Many
people invest in real estate because the general trend of property is that it
increases in value. As such, your returns are guaranteed over some time. It is
important for you to understand these factors before you invest in real estate.
1.
Purpose
Before purchasing
either land or a building, the first factor is to determine why you are
making the purchase. For land, consider factors like: - Is it for immediate
settlement, immediate construction or for speculation purposes. Are you
purchasing for your use or you would like to resell? The same case
applies to purchase of a house. Will it be a house for you to live in or a
house that you may want to rent out?
2.
Type
Once
the purpose is determined, you then must consider if you are making a
commercial, residential, agricultural or an industrial property.
Commercial properties are generally used as outlets for sale and purchase
of goods or services or for use as offices. Commercial properties are usually
more expensive than residential property and attract different taxes and this
impacts on your budget. For houses, additionally consider whether you need to
purchase an apartment, townhouse, bungalow or a house with a separate servant
quarter.
The
budget you have available determines the locations you can afford including the
size of either land or building. The budget should be enough to not only cover
the purchase price, but sufficient enough to cover taxes, agents commissions
and the legal costs of conveyancing.
4.
Location
Location
is usually the biggest determinant of price. If you are purchasing
hoping for returns from increased sale price, then you would need to select
property in an area that is experiencing or is expected to have a high price appreciation.
If you are purchasing a house to live in, then you must consider a location
that is easy to commute, is secure, have social amenities and factors like
schools and availability of transport.
5.
Property Tenure
In
Kenya, there are two main forms of property tenure. These are free hold and
leasehold interest. Freehold property gives the owner absolute ownership of the
property and does not attract ground rent. Leasehold property confers to
the owner a limited period to own the property which can be extended. As
evidence of ownership, the government issues buyers with a Certificate of Title
for freehold and a Certificate of lease for leasehold titles as a primary
evidence of property ownership. Article 65 of the Kenyan Constitution limits
foreigners to holding only leasehold titles for a maximum of 99 years but
permits future renewals on condition that the subject property held under that
title is economically active and it is not required for public use purposes.
Any title that is on freehold that is purchased by a foreigner, a company not
wholly owned by Kenyans or property held in trust whose beneficiary is not
Kenyan changes to leasehold.
6.
The current condition of the real estate market in Kenya
Conditions
in the property market change from time to time. If you are selling a house,
high property prices are a good condition. On the other hand, if the property
prices are low, it is a good time to buy and a bad one to sell. Thus, before
you invest in some real estate in Kenya, perform some research to find out the
prevailing market
conditions.
The
Important Take Away
Buying property is
every Kenyan's dream and rightfully so. And is very
rewarding. Numerous people have made a fortune investing in real estate. If you
want to join the ranks of successful real estate investors, the elements above
are the ones which you should actively consider. They can make the difference
between a few thousands in returns or millions.
