Imagine a landlord using a strange trick to make sure tenants pay their rent arrears. It sounds unusual, but for one tenant, this became a real problem. Here’s what happened: the landlord locked the tenant’s door with a padlock, but not in the usual way. The lock was just hanging there, so the door didn’t close properly and stayed open. This left the tenant’s home exposed and vulnerable.
The tenant had already paid a deposit, which she usually meant to cover damages or unpaid rent. “Even though the deposit was paid, the landlord continued to lock the door in this odd manner”. This not only made it difficult for the tenant to secure their home but also led to frustration and confusion about what to do next.
Using such an unusual method raises questions about what is fair and legal. Landlords have the right to deal with unpaid rent, but they must do so in a way that follows the law and respects tenants’ rights.
It’s important for both tenants and landlords to follow the right steps when dealing with rent.
As a tenant, to avoid problems with your landlord, it’s important to pay your rent on time. Keeping up with payments helps prevent conflicts and avoids stress. If you’re late with payments, your landlord might take unusual steps to get the rent. Always keep records of your rent payments, including receipts, so you can prove you’ve paid if issues come up. If you’re having trouble paying, let your landlord know as soon as possible. They might be willing to work out a payment plan to help you manage.
Landlords should stick to legal methods when dealing with unpaid rent. This usually means giving the right notice and following specific rules. Landlords must also treat tenants fairly and respectfully. Using unusual methods to get rent can be seen as harassment and may be against the law. It’s better to handle rent problems through official channels and keep communication professional. This approach helps keep things fair and ensures that actions are legal.
A Kenyan man has caused quite a stir online after sharing some extreme advice on how to deal with landlords who refuse to return rental deposits. His tips, posted on Facebook, have led to a heated discussion, with many people questioning whether his suggestions go too far.
The Facebook user, named Fred Braddock, shared some radical ideas on how to get back at landlords who won’t return deposits. Instead of just accepting the loss, Fred encouraged tenants to take drastic actions to damage the property.
He suggested things like using a knife to remove tiles and flooding the house with water, pouring cement into the toilet to block the plumbing, breaking electrical sockets and bulb holders, spray-painting the landlord’s name on the walls, and finally, breaking the padlock at the meter box.
Fred’s advice quickly went viral, with many Kenyans shocked by how extreme his suggestions were. Some thought his ideas were too harsh, while others even added their own.
Kellen W Nyaga commented, “Doing all this, you must be wicked, idle, poor, and full of bitterness.”
Nells J Reagans had a different idea, suggesting, “Print posters with his numbers and put them on bridges with KeNHA markings. They will fight your battles.”
However, not everyone agreed with these tactics. Mercy Ronoh said, “My conscience can’t allow me,” and Joy Njuguna Joyce added, “This is tiring and dumb. Why not pay rent and sit on the deposit by force?”
Fred’s post highlights the frustration many tenants feel when landlords refuse to return deposits. In another incident, a Twitter user shared how she dealt with a similar situation by pouring cooking oil down the sink to block it, sparking more debate.
While Fred’s extreme suggestions may be tempting for some, they bring up important questions about fairness and legality. The conversation shows that there’s a need for better rules and clearer processes for handling rental deposits in Kenya. In the end, peaceful solutions benefit both landlords and tenants.
As the online debate continues, it’s clear that the relationship between landlords and tenants in Kenya needs better communication, understanding, and fairness.
Legally evicting a tenant in Kenya requires following specific steps outlined in the law to ensure the process is fair and just. The landlord must first issue a written notice to the tenant, typically giving them 30 to 90 days to vacate the property. This notice must clearly state the reasons for eviction, such as non-payment of rent, breach of lease terms, or the landlord’s intention to use the property for personal use.
If the tenant refuses to leave after the notice period, the landlord cannot forcibly remove them. Instead, the landlord must file an eviction suit in a Rent Tribunal or a court of law. The tribunal or court will review the case and, if the landlord’s reasons are valid, issue an eviction order.
Thousands of real estate investors in Kenya rely on the best property managers to benefit from their business. That calls for more property manager vacancies across the real estate sector.
This blog explains what a property manager is, the skills you need, the process, and the benefits involved in property management.
Once you follow everything in this blog, you’ll become a go-to property manager everyone loves to hire.
Keep reading.
