Category: Property Management

In Kenya, the rental market can be highly competitive, and finding quality tenants is essential for the success of any landlord. To secure better tenants and ensure a profitable investment, landlords must take steps to attract and retain tenants who are reliable, responsible, and respectful of their rental properties. There are several strategies that landlords can use to improve the quality of their tenant pool and achieve long-term success in the rental market and all are discussed in this article.  

Characteristics of a good tenant

Before we look at the strategies landlords can use to secure better tenants, it’s important we first have a look at what characterizes a good tenant.

1.    Pays Rent on Time.

A good tenant always pays rent on time, without any reminders or delays.

2.    Respects the Property.

A good tenant takes care of the property and keeps it clean and well-maintained. They report any damages or repairs that are needed and don’t cause any damage to the property.

3.    Communicates Effectively.

A good tenant communicates effectively with the landlord or property manager. They keep them informed of any issues or concerns and respond promptly to messages or calls.

4.    Follows Lease Terms.

A good tenant follows the lease terms and abides by the rules and regulations of the property. They don’t violate any policies, such as smoking or keeping pets in a non-pet-friendly property.

5.    Has Good Credit and References.

A good tenant has a good credit history and positive rental references from previous landlords.

6.    Maintains a Good Relationship with Neighbors.

A good tenant is respectful and considerate of their neighbors. They do not cause any disturbances or noise complaints.

How Kenyan landlords can secure better tenants.

To get tenants with the above characteristics, then landlords can follow the following strategies.

1)  Thorough Tenant Screening.

Conducting a thorough tenant screening process can help landlords find the best tenants for their properties. This should include checking the tenant’s credit history, employment history, and rental references. By doing so, landlords can avoid renting to tenants with a history of late payments, evictions, or other red flags.

2)  Offer Competitive Rent Rates.

Pricing rental properties competitively can help landlords attract quality tenants. Landlords should research the local rental market to determine what rent rates are typical for their area and adjust their rent rates accordingly. Offering move-in specials or other incentives can also help landlords attract quality tenants.

3)  Improve Property Condition.

Keeping rental properties in good condition can help landlords attract quality tenants. Landlords should ensure that properties are clean, well-maintained, and free of any safety hazards. Making updates or renovations to properties can also help landlords attract quality tenants.

4)  Provide Excellent Customer Service.

Providing excellent customer service can help landlords retain quality tenants. This includes being responsive to tenant requests or complaints, communicating effectively with tenants, and being respectful of tenants’ privacy.

5)  Build a Strong Online Presence.

Building a strong online presence can help landlords attract quality tenants. This includes creating a website for rental properties, advertising properties on online classifieds or social media platforms, and responding promptly to online inquiries.

6)  Offer Amenities and Services.

Offering amenities and services can help landlords attract quality tenants. This could include providing parking, laundry facilities, or other amenities that are in demand in the local rental market.

Conclusion.

Securing better tenants is an important goal for landlords in Kenya who want to achieve success in the rental market. By implementing the above strategies landlords can attract and retain tenants who are responsible, reliable, and respectful of their properties. This not only ensures a steady income stream but also makes property management easier and more profitable in the long run. By prioritizing the needs of their tenants and investing in the quality of their properties, landlords can establish a reputation for excellence and achieve success in the competitive rental market of Kenya. If you have found this article informative, kindly consider sharing it with landlords or anyone who will find it relevant for them to also have a chance to expand their knowledge on this topic. Thanks in advance.

Who doesn’t like to earn money, even when they do get to work? That is exactly what it means to earn money passively. However, you need to make more initial efforts to invest in a passive income stream that will help you earn money in the future. One of the best passive incomes is through rental properties in Kenya.

Once you build rental properties, you require a lot of funds and plan execution at the beginning, but after you set everything up, you’ll start earning money throughout. This blog will show you how to earn passive income through rental properties in Kenya. Keep reading.

We are always glad when you make the right investment choices. That is why we give you many investment tips on starting and managing a rental property business. We also have real estate agents who can help you get the best rental properties where you can start earning passive income immediately.

