step ahead in becoming what you want in life. Sorting out your home keeps your family satisfied.

In addition, you can focus on other investment plans after you have a roof over your head, which sounds good.

10. No rent increments 

Landlords can be frustrating at some points. They can wake up one day and decide to add a 10% increment to the monthly rent.

When it comes to that, it’s either you take it or leave it. After all, it’s their property, and you got no shares.

Once you own a home, forget about those weird rent increments. Your only focus is mortgage repayment, which never changes if it’s a fixed-rate loan.

What Next?

Well, you’ve seen all the benefits you could gain when you plan to own a home. At least, you are now ready to make an informed decision when buying a home. 

Frequently Asked Questions 

1. What are the social benefits of owning a home?

One of the most significant benefits to society is a reduced crime rate since you’ll also contribute to ensure that the area is secure. You can also participate in other activities like making your neighborhood’s roads among the best. Of course, you don’t want to get stuck in the mud when it rains, so you’ll participate in activities to make your area the best.

2. How do I benefit financially if I become a homeowner?

You can save money through reduced taxes when you include mortgage insurance costs. You’ll also save rent that you could have paid since you will use the funds to pay for a house which later becomes your net worth. In addition, you’ll profit from selling your home when you plan to sell it.

3. Which is better, homeownership or renting?

I would go for homeownership if I had the financial ability. However, if you don’t have enough income to pay your mortgage, go for renting till you are ready to own a home.

Buying multiple rental properties is one sign that you aren’t new in property investment. However, you’ll still need guidance in accumulating such huge properties. 

I’m sure you’ve tasted rental income and found the sweetness of it. That’s why you need to upgrade. Right?

However, before adding more rental property, ensure that the current one is stable enough to repay the mortgage in case your job fails.

This guide will show you how to make those big investments with much ease. You’ll also learn the precautions before making a mistake while investing in multiple rental properties.

The ideas you’ll learn here have worked for more prominent real estate investors who own properties worth billions of money.

Keep reading.

How do you invest in Multiple Rental Properties?

Step 1: Determine your goals 

You might want to retire early with real estate. That’s why you could be planning on multiple rental property investments. With a goal in mind, you will manage to stay in line to achieve your dreams.

1. Consider different types of real estate. 

You can consider investing in mixed-use rentals if you have a residential rental property. A mixed-use rental refers to property that can serve as retail stores at the front and residential rooms at the back. 

You can also try investing in apartments or single-family residential, leisure buildings, warehouses, and offices for rent. 

This criterion will ensure you get different types of tenants that will boost your rental income.

2. Research on best locations for your rental property 

Diversify your rental properties such that you don’t congest them in one area. Remember, you could suffer losses if something like fire breaks into your property. 

Different locations have different rental yields in Kenya. For instance, rental yield in Ruiru, Limuru, Kamulu, Athiriver, Mlolongo and other Nairobi metropolitan areas is higher compared to rural towns.

Step 2: How to finance multiple rental property investments 

Indeed, you need funds to multiply your rental properties. So where do you get the funds, even with an ongoing mortgage repayment?

• An investment line of credit 

To get funds through this method, the property you are using as collateral should have equity of above 40%. The mortgage lender refinances your previous loan. Once that happens, they will clear the old loan and give you the balance. However, the new funds will be a new loan with different interests, installments, and repayment terms.

• Cash Out Refinance 

This method allows you to use the existing property’s equity against the loan to use the funds as a new estate down payment.

• Blanket mortgage 

This mortgage covers multiple real estates so you don’t have to apply for a mortgage loan for each property.

However, this financing method requires you to have prior experience with real estate. 

Owner financing 

• Conventional financing 

This type of financing can only occur when you don’t have an active loan repayment. The borrowing is entirely based on your credit score, income level and at least a 20% loan down payment.

When getting any of the above loans, you will need the following. 

• Personal and rental business tax returns for the last two years 
• Bank statements, both personal and business 
• Experience in previous real estate investment 

Step 3: Register each property as a different Limited Liability Company (LLC).