Who is a Property Manager, and What Do They Do?
A property manager is a professional who is responsible for the day-to-day management of a property, including its maintenance, repair, and upkeep.
Property managers play a vital role in the real estate industry, and their duties can vary depending on the type of property they are managing. For example, residential property managers typically handle smaller properties, such as apartments and condos, while commercial property managers may oversee large office buildings or shopping centers.
Regardless of the property type, a prophttps://www.youtube.com/embed/oE3TBP52UEY?start=169erty manager’s ultimate goal is to protect the owner’s investment and ensure that the property is well-maintained and profitable.
-They handle the financial aspects of property ownership.
In some cases, property managers may also be responsible for marketing the property and finding new tenants. Property managers can get tenants through advertising on posts and social media and also by getting connections from their real estate networks.
Good property managers help investors to achieve their investment goals. They will ensure that the apartments are in good condition all the time, making them more attractive to new tenants.
Real estate managers usually have the tangible industry knowledge to enable them to keep the owner’s property at trending features in the region. For instance, if the neighboring houses have tiles and ceilings, a property manager should inform the owner to make necessary changes to upgrade.
As a property manager, you should strongly understand the Kenyan property market. They should know the ins and outs of the market, as well as the current trends.
Secondly, they must be excellent communicators. They will need to be able to communicate effectively with their clients and other property professionals.
Lastly, they must be well-organised and detail-oriented. It is important to keep track of all the different aspects of their job and ensure that everything is running smoothly.
The Process of Becoming a Property Manager in Kenya
In Kenya, the process of becoming a property manager generally involves completing a degree or certificate in business administration, real estate, or a related field.
Many property management firms also require candidates to have several years of experience working in customer service, sales, or another related field.
Some firms may also require candidates to pass a background check and/or drug test. Once hired, property managers typically undergo on-the-job training to learn their firm’s specific policies and procedures.
The Benefits of Becoming a Property Manager
There are numerous benefits to becoming a property manager.
-Perhaps the most obvious benefit is the potential to earn a high income. Property managers can earn a very good salary, especially if they are managing multiple properties.
-In addition to a high income, property managers also enjoy other benefits, such as job security and the potential for career advancement.
-Property managers have the potential to build a strong real estate network that helps in building their portfolio.
-Another benefit of becoming a property manager is that it can be a very rewarding career. Property managers often form strong bonds with their tenants and take great pride in providing them with a safe and comfortable place to live.
-Property managers often use their creativity and problem-solving skills daily, which can be very satisfying.
Conclusion
Overall, becoming a property manager can be a great career choice for those who are looking for a stable job with good earnings potential and the opportunity to make a difference in people’s lives.
To become a property manager in Kenya, you must have a strong understanding of the Kenyan property market and its legal and financial aspects.
You will also need to be well-organised and have excellent communication and customer service skills. If you have these skills and qualifications, you will be well-positioned to succeed in this field.
Frequently Asked Questions
How do property managers get paid?
Some real estate investors pay in commissions (a percentage of the rent collected per month), while others pay a constant monthly salary. If the owner pays commission based, you may not earn much if there is a high vacancy rate.
Is being a property manager stressful?
Indeed, this depends on the manager’s ability to handle tasks. You can meet with demanding residents, but it depends on how you treat them. Actually, you can create a good rapport with the residents, and they will give you ample time to make their stay comfortable. Something else, if the investor and board members are so demanding, you may have a hard time working as a property manager.
What is the most important role of a real estate manager?
Since real estate investment depends on house occupancy rate to make profits, a good relationship with tenants is important. That’s why property managers should do their best to ensure their tenants are comfortable. They should keep the properties as attractive as possible. In addition, solving tenants’ issues with ease is a good idea.
What is the property manager’s responsibility to the owner?
The property manager is responsible for overseeing all activity in a property. The owner expects timely reports on the status of the property and the tenants. If anything needs repair, the manager should report to the owner immediately. In addition, the property manager will foresee all construction and repairs to ensure they are quality before the owner makes payments.
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Are you overwhelmed when considering buying your first rental property in Kenya? Well, you’re not alone. Many people experience anxiety when they are about to make a big purchase that will bring more money.
However, don’t let anxiety carry you into making the wrong investment choices that will haunt you in the future.
