Earning a decent salary minus investing will never get you rich. That’s the whole truth; no arguing about it, period!
Let’s take for example, in Kenya, a basic salary of about Ksh50, 000 ($600) is considered a decent pay. With such an amount, you can get a decent home to rent, access better education and–if you happen to save–afford a nice car eventually. However, will such an amount–or even more— make you rich?
Hell no. Why?
Okay, let’s say you’re the penny-pinching type, who saves 100% of whatever gets into your hands. Now after saving all your salary for about a year—which is of course impossible–your account will be reflecting an accrued total of ksh600, 000 (roughly $7000). By pushing it further to 10 years, you’d have made an accumulated total of about Ksh6 million ($70, 0000).
Is such an amount enough to get you the “rich” title; leave alone get you a descent home? The answer is a big No.
In simple words, if you sometimes dream of becoming rich someday, then it’s high time you considered thinking in terms of investing and not earning. And if you’re somehow stuck between choosing the right investment to make, then this article has a better idea for you—Kenya Real Estate. That being said, how can you invest in Kenya Real estate?
How to Invest in Kenyan Real Estate
Well, to begin with, you have to build up your starting capital. This can either be done by saving or inquiring from your local bank about loans. Either way, you have to come up with an effective financial plan that will enable you to place at least 25% down payment on the residential real estate that you’re planning to invest in.
Real Estate Training
Also important, try enrolling for a real estate training seminar within your locality to learn more about how the business is run. If you stay in Nairobi, there are several well-reputed convention centres and training institutions, which offer quality courses on real estate; enrol in one. Alternatively, you can head to a local bookstore to read more about real estate investing, before tossing any money into the business.
Before putting any real money into the business, you must have enough knowledge on property assessment or analysis. If not, then consider hiring an appraiser with enough experience to help you evaluate the value of a particular property before putting your money into the business.
Make A Down Payment
If the condition of the house you’ve inspected meet your standards, go ahead and make a down payment, and then rent it out straightaway. In so doing, you are likely to find a tenant who pays an amount that covers—if not exceeds—your monthly mortgage, altogether with fees and property taxes.
Building Up Equity
Your next step should be to build up equity by having the tenants pay up the mortgage for you. While doing this, be sure to keep a cash float for contingency purposes.
Use The Equity You’ve Built Up To Pay The Down Payment For Another House
If you have a goal of building a mini-real estate empire, then here’s your chance to use the equity you’ve been building up to pay the down payment for another house. With this option, there’s no limit to the number of houses you can acquire provided you are in good position to manage them.
Buying and selling houses in Nairobi or its outskirts is just one out the many real estate strategies that you can employ to become a millionaire within a snap. Another viable option will be to flip houses. That is; buying houses at prices that are lower than the market rates and then improving them before selling at higher, profitable rates.
Investing In Commercial Real Estate
Another strategy is to invest in a commercial real estate, like mobile home parks, apartment buildings and strip malls, to start earning interest on the capital invested.
Join Kenya Association of Investment Groups (KIAG)
By joining this association, you’ll get a chance of learning the best Kenya real estate practices from more experienced investors within or outside Nairobi. But more importantly, you may meet sellers who are willing to let out their properties with no down payment, or who are willing to give you all the support you need in your search.
Now, unless your investment is within Nairobi, it may take you some time before you eventually find someone to buy it immediately or a tenant to rent it as quickly as you had projected. Because of that, it’s always advisable to build your own cash reserve while starting out, which can at least cover your mortgage for six months as you continue looking for a tenant or buyer to respectively rent or purchase your property.
See Also: How to Make Money in Kenya This Year