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Real Estate Investment Opportunities in Kenya

Posted by Nathaniel Ndegwa on November 15, 2019
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Being a growing economy, Kenya presents one of the best return on investment opportunities in property investment. They say that the best time to buy a property was 5 years ago, but the next best time in today.

At Mkaazi Real Estate we enable everyone we work with secure verified properties by doing the due diligence on their behalf. Feel free to click on the home finder button and let us make your property search easy. And yes, it free.

Having said that, before picking a real estate investment option, it is prudent to do thorough background checks. The best due diligence can only be done by the person intending to make the purchase.

So here are a few things we recommend a prospective real estate investor to do.

Critical things you need to know and do before you buy property in Kenya

Finding a good property to invest in in Kenya can be a tricky affair. There are many reasons why this is so but today we would like to focus on how to ensure you get the right property without the risk.

Verify the authenticity of the property.

The first step is to know exactly who owns the property. This is very important because the kind of individual/entity you buy from can jeopardize your ownership of the property later. For example, if the property was illegally acquired, then ownership can be revoked when it has already been transferred to you. So here is how to circumvent this:

• Know the owner of the property

Mostly, when property is developed, a different entity is constituted to handle the process , it is called an SPV (special purpose vehicle). It is easy to find who are the share holders of this entity are, since they are the owners of the property developed. If the land has changed hands recently, request for the transfer and conveyancing documentation to establish the validity of the current ownership.

• If it is a property on a sectional title deed, as is the case of apartments, check the remaining time on the lease. Some properties can be built on land with leases that are about to expire. Renewing a lease is a cost and time consuming process.  You want as many years as possible on the land lease.

• Has the change of use been done?. Some zones require that for certain kind of developments to be done, a change of use is has to be granted by the county government. Confirm this has been done and granted.

• Is what is being built within the ones allowed in that part of the City?. Check the city zoning and verify if the development is OK for the location it is being built.

Who is developing the property you want to purchase ?

The next question to ask is, who is the developer of the project?. Do they have a good track record? Who are the directors? Are they of good repute?. This information can enable you to decipher the kind of people you are buying from. The rule of thumb is, the less drama, the safer the deal.

You can check out some verified developers that Mkaazi Real Estate is working with here.

Be clear on exactly what you are buying

It is very important for you understand clearly what is being sold. For example in the case of buying commercial space, you must know if buying net or gross space.

In the case of commercial space, make a point of actually verifying the dimensions of the space you are buying. This is because you are paying for every square foot of the space. Always negotiate for net space and not gross space.

Here are a few useful tips for your real estate investment opportunities in Kenya

Get Agreements in place first:

Never pay before you have a duly executed agreement. It helps to have a lawyer review it. Buying property is a big decision, mostly one of the biggest decisions one can make in their lives, so be extra careful.

Compare :

Check the room or unit sizes, amenities, quality of finishes and location. Then go online, search for properties with similar features in the same locality and compare the value of what is on offer. Check if you are getting the best deal compared to what is available.

Also check the expected rental return . How much are similar properties rent for in the same location? How long will it take to get back an equivalent of the purchase price from rent earned at the current rate?(A good deal means you make your money back in 8 years or less, anything below 8 years is awesome). You can also approximate the anticipated appreciation (Are there new infrastructure development that will positively affect the property value?).

How do they compare to other properties ?. With this information, you are on your way to getting the information that can give you an edge if you want to negotiate for a better purchase price.

Establish the real value : 

It is important to know if you are paying the market value of a property. Most valuers can give you a simple report indicating the approximate market value and forced value of a property. This can also inform you whether you are being offered the property at a price that is within market values.

Are you considering buying an Off-plan property ?

By off-plan property here I mean a real estate project that has not broken ground yet, and therefore there is no physical structure to inspect.

Check if there is capacity to deliver. What is the source of their funds?Have they finished other projects before?. Are they offering you a good discount to warrant the risk?. Is the money held in escrow or is it used to build?.

I hope you are now ready to explore real estate investments in Kenya. A great place to start is with our curated featured properties here.

I trust this was helpful, feel free to ask us questions or inquire at info@mkaazirealestate.com or call us directly or on Whatsapp on +254 763 568 989.

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