That’s why you need this guide to help you make the right choices while buying your first commercial property. Keep reading to know how you’ll become a landlord soon.
Steps to Buy First Rental Property in Kenya
Build your credit history
Loans are good, but if you take them for a good purpose. However, you cannot get big loans with a poor credit score.
It’s still funny how the youth are ruining their credit scores by taking expensive payday loans from mobile apps in Kenya, which they later fail to repay. However, the good thing is that anyone can build a good credit score, regardless of their credit history. But you may have to correct your credit early to retire at 40 with real estate.
To buy a rental property, you need lots of cash, and saving such a tremendous amount of money might be challenging. So, you’ll need to take a long-term loan to boost your savings and buy commercial property.
Before getting into real estate, you should first research the potential income you will get once you become a landlord.
While researching, consider the following:
Find a location that is likely to bring in more yields. For instance, a rental property in Nairobi and its metropolitan area will yield more than property in deeper rural areas.
Will the rental property need renovation? If yes, how much will it cost, based on the current market price of construction materials? This factor will help you analyse the amount of cash you need to set up your property to bring in money.
Ensure you learn about the market trends. Of course, you need to know what other investors are doing in the area you wish to buy your first rental property in Kenya. You can also survey the rate of rent in the area, which will determine how much you’ll earn monthly as a landlord.
You should also know the price of the rental property you are buying. This knowledge will help you know what amount of loan you’ll take if you’re not buying with your savings. In addition, knowing the value of your investment eases the calculation of Return on Investment (ROI).
List all the documents you need
You should have all the necessary necessities to purchase the property and prepare it as early as possible.
Don’t forget to get lawyers/ advocates to handle the purchase’s legal part.
Find a good lender
It will be good if you shun loan brokers from your way if you need to get better deals. However, a good credit score of more than 700 will lead to a better loan deal.
Since you have the amount you’ll use to buy the property, don’t take a huge amount of money that exceeds your needs.
Having savings to help you make the purchase is preferable, so you don’t depend entirely on loans.
After everything is in place, you must take the bold step to becoming a real estate investor. Ensure you have your witnesses; the seller has their witnesses and lawyers.
You should make the process as legal as possible. Ensure you also enquire about title deeds and do a search to know their validity.
In addition, it’s advisable to use electronic money transfers instead of paying in cash. This trick will help keep durable records that won’t get altered by anybody whatsoever.
Have plans to transform your new rental property
After you’ve become the legal owner of the property, you can refurbish it into what you want to draw new clients. Consider furnishing your rental property to be more appealing to the customers.
Focus on high-value clients
Remember, you’ll now be after profits and ROI and, of course, not forgetting customer satisfaction.
You can derive excellent means to advertise your property to potential clients. Remember that the more your houses are vacant, you may not realize your dream income.
Always make an effort to make your property as decent as possible. Remember that it’s the appearance that will attract high-value clients.
The Bottom Line
Buying your first rental property in Kenya is simple if you follow this guide. Why don’t you start planning on buying your first rental property?
Frequently Asked Questions
How do I fund my first rental property in Kenya?
You can fund your first property with your savings or a loan. Your savings can serve as a downpayment of the property. If you own a home, you can use it as collateral against the loan you take. However, ensure you can repay the loan if you don’t want to lose your home to the lender.
What is an excellent rental yield in Kenya?
Your rental income depends much on the location of your property. Big cities and towns have a higher rental yield than small rural towns. In addition, a residential property can yield between 5% and 7%, while a commercial property between 9% and 12%, depending on location.
Is being a landlord profitable?
If you make the right decisions after becoming a landlord, you can earn lots of profits. You also need to make your houses very attractive to potential clients.
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The cost of living is at its peak, not only in Kenya but also in other countries worldwide. As a result, getting money for survival has been challenging, leave alone investing in real estate.
However, that should not discourage you because life has to move on anyway, with new survival tactics.
You can get a friend or a relative and engage in joint tenancy, where you’ll contribute towards property ownership.
By the end of this post, you should:
Understand joint tenancy meaning
How joint tenancy works
Know the benefits of joint tenancy
Why you may have to avoid joint tenancy
So,
What is Joint Tenancy?
Don’t confuse joint tenancy with being a tenant. Being a tenant means you don’t own the property and can only rent it. A tenant can move from one property to another without restrictions.