3 Ways To Earn Passive Income Through Rental Properties in Kenya

Through Rental Income

Most real estate investors in Kenya have ventured into the building to rent properties. This strategy allows them to build properties that they can rent to residents or commercialists monthly or annually.

We have three ways to earn passive income through rental properties in Kenya. However, before you become a landlord, ensure you understand the Landlord Tenant Bill in Kenya.

Although rental properties are passive income generators, you should continuously improve your property to attract tenants.

Residential properties

Residential properties are a great way to provide accommodation for people. They come in all shapes and sizes and can be found in most cities and towns. People who want to rent out their property can do so easily without the need to have an estate agent involved.

In Kenya, residential real estate properties have been numerous around the CBD area. Such areas offer tenants access to good public transport networks, schools, and hospitals. Security is also important when building these properties, as it allows tenants to feel safe within their home. Moreover, renters expect adequate water supply and electricity services, which can be easily accessed within the locality of the residence. In essence, landlords must ensure that their residential properties meet these standards to attract potential tenants, thereby helping them generate revenue through renting out their premises.

Commercial Properties

Another way you can earn a rental income is by investing in commercial properties. With these properties, you rent them to business people who set up their businesses. The location you choose to set up commercial properties largely determines their success.

However, industrial properties have a designated area where you should build them. But you can always build property for other businesses like retail stores, offices, and small businesses in town centers. Commercial properties usually have higher returns compared to residential properties in Kenya.

Mixed-use Developments

These developments have both commercial and residential sections, all in one building. A good scenario is when a building has retail and office spaces at the front and residential spaces at the back. Another instance is having a commercial section on the ground floor and a residential section on the other floors of the building.

In rural parts of Kenya, mixed-use developments are particularly common as it allows them to get higher returns on their investments due to its ability to provide multiple revenue streams. As opposed to a single-use property where return on investment tends to be lower, with mixed-use developments developers can obtain better yields through rental income or capital gains from both residential and commercial uses in one place. This has led to an increase in new development projects that combine residential and commercial space without sacrificing quality or convenience for either type of user.

Property Appreciation

You can also earn passive income through property appreciation. Once you buy or build real estate, you can wait for years and resell it. Property appreciation mostly occurs when the demand for houses increases. It can also appreciate when inflation occurs in the country’s economy.

Over the years, the property’s value increases as you wait without much involvement. Whether it’s a rental property or a home, appreciation occurs constantly.

Invest in REITs

Real estate investment trusts are companies that pool funds from interested people and invest them in properties and other digital assets. Once you invest in REITs, you’ll earn passive income through rental properties without being actively involved.

Investing in REITs is a great way to start real estate investing and earning returns without facing the risks involved. In addition, you can invest in REITs with less money than building or buying property.

https://youtube.com/watch?v=mSGQglHw6PM%3Fstart%3D3

What to Consider Before Investing in Rental Properties in Kenya

Location

In any property business, whether selling homes or renting out apartments, you must consider location as the main factor determining your success. When you buy or build rental properties in a more desirable location, you will get tenants faster, and your houses will always have low vacancy rates.

Property’s condition

Another thing to consider when investing in rental properties in Kenya is the property’s condition. Most people like properties with high ceilings, tiles, big rooms, etc. To succeed in rental property, ensure you continuously improve your property’s condition to match tenants’ needs.

Costs involved

Real estate investment needs a lot of money, and that’s one thing you should consider when investing in property. You should set your finances right before you start your investment.

For instance, you can save money to buy or build rental property in cash. Or you can take out a mortgage loan to buy the property. However, you still need some cash for the mortgage down payment.

The Bottom Line

Earning passive income is a dream of many, probably a retirement plan. However, remember the initial costs involved in investing in these rental properties. To get a continuous flow of passive income through rental properties in Kenya, you should always improve your property.

We help realtors like you start and invest in the real estate business. We also have a group of real estate agents who help you get nice properties at desirable locations.