Having each property stand as a single LLC protects you from losing your property in case of an accident in one of your rental properties.

For instance, a tenant can sue you due to damages in case of an accident resulting from faulty maintenance of your property. If they win, they could follow other properties under the same name, including personal property. 

Therefore, it’s advisable to confuse the law by registering each rental property as a different LLC.

Registering your property as a different LLC saves you from keeping personal expenses from rental business expenses.

It will also be an excellent way to keep clear records of each property. Therefore, property management will be simple.

Different LLCs mean that each company will have different expenses, hence reducing the tax liability. In addition, profits and losses will be divided among each property’s shareholders, again, reducing the tax liability.

Factors to Consider Before Investing in Multiple Rental Property 

• Ensure you set your goals clearly to avoid changing your mind halfway in investment. 
• Your income level should be higher. If you need to finance your other properties, you need lots of money, which you may get from a blanket mortgage.
• You need to hire a professional property attorney who has handled multiple property transfers 
• Are you ready to hire a property manager? You are now turning into a big real estate investor and need people with great minds around you. That’s why you should get a professional property manager to ensure you don’t lose money in your investment.

Bottom Line 

If you want to invest in multiple rental properties, you need to take calculated risks to avoid losing money in the end. 

Real estate investment is actually not for the faint-hearted, so ensure you are psychologically prepared to take huge risks.

Frequently Asked Questions 

1. How do I buy multiple properties with one mortgage?

The only sure way to buy multiple rental properties with one mortgage is by taking a blanket mortgage. With this loan, you can finance the buying of multiple properties with one big mortgage. However, you must have a solid experience in the real estate industry.

2. How do I use my property to buy more properties?

Through the accrued property equity, you can refinance your mortgage or get a property equity line of credit.

3. Is there a limit to the number of properties I can own?

No. There is no limit to the number of properties you can own. All you need to do is ensure that every property stands as a single LLC.

Buying a house in Kenya in 2024 can be challenging, especially if you are a first-time homebuyer. Buying a home is not for the faith-hearted. One reason is you need lots of money, and the other is time to search for the best deals. That makes the whole process a tiresome one.

Therefore, you need guidance on how you can prepare and search for your desired house and, finally, pay for it. That’s why we have this guide that will take you through everything you need to know before, during, and after home buying.

Here are the 5 key steps to follow when buying a house in Kenya.

1. How to prepare to buy a house
2. Get a good real estate agent
3. How to select your home
4. Final walkthrough
5. Sign sales agreement documents and make payment

Let’s get to the guide on what you need to take into consideration when you are making the purchase.

5 Simple Steps to Buy a Home in Kenya for Beginners

1. How to Prepare to Buy a House

Buying a house is unlike going to the market to purchase household items. Since homebuying needs a lot of money, you have to prepare before you can think of making the purchase.

So, what do you do?

• What’s your budget?

A budget should be the first thing to ring in your mind when you think of buying a home. Some homes are cheaper, while others are expensive. It all depends on the location and the size you need.

Once you know the total amount you need for a home purchase, you can start saving your money.

• Start saving money.

The first thing to enable you to save money is multiple stable income sources. In addition, these income sources will make your mortgage repayment easier since there will be continuous cash flow.

Even if you plan to get a mortgage loan, you’ll still need money to cater for a home or mortgage down payment and other related costs. After saving money, start searching for the best mortgage loans.

Ensure you learn about the payment plan and see whether you can afford to pay the monthly installments. 

After you get a suitable lender, apply for a mortgage and let the lender preapprove you. This criterion will help you avoid disappointments during closing a deal on your home. However, get a mortgage contingency that will save you from fines if the lender decides otherwise regarding your loan approval.

Read: The best mortgage loan providers in Kenya

2. Get a Good Real Estate Agent

As a first-time homebuyer in Kenya, you need a professional to help you search for the best houses in your preferred locations. For instance, get a real estate agent from the site if you want a home in Nairobi or its metropolitan areas.

An excellent real estate agent will give you price approximations of homes in different areas. That will help you get your desired home faster, without much struggle.