On the other hand, joint tenancy is a property ownership criterion involving two or more people contributing equally to buying property.
When you are ready to form a joint tenancy, you can hire a real estate attorney who will take you through all legal aspects.
You can co-own a home with a spouse, friend, or relative with whom you have equal responsibilities in the house.
In addition, you can also co-own a commercial property where you will equally share the profits and any other maintenance costs involved.
How Joint Tenancy Works
Each member will contribute 50% of the final property cost if you are two members. In addition, all your names will appear on the property ownership documents.
What if you both don’t have funds? Can you take a mortgage together? Well, to get a mortgage loan to invest in real estate, you both need a higher credit score, say above 650.
However, if the income of the joint tenants is high when combined, there is a good chance of the lender approving their loan.
In addition, if all members have excellent credit scores, they will get a better loan deal with lower interest rates. So it will be a good idea for each member to improve their credit score before applying.
If both of you can qualify for a mortgage loan, you can apply for a mortgage together when you have a high score and a higher income level.
Every member will contribute an equal amount of all costs involved during the joint mortgage loan application. In addition, the lender divides the instalments among the members so that each one pays equally.
What if one member dies or fails to repay his share of the mortgage due to job loss or something similar?
Well, if a co-tenant dies, their share of ownership goes to the other co-tenant. If more than one co-tenant remains, they will have to restructure their ownership to have equal shares. If unwilling to share equally, they may have to reform it to tenancy in common. Tenancy in common allows members to have different claims of property ownership.
The same criterion applies if one tenant wants to sell their property share.
If one co-tenant dies, the remaining co-tenants take full responsibility for the mortgage and the property. The deceased beneficiaries have nothing to do with the joint tenancy property. They can only benefit from the dead person’s other properties.
This aspect of property transfers is known as Joint tenancy with rights of survivorship.
The Benefits of Joint Tenancy
You only need to have a percentage of the total cost of the property.
However, when you agree on a joint tenancy, you may not even take a loan if you have a huge amount of savings.
You will share the downpayment that the real estate buyer requests.
If you take a mortgage, you don’t pay it solely.
When you take a mortgage to invest in joint tenancy, all co-tenants will have an equal share of installments to repay the mortgage.
Furthermore, it will take a shorter period to repay the mortgage since you are sharing.
When one co-tenant dies, his share belongs to the remaining co-tenants.
This scenario is only advantageous to the remaining co-tenant since the deceased beneficiaries have nothing to rejoice at. However, if the remaining co-tenants are compassionate, they can reward the deceased family with a one-time compensation, but it’s not compulsory.
The mortgage loan is paid, even when one member dies.
The deceased family members won’t be left with a mortgage loan to repay if their loved one dies. Instead, the remaining co-tenants will take care of it without involving the family.
Disadvantages of Joint Tenancy
When you die your family is left with nothing.
With the rights of survivorship, other co-tenants have the right to own all your shares since there is no need for probation.
Added responsibility.
If one co-tenant dies, the remaining members have the responsibility to repay the mortgage loan.
The same applies when one member loses their job. In addition, the remaining co-tenants will also have to foot all property maintenance costs.
Relationship may end.
You all know what happens when a good relationship turns sour. It will be so tough to co-own property with someone you don’t talk with. The only possible solution will be selling the property, which won’t happen so fast.
Conclusion
Joint tenancy is a good investment plan, especially if you are working with a close friend or relative. The good thing is that you won’t need lots of money to be a real estate investor.
Frequently Asked Questions
When do I need joint tenancy?
You will need this investment when you have less money, but you have someone whom you can share and co-own the property with.
What happens when one member wants to leave a joint tenancy?
The member has to give written notice to the other members. Then they should agree on terms and conditions involved.
Can a couple have a joint tenancy?
Yes. If they agree, they can engage in joint tenancy ownership. In case of divorce, they will equally divide the property, with help of an attorney of course.https://www.youtube.com/embed/BxvT-qT-7R0?start=68
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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.
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.
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 letterto increase the chances of getting the property if there is competition.
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.
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.
Finding the right agent is crucial.
Connect with a local real estate expert who knows your town’s market inside and out.
Increasing rent for your commercial or residential tenants is tough during harsh economic times. However, everyone is feeling wrath, and we have to survive anyway.