Frequently Asked Questions

1. Can you make passive income through the rental property?

Yes. You can make money without actively getting involved in rental property. You only need to set everything right and market your property to get tenants.

2. How do I start a passive income rental property in Kenya?

You can buy and build on raw land, provided it’s in a location that’s likely to grow. Alternatively, you can buy a complete rental property and start earning money from the property.

Two laws in Kenya govern tenancy and resulting disputes. These are The Rent Restriction Act Cap 296 Laws of Kenya and The Landlord and Tenant (shops, hotel and catering establishment Act) Cap 301. Other laws include Land Laws (Amendment) Act 2016 which amends the Land Act 2012 and the Land Registration Act 2012.

I am working with the assumption that you already have a signed lease/rental agreement.

If you do not, please download this sample for use.

Sample Rent Agreement

The law only protects someone who is in occupation and is doing so legally. If the occupant is occupying the property illegally, they may be evicted by force.

 Eviction of a tenant at a residential unit.

The procedure to be followed majorly depends on how parties agreed in the first place. However, there is a bare minimum set by law.

• First, a landlord must give a notice of termination. The notice must must state the date on which the tenancy will end. For tenants on registered leases, the lease terms dictate the notice period. If the rent is paid on a monthly basis, the landlord must give a one-month termination notice.
• In cases where the landlord and tenant have oral agreements or written agreements without a termination clause, Such agreements are referred to as periodic tenancies. The notice period should be equivalent to the interval between rent payments.
• You can download a tenant eviction notice template here
• Once the termination notice is served upon the tenant, he/she may protest the notice by writing back to the landlord indicating why he/she will not comply with the notice.
• Both parties must agree to the termination. The law establishes the Rent tribunal that listens and resolves tenancy disputes. It is this body that the tenant must contact if they have any objection to the landlord’s eviction notice within thirty days of receiving the eviction notice.
• Once the termination notice period expires, the tenant becomes a trespasser, and the landlord can apply to the Environment and Land Court for an eviction order.
• The landlord must obtain a court order for possession unless the tenant consents or agrees to vacate the premises.
• There have been instances where landlords increase rent for tenants who refuse to vacate their premises. That is unlawful. The law says a property owner cannot waive a notice of termination, create a new tenancy, or reinstate a tenancy by notice of rent increase.

10 Terms You must Include in Your Lease or Rental Agreement

Eviction of a tenant from business premises/Controlled Tenancy

The Landlord and Tenant (Shops, Hotels, and Catering Establishments) Act (Cap 301 Laws of Kenya) is designed to protect “protected tenants” from eviction and exploitation.

Under this Act, a landlord cannot evict a tenant without issuing a two-month termination notice, unless the parties agree to a shorter notice period.

What is Controlled Tenancy?

A controlled tenancy is defined under section 2 of the Landlord and Tenant Act (Shops, Hotels and Catering Establishments Act), Chapter 301 of the Laws of Kenya as a tenancy for a shop, hotel or catering establishment which has:

1. Been reduced into writing; or
2. Hasn’t been reduced into writing but which is for a period not exceeding five years; or which contains a provision(s) for termination, other than for breach of covenant, within five years from commencement thereof; or which relates to premises specified by the Minister in a Gazette Notice to be a controlled tenancy.

Generally, where tenancy subsists but without a formal written document, that tenancy is defined as a controlled tenancy. The intent to confer tenancy is evident. However, what isn’t outrightly determinable is the nature of the agreement between the two parties.

