Buying
land in Kenya is a good investment strategy for good returns. The cost of
purchasing land will vary from location to location, but the bottom line is
with time, the value of every piece of land appreciates in
value. As a landowner you not only get financial security but
also peace of mind.
Read: Top
factors to consider before investing in property in Kenya
Once
you buy land, there are
two ways to generate cash. This can be through active utilization of
the land or holding the land and wait for it to appreciate.
Below,
we evaluate in detail both passive and active ways that you can use your land
to generate value:
1. Buy
and wait for appreciation.
2. Develop
the land.
3. Divide
into several plots and sell.
4. Lease
the land
5. Farm
on the land.
1. Buy
and Hold
This
is the most common way real estate offers a profit as Land appreciates over
time. Thus, its near guaranteed that if you buy land and sell it later,
you are bound to make returns on it by buying and holding onto it. appreciation in value
happens when new developments happen like roads, schools, administrative
offices or other infrastructural developments occur close or next to your land.
The
only challenge is that the amount of appreciation is beyond your control.
Related: The
Key Steps in the Process of Buying Land in Kenya
2. Develop
It
Depending
on the location of the land, you may develop it to generate active income
including building rental properties. The rental properties generate income
while the value of the land keeps appreciating.
3. Subdivide and Sell
If
you purchase a big piece of land, you can get returns by subdividing the land
and sell off the pieces to other individual buyers. Subdivided land is
more marketable as its easier to find a buyer for a smaller, more
affordable parcel of land, as opposed to selling a bigger piece. Currently, Malindi is
experiencing growth and land is still relatively cheap. You may but 10 acres
for Ksh 1,000,000 and subdivide to one-acre portions. You can then sell an acre
at Ksh 200,000 and make at least half a million shillings after you take out
subdivision and other expenses.
Read:
Ultimate step by step guide to land subdivision in Kenya: Guide to doing
subdivisions
4. Lease
It
If
the land is located strategically, there are businesses looking to lease
land whether on a monthly and yearly basis. The lease
could be for commercial purposes like setting up businesses like petrol
stations, car wash, garage etc. I have seen road contractors looking for land
to lease when setting up sites to operate from. Other lease
opportunities include billboard rentals and cell towers for
companies like Safaricom.
If
the land is in a quarry, you may let companies extract building materials and
pay a royalty to you. For agricultural land and you lack the necessary
background or experience in farming, you may lease the land to an experienced
farmer.
5. Farm
on it
If
you have farming skills, putting your land into agricultural use can be a very
lucrative business as the produce will always yield good income in the market.
This is because food will always be in demand.
The
final takeaway
Investing
in land in Kenya remains one of the best investment decisions you can make.
There are various avenues as above on how to generate returns and I hope you
find one that works for you.
Whatever way
you decide to profit from owning land, certain strategies will help you
succeed.
Be
financially prepared: Real estate is a capital
intensive investment. You thus need to ensure you plan your finances
well. As it takes time to sell land, buy land that you do not have to sell
quickly.
Get
to know the local area: It has always been said that the three
most important factors in real estate are location, location, location. This
still holds to date. Whether it's from a physical visit or starting off with
online research, do your best to know the
local market . Find a few real estate agents in the area as well
who can advise you on property prices.
Keep things simple: A
simple strategy always takes you a long way in real estate investing in
Kenya. If you are starting off in real estate, it's best to start small
and then grow steadily and you gain more experience.