So, as a landlord, you can increase rent, but you should follow a good procedure that’s friendly to your tenants. Remember, an abrupt rent increment can send away your tenants, increasing the vacancy rate and reducing your returns.
In Kenya, we have the landlord and tenant act that will guide you. As much as rents and property costs are rising, tenants and buyers are protected against short-term rent increments.
This bill applies to residential and tenancy for business premises.
Here is a breakdown of how to increase rent in Kenyan houses.
This bill protects both tenants and landlords from misusing each other. For instance, a landlord can only increase rent once per year for residential properties and once in two years for commercial properties.
The landlord should also give the tenant written notice of 90 days before increasing the rent. Failure to do that means a tenant can obtain a court order to allow them to stay on the premises until they get somewhere else.
The bill also says that a landlord cannot deny tenants water and electricity even after defaulting on rent.
Why You Should Increase Rent
There are various reasons that trigger landlords should raise the rent.
Market trends
As you all know, real estate investment is expensive, and property costs always increase. So, to gain enough cash flow, a landlord should increase the rent.
Although the tenants never receive news of rent increments ceremoniously, you should always find a way to increase rent to gain from your investments.
High cost of living
Everyone feels the cost of living, whether a tenant or a landlord. The cost of living also increases property prices. In addition, maintenance costs also rise with the cost of living. Therefore, as a landlord, you should increase monthly rent to cope with the current market.
Property improvements
Let’s say your rental houses had no ceilings or tiles. Once you renovate to add them, you should raise the rent to cover the new standards. The landlord and tenant bill allows landlords to terminate the tenancy, renovate their buildings, and use them for desired purposes.
Improved neighborhoods
As neighborhood standards rise, so should the rent in the area. An improved neighborhood calls for more tenants hence raising the demand. As a result, landlords increase the rent to cover high standards like improved local roads, security, and other social amenities.
Property tax increments
Once the government poses more tax on properties, you should increase rent to cover that new expense.
How To Calculate Rental Increment In Kenya
Rental increment should be a percentage between one and ten of the monthly rent.
For example, if you charge a monthly rent of Ksh.5000 and would like to increase it by 4%.
The rental increment will be:
4%×5000=200
So, the total rent will be 5200.
After settling on the final rent increment, write a letter to each tenant explaining when the new rent requirements will be effective. You can tell them your reasons for increasing the rent if you wish. But it’s not mandatory. However, to avoid losing tenants, you can reason with them about why you are increasing rent.
What to Know Before Increasing Rent in Kenya
While thinking of a rent increment, consider abiding by the landlord and tenant act (2021). You should ensure your timeline adheres to that recommended on the bill.
Always research market and neighborhood trends before coming up with an increment figure.
The property status should match the new rent. Don’t charge more rent for an average-looking house. Instead, renovate before hiking the rent.
Summing Up
As long as property costs keep skyrocketing, rent will also increase. Therefore, as a landlord, prepare to raise your house rent by a small percentage so that you stay in business. Remember that negative cash flow can result in closing down your real estate business, which is a bad idea.
Frequently Asked Questions
Can a landlord evict me for no reason?
A landlord should follow eviction procedures as stated in the landlord and tenant bill. However, there are exceptions, like when a tenant fails to pay three consecutive monthly rents or when a tenant violates the law and also damages the property. The landlord should give tenants at least three months’ notice before evicting them.
What happens if a tenant fails to pay a rent increment?
The best solution is to end their tenancy after the fixed term ends. There is no need to drag each other around.
What happens when a landlord decides to sell their property?
The tenants can stay. The new owner will carry on with the property management. However, the new landlord can issue an eviction notice of three months if they wish to renovate the houses.
What’s the fair price to increase the rent?
A percentage of less than 10% of the rent is enough to increase the rent. A bigger percentage can result in a high vacancy rate, which is not a good indication of your returns.
You’ve already bought your buy-to-rent property in one of the thriving Kenyan markets. Now, it’s time to determine the right rent to charge your tenants. The rent you charge your tenants should be a determinant of whether your real estate business will thrive or not.
If you are a first-time landlord, ensure you are conversant with the landlord and tenant act (2021) that protects you and the tenant. Alternatively, you can ask your attorney to pinpoint the critical and commonly used rules in real estate developments.