Click to Download draft Letter for Intention to Increase Rent

Grounds for termination of tenancy

1. The tenant’s failure to comply with the obligations in respect of repair and maintenance of the Premises as comprised in the Agreement;
2. Default in payment of rent for a period of 2 months after such rent has become due;
3. Commission of substantial breach of obligations under the Agreement and is connected with the tenant’s use or management of the premises;
4. That the landlord has offered or is willing to provide or secure the provision of alternative accommodation for the tenant and the terms which provide for the same are reasonable and accommodation suitable for the tenant’s requirements;
5. That the tenancy was created by subletting part of the premises whereby the landlord is the owner of the interest in that upon termination of the superior tenancy, the landlord requires possession of such premises as a whole for the purpose of letting or disposing the same as a whole;
6. That upon termination of the tenancy, the landlord intends to demolish or reconstruct the premises or a substantial part thereof or carry out substantial work of construction on the premises or part and that he could not reasonably do so without obtaining possession of such premises; and
7. That on the termination of the tenancy, the landlord himself intends to occupy the premises for a period of not less than one year for the purposes or part purposes of a business to be carried out by him or as residence.

Rental increments

• A landlord cannot increase your house’s rent without notice unless stated in a tenancy agreement.
• Typically, such increments happen when a person is renewing their lease agreement.
• It also happens when one is moving to a new house.
• You must receive a formal letter stating when the property owner will increase rent.
• The letter or written notice must give you at least one month to inform you of the coming changes.
• A landlord may or may not give a reason for increasing the rent.
• On the other hand, you have the right to object to the increment.
• If you choose to object, you must notify your landlord within 30 days after receiving the notice.

Rent-to-Own Contracts in Kenya

Deposits

• Before occupancy, landlords require tenants to pay the rent in advance and another equal amount as a security deposit.
• The deposit you give before occupancy is refundable.
• You can claim it once you return the property in its original conditions at the end of your lease contract.
• The law on deposits isn’t explicitly included in the constitution and as a result, there are cases of breaches that go unpunished.
• The duration for a refund of rent deposit will depend on what is stated on the tenancy agreement.
• In some cases, it is usually within 30 days after the end of a lease agreement. Should you move before the end of the agreement, your landlord can wait until the expiry of the lease before giving you the deposit.
• Understand that rental deposit laws also protect the landlord.In simple terms, there are situations where you will not get back the full amount. These include:
  • Non-payment of rent
  • Damage to the property
  • Unpaid utilities such as electricity and water
  If a landlord decides not to pay, find out the reasons for such a decision. Speak to them amicably to get a refund.

Right to Privacy

• Once you move in, the landlord can’t enter your property without your consent.
• It doesn’t matter what they are trying to do, they need to have your permission before they can access your house.
• The only exception would be if there is an emergency such as a fire.
• Also, your safety is of utmost importance no matter where you are staying.
• The landlord should make sure that the doors, windows and locks work properly to ensure your safety. If you want to add extra locks, you have the right to do so.

Distress for Rent

• Kenya has Distress for Rent Act. It is a law that gives property owners the mandate to seize or cause a seize of goods from a tenant that owes rent.
• So, if you are in arrears of more than a month, a landlord can use the act to try and sell goods to recover the money owed.
• In this case, a property owner does not have to seek a court order to recover rent.
• The law requires landlords to use licensed auctioneers to conduct the process.
• Once it is in the hands of an auctioneer, the company or agency will conduct the process under the guidance of The Auctioneers Act.

Eviction from Land.

Regulation provides that the people participating in an eviction should produce: the original national identification cards; the official or staff identification cards; a letter of authorization from the owner; or a letter from the Commission in case of public land.

Regulation 67(2) provides that the letters of authorization to carry out evictions must be copied to the national government administration in the county and to the Officer Commanding Police Division of the area in which the land is situated.

 Regulation 68 stipulates that eviction should be carried out between 6 am and 6pm while Regulation 70 provides the manner in which the notices should be served on the evictees

Eviction by force

While this is within the rights of the property owner, eviction must be carried out in a humane manner. The procedures to be followed during forced evictions include:

1. an opportunity for genuine consultation with those affected;
2. adequate and reasonable notice for all affected persons prior to the scheduled date of eviction;
3. information on the proposed evictions, and, where applicable, on the alternative
4. especially where groups of people are involved, government officials or their representatives to be present during an eviction;
5. all persons carrying out the eviction to be properly identified;
6. evictions not to take place in particularly bad weather or at night unless the affected persons consent otherwise;
7. provision of legal remedies