Real estate agents will also help you get home to a place with good security and availability of social amenities. So you won’t suffer.

3. The Home Buying Process

After an agent shows you around the best houses in a particular location, you can select the one most appealing to you. 

• How to select an excellent house

You should look for things in a good house, such as electricity, water availability in the area, roofing quality, inner and outer walls quality, paint quality, and floor quality. In addition, you should also worry about who your neighbours are.

With those factors in mind, you’ll select a good house that will serve you for longer. And with good neighbours, you will not have any reason to sell your home in the future due to the wrong neighborhood.

• Make an offer to the owner.

After selecting the house you need, you can contact the owner and make an offer. In addition, ensure you ask them about repairs if there is anything that has to be fixed in the house.

At this stage, you should negotiate the house price if they cannot do the repairs because you’ll do them yourself.

• Get a real estate attorney. 

A legal figure is crucial when making big purchases. Get a real estate attorney who will handle all legal proceedings of home buying. 

An attorney can even represent you in court if something goes amiss with your new property. 

• Ask the owner about a recent home appraisal.

If you are using a mortgage, the lender will request to know the current worthiness of the home you are about to buy. Therefore, if the homeowner doesn’t have a recent home appraisal, help them get one because you’ll need it.

This will also help you get a quality home at a reasonable price instead of paying more money for a less-worthy house.

• Secure your funds.

After everything is okay, you can get home-buying funds from your mortgage lender. It will be a good idea to open an escrow account and deposit your home buying funds there. 

With an escrow account, you can get back your money if the seller appears to be spam.

4. The Final Walkthrough 

After securing your funds in an escrow account, go back to the property and do a final home inspection. 

Ensure the seller has done all the repairs and that they have all the required documents regarding the house. After confirming everything is in place, you can close the deal with your seller.

5. Sign the documents. 

This step brings the best feeling to both seller and the buyer since one will be a homeowner, and the other will make profits.

Therefore, get your attorney and witnesses ready when signing the sales agreement documents. 

The seller should also have their attorney and witnesses, and it will be a transparent process.

After the seller hands you the ownership documents, you can signal escrow to release the funds to the home seller.

The Bottom Line 

Now, you have the best procedure to help you buy a home in Kenya for the first time. Ensure you follow the process and will proudly be a new homeowner. 

Frequently Asked Questions 

1. Who qualifies as a first-time home buyer?

A single person who doesn’t have any past records of home ownership is a first-time home buyer. In addition, couples who have no past records of owning a home are also first-time buyers.

2. How long does it take to buy a home in Kenya?

While you can take possession of a house immediately, property transfers can take a while. On average, it may take up to 3 months for a title to be registered in your name.  

3. Can I own a home in Kenya while abroad?

Yes. You can get a real estate attorney to help you purchase a house in the country while you are abroad.

4. How much money do I need to buy a 1 bedroom house close Nairobi?

You’ll need at least Ksh.2.5 million to get a one-bedroom house in Nairobi. A three bedroom house costs from Ksh 7.5 million depending on the location.  But the prices will keep rising in the future.

Everyone loves to own a home, but the price pushes many away. However, with a good credit score and a decent income flow, you can buy a home wherever you want.

Home-buying can be extremely time-consuming, especially if you are a new buyer. You need to hire a professional agent to help you get the best home deals in your preferred location.

So,

What Makes a Good Home?

A good home rings differently with each individual. One may like a different roofing design than others, but there are common values that each person would like. 

So, here are the common factors that make a good home.

• Spacious rooms 

Of course, no one wants to squeeze their seats in a tiny living room, leaving little space to pass through. In Addition, big and spacious bedrooms will do fine for anyone with kids and lots of stuff.

• Water in the sinks 

How long can you have water in your taps? Do you have to keep filling your jerricans, fearing they would stay for days without running taps? Although it’s a good idea to take precautions.

• Longer distance from the waste dumping site 

Nothingvsucks like tolerating waste smells throughout your stay at home. It’s not even hygienic to stay in areas near waste dumps, as you may contract dangerous diseases.