Factors to Consider When Determining the Rental Prices in Kenya
Location/neighborhood
You’ll agree with me that different locations have different rent standards. Rich and middle-class individuals stay in areas with high-standard houses like gated communities and so forth. For instance, renting in Kileleshwa is different from renting in Mathare.
However, your houses should match the standards of the neighboring apartments to compare rent with them. Don’t expect to charge a low-class home like a well-maintained apartment.
Mortgage monthly installments
An excellent monthly rental income should cater to all expenses, mortgage, and property insurance. That’s why you should consider your monthly mortgage payments before coming up with rent.
From your monthly rental income, 50% should go to property expenses, including insurance, while the other half should pay the mortgage, and the rest is cash flow.
While setting up a rent value, ensure you can cater to all those and still have a reliable cash flow to care for emergency needs.
The cost of living is very high nowadays. And inflation is at its peak. That means that everything, including construction materials, is growing more expensive day by day. As a result, you need a higher monthly rental income to maintain your property to higher standards.
When setting up your monthly rent, consider the market prices of construction materials. That will help you factor in those costs to generate a fair monthly rent. Furthermore, the standard of your house determines how much it’s gonna spend during renovations.
What’s your desired cash flow?
You are left with cash flow after paying all expenses, including monthly mortgages. If you need a higher cash flow, you need to set a higher rent amount to cater to that.
However, cash flow depends much on the rate of occupancy. So, you may get your desired cash flow if the houses are over 90% occupied.
A good cash flow ensures you can save some funds for sorting out emergency needs of the property before tenants pay their rent.
Conclusion
Owning real estate is one thing and getting the returns is something else. To gain high returns, you should set reasonable rent standards that will bring your more tenants. Remember to research the neighborhood cost of living and the rent standards before settling for a rent amount.
Frequently Asked Questions
When should a landlord increase rent?
Landlords are free to increase rent once per year for residential houses and once in two years for commercial rentals. The landlord can increase rent whenever the cost of living is high because the maintenance cost will alos be high.
How do I calculate rental yield?
Take your monthly rental income and multiply it by 12 months to get your annual rental income. Afterward, divide the yearly rental income, then multiply it by 100%. You’ll get the annual and monthly yield in percentage.
How do you budget your rental income?
The best way to budget your rental income is to assume that 50% of gross monthly rent goes to expenses. Take out monthly mortgage installments from the remaining half, and the balance should be the business cash flow.
If maintained well, rental property could give you a steady passive income for many years. Therefore, you can retire early if you wish to. Real estate investment is the most reliable long-term investment in Kenya.
The main goal of building or buying a rental property is to get continuous passive income through rental income. That’s why you should make an effort to find new tenants. In addition, your cash flow and investment returns depend on your house’s occupancy level.
There are many ways out there to find new tenants, but what is among the cheapest ways? Well, this guide will show you simple ways to find new tenants, which are cheap too.
Ensure you do regular repairs so that your apartments are the best in the neighbourhood. People will move kilometers looking for standard houses with steady water and electricity. Therefore, always strive to provide clean water to your tenants, and you’ll never suffer from high vacancies.
Good houses will automatically sell themselves off. In addition, if someone doesn’t need a house at the moment, they can spread the news to their friends to move into your houses since they are the best in the area.
Open business social media accounts
Social media is currently a big village with people from all over the blog. Businesses have thought of meeting their clients on social media, and it is working wonders for them.
You can still do the same for your rental business. All you need to do is open a business social media account and introduce your business to clients. The most used social media app is Facebook, with over 1.9 billiondaily users globally.
When opening those accounts, customize them to where you are located. Remember that you’ll meet with people all over the globe, and the best way to get your preferred clients is by stating your location.
Take pictures of your apartments, both in and out, and post them on social media. Caption the images with phrases like houses to let, apartments to let, etc. Don’t forget to include the location and directions to your premises.
In addition, include a call to action button like a WhatsApp or a Messenger button on Facebook. Fair enough, the interested tenants will contact you, and you can schedule a house viewing date and time with them. Once they like your apartments, you’ll have your new tenant through social media.
In addition, with social media, you can create ads to run on the accounts of people in your region. That will help you reach your target customer without much involvement in sharing your vacancy posts. It’s cheap to create these ads since Facebook costs you at least Ksh. 500 per week to run your ads. And it will be worth the price since you will get more profits if you get the right tenants.
Advertisements through posters
This is somehow a traditional advertisement method since it doesn’t need the internet to reach clients. All you do is write on paper that you have vacant houses to let in a certain region. Add your phone number on the paper where people will contact you. In addition, don’t forget to add location and directions too. You can have the advert printed, or write it using a marker pen.
Once your copies are ready, you can start pinning them outside your apartment’s gate, electricity posts, and outside the shops in the area. However, with the shops, you should seek permission from the owner before pinning your posts.
Actually, this method is the cheapest, and it yields quick results. Most people searching for houses end up contacting numbers on those posters. So it’s an effective method if you don’t have much money to dispose of in doing advertisements.
Word of mouth is another inexpensive way to find new tenants for your rental business. After buying or building your mixed-use property, you can start by telling your close circle (friends, family, or colleagues) about it. If they need to relocate, they may first see your rentals, and if they look good, they will definitely stay.
Those who are not relocating can help you spread the news of your good apartments to their friends and family, and you may end up with your new tenants.in addition, the neighbours can also invite their friends to have a look at your apartments, and you can get a new tenant through that.
Word of mouth costs you no shilling when looking for new tenants in your region. All you need is good-looking apartments, and boom, tenants will flow in through referrals from your friends and family.
Landlord and tenant networks
Most landlords in the same region are friends, and they regularly meet in town for a cup of coffee. Once you join these groups, you may get your first tenant from these guys. For instance, let’s say that someone was looking for a house on one of the landlord premises, but unfortunately, they were full. That landlord can refer you to their client and invite them over to view your houses.
Furthermore, tenants also have merry-go-round groups and ‘chamas’ where they meet on a regular basis. You can join them if they don’t mind and you can show them your vacant apartments. If your houses are better than their current ones, they™ll come to you.
Summary
Investing in rental real estate is one thing and getting good and reliable tenants is the catch. You need to get good tenants if you want to get good cash flow and returns on investment.
In addition, once you get your tenants, ensure you treat them well by providing solutions to the in-house problems.
Treating your clients well ensures they don’t move, and your commercial real estate will always be full.
Frequently Asked Questions
How do I get tenants faster?
The only sure way of getting tenants faster is by advertising your rental property on posters and by word of mouth. Kenyans are not that versed in buying online. They believe most online advertisements are scams, but you can try them since some believe in genuine sellers.
How do I attract tenants into my apartments?
You can attract a typical Kenyan to your property through good, and highly maintained houses, a parking lot, a big compound where kids can play, a steady water supply, and the list is endless.
How do I know a good tenant?
Ask your new tenants for contact information for their former landlords. Enquire about the tenant’s overall behaviour, including rent payments. A tenant with good credit reports can prove to be a good tenant.
What should I ask my new tenants?
Ask your new tenants the following questions to ensure they are genuine.
Why are they moving?
When are they moving into your house?
Their monthly income
Do they have pets?
How long have they stayed with their former landlord?
These questions will help you know the type of tenant you’ll be dealing with. You can do further research on the answers you receive from your tenant.
Let’s agree that being a good landlord contributes to the number of happy tenants you’ll keep. You probably have walked a long way to earn your first coin from your rental investment. Of course, you’ll be happy to have 100% property occupancy. But how do you do that?
This blog explains ten tips to help you be a good landlord, which will make your tenants stay longer. And if they have to move, they’ll refer their friends to your premises, because you are a good landlord.
So,
How Do We Explain Good Landlords?
Always have spare cash for emergencies.
One thing that will make you collide with your tenants is failing to repair their houses. Indeed, the sink can block, the roof may need some fixing, and also cabinets may need some repairs.
Once the tenant requests you to repair them, and you don’t have money, you may lose them. Anyone can be financially broke, especially when the cost of living is high. But that doesn’t mean a tenant should stay in a house with a blocked sink or toilet.
Therefore, always save something from your cash flow and use it when things go wrong. This criterion will help you maintain long-lasting relationships with your tenants since you are available for their needs.
Act swiftly to tenant problems and complaints.
You have to be a present landlord if you need long-term tenants in your apartments.