• Security alarms 

A good and secure home will have a security alarm you can ring whenever you need help. An alarm will reach more people who can call the police on your behalf, reducing crime rates. 

• Large compound 

Of course, you do not want to borrow a car parking lot from your neighbour. Ensure you get a house with a larger compound where you can build a car parking lot. In addition, you can also have a small kitchen garden where you can plant vegetables and cut some expenses.

8 Factors to Consider When Buying a Home 

1. Purchase price 

Once you think of buying a home, the purchase price comes first. Indeed, don’t expect a cheap home since the least cost can be over Ksh. 10 million. And that’s not some little cash.

If you are a first-time home buyer, consider doing thorough research to know areas with affordable homes.  Alternatively, you can hire a real estate agent to take you through the best neighbourhoods with affordable home prices.

2. Your credit score and income flow

Your credit history plays a significant role when acquiring a big purchase like a home. Chances are you will need a mortgage loan to finance your home. Therefore, you need a good credit score to access a mortgage loan with fair interest rates and payment plans. 

Your income flow is also a big play since you’ll need money to pay a downpayment either by cash or through escrow. You’ll also need a steady income flow to manage mortgage repayments for the required timeframe.

3. Maintenance costs 

You’ll need to maintain your home to renew and make it more appealing. Think of the cost you need to repaint and fix things like windows, doors, or cabinets. 

If the cost is high, you should consider getting a newer home with stronger doors, windows and cabinets that don’t need fixes for the first few years.

4. Location 

Your neighbourhood matters a lot in terms of peace and security. Therefore, look for a location near police stations where you’ll get close help when you need it. 

In addition, a good neighbourhood will have less noise and fewer or no crimes. You don’t want to listen to an all-night party, and you’ll have to be at work the next day at 8. Therefore, the location you choose should have mature owners who respect others’ privacy and comfort.

5. Age of the property 

The older the house, the faster it depreciates. If you want to enjoy the full benefits of your property, consider getting a recent property. That way, you won’t bother with maintenance costs for some time. 

6. Why is the seller selling it?

Don’t forget to research why the seller is interested in liquifying the home. An excellent way to explore is to ask the neighbours about the home history. The owner might not give you the correct answer, especially if they are fleeing from some danger.

Always do a title deed search on the eCitizen portal to ensure you don’t get yourself in mixed ownerships and endless court sessions.

7. Size of the house and its compound 

What home size do you prefer? That depends on your needs and family size, of course. 

Buy a house you won’t regret its size in the future, especially if your family is growing. 

Can the compound accommodate other small structures for your dog, chicken, or maybe dairy cows?

Remember, you can create other income streams in the compound, like dairy farming, to help you with mortgage repayment.

8. How far are social amenities?

Social amenities such as electricity, water, good transport, and communication entail our daily activities. Once your home is far from any social amenities, surviving in such a location is very tough.

Therefore, ensure you scan the area around the home you want to buy and know the available social amenities. The most important of all is clean and drinkable water. 

Electricity, communication and good transport are also essential to make your living more comfortable. 

Conclusion 

Never rush when buying a home. If you rush, you may fall prey to con men who will sift away all coins in your pockets. You should thoroughly research about homes and the best locations as you save money for a downpayment. 

In addition, involve a property attorney to help you with the legal proceedings of buying a home. 

Frequently Asked Questions 

1. What is the most remarkable feature to consider when buying a home?

Location is the most crucial factor to consider when buying property. The location carries many aspects, such as security and availability of social amenities. Therefore, location is the core factor when buying a home.

2. Which mistakes should you avoid when buying a home?

Avoid looking for home alone without professional help. If you don’t work with a property agent, the chances of getting conned are very high. In addition, never start a home buying process before mortgage pre-approval. That will save you from disappointments and possible fines. 

Again, you should ask your mortgage lender about the monthly instalments and see whether you can afford them. Remember that if you skip multiple instalments, the lender will repossess your home, leaving you with nothing.