Suppose your tenants fight over a clothes-hanging line. If the fight persists, someone may get hurt, and that’s a bad sign for yourreal estate investment. So, what should you do as a good landlord? The best solution will be to add more clothes-hanging lines to solve such disputes in the future.
In addition, always be available to solve anything that needs your attention. That will ensure you live harmoniously with your tenants. Therefore, they will love to stay and refer their friend to your apartments.
Always be professional.
Keep a professional relationship with your tenants ~ always. Don’t ever let personal issues dictate how you run your rental business.
For instance, don’t come to your tenants borrowing money for an ’emergency at home. One, they’ll disrespect you, and two, they’ll start delaying rent payments because you borrow them and there is no interest.
Don’t let personal desires cheat you into being intimate with any tenants. That will be the beginning of your downfall, and you won’t know when it will happen.
The main goal of maintaining a professional relationship is to respect your tenant, and they’ll reciprocate the respect.
Keep clear records.
Treat your real estate investment like any other business. Keep all tenant rent payment records and provide them with a receipt acknowledging their payment.
These records will help sort out issues resulting from misunderstandings between you and tenants regarding the payment of rent. As a result, you won’t have to lose your tenant due to a small misunderstanding.
In addition, keep records of electricity payments, insurance, mortgages, and all other expenses. These records will help you when dealing with KRA returns. No one will come to frustrate your tenants by disconnecting electricity. Any system can go down, so ensure you keep both manual and electronic records to help you in case of system failures.
In one way, that will protect the tenants from unnecessary disturbances from KRA, banks, and other government officers.
Hire a house manager.
A house manager will be your close eye on the premises. They will tell you what’s happening in the houses and what needs maintenance.
A good apartment manager or caretaker (as we commonly call them) will keep the compound clean. The manager will supervise any maintenance to ensure everything is done perfectly.
Caretakers can also help solve small disputes among the tenants when you are not around.
No one likes to stay on outdated premises. Therefore you should strive to keep your houses up to date. Research industry trends to ensure your apartments satisfy your tenant’s needs.
Instead of letting your tenants share electricity bills, install a token on each house. That will be an excellent way to allow your tenants to use electricity, knowing they will pay justly.
In addition, instead of putting the floor, consider adding tiles. Remember, the better your houses are, the more you will increase rent, increasing your overall cash flow.
Get good clients.
Always strive to have good tenants. Remember, there are still bad tenants who will push you to the limits. They will make sure to paint your name badly. A bad client can make you take drastic measures that may push other tenants away.
Therefore, search for new and good tenants who respect you and your property. Always research about any tenant you are taking in. You can ask them why they are moving from their previous area. If possible, ask them for contacts of their former landlord or caretaker.
That will help you know the kind of person you are dealing with. After all, you don’t want to stay with a rent defaulter or a tenant who destroyed their former landlord’s property.
Setting clear rules helps eliminate jockers from joining your premises. As a result, you’ll get good tenants you can treat well without colliding.
Write customized welcome notes to your new tenants.
Show your new tenants how you appreciate them joining your houses. You can drop them welcome notes. They’ll feel good, and they may even refer their friends.
If you have a moving vehicle, offer them cheaper costs of moving to your apartments. You can also give them some toiletries to use while settling before they buy theirs.
Respect tenants’ privacy.
No one likes a nagging landlord who is always on the back of their tenants. Be a good landlord by staying out of the personal life of your tenants.
As long as your tenants pay rent, don’t misuse your house, and don’t break the rules, let them be. Do not invade their privacy unless it proves dangerous to the parties involved. For instance, if couples are ever fighting and throwing insults at each other, you can get involved before your apartments become a crime scene.
To Sum Up
A good landlord can maintain long-lasting relationships with their tenants. As a result, they will have a high occupancy rate and get good returns on investments from their rental business.
Frequently Asked Questions
What does it take to be an awesome landlord?
The secret of being a good landlord is ensuring your tenants are comfortable with everything in the apartments.
What do I check for when renting out apartments?
To get a good tenant, you should scrutinise their past to ensure you are not dealing with a bad tenant. Ask them about their jobs, recent apartments they’ve stayed in, and why they are moving out.
What do I need to know before becoming a landlord?
Before thinking of becoming a landlord, ensure you are good at listening. Do you know the saying, ‘the customer is always right? Well, it also applies to your rental business. You should listen to the complaints of your tenants and resolve what they request.
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