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What You Should Keep In Mind About Kenya’s Real Estate Sector.

Kenya’s real estate sector contributes significantly to the economy and GDP. It has recently undergone transformation as a result of policy changes, a lack of funding, and a variety of other factors. If one wishes to invest in real estate, he or she must consider a number of factors, as making the wrong decision can be extremely costly.

Many young people are drawn to real estate investments for a variety of reasons, including peer pressure, family expectations, a desire to own such an asset, little or no understanding of real estate as an asset class, a lack of awareness of other financial instruments, and so on.

I recall an instance of a guy I came across online the other day. Mathew Mutheu, a 27-year-old “Hustler” from Machackos, recently relocated to Nairobi after trading in cryptocurrency. Mathew had heard from friends and colleagues that the Kenyan real estate sector had provided very good returns in recent years. He intends to use the Crypto maturity amount to invest in real estate and to obtain a home loan. Should Mathew go ahead with it?

Consider the Reason for Investment. 

Before investing in immovable assets such as real estate—an apartment, land or commercial space—look beyond the financial aspects. What is the goal of the investment? Is it only for returns or for personal use as well?

How long will you be in the property or city? Do you intend to stay? If you do not intend to stay in that city for an extended period of time? 

Conduct a background check.

Before investing, it is critical to conduct a thorough background check on the property. The background check should include information about the property’s location, the builder, and whether the property meets all legal requirements.

Other considerations should include delivery time and pricing. Only after you have completed all of these tasks should you consider investing in Kenya’s real estate sector.

Determine your expenses and profits.

Any property investment is always risky and necessitates careful planning of expenses and profits ahead of time. If you are a beginner, start by calculating how much money you already have and how much you can borrow. 

After that, compute the total cost. Also consider the operating costs. Another major issue in real estate is liquidity. You are unable to make partial withdrawals from your investment.

Purchase a low-cost property.

As a beginner, never jump in for an expensive property deal because it may have hidden costs and complexities that will cause you problems in the long run. It is always best to look for properties in the lower to mid-range price ranges. 

The reason for choosing such a price range is to manage the future cost of renovation/redevelopment of the property before renting or selling it, which is where Off-Plan property comes in. These types of properties allow you to purchase far below market value.

Consider loan options.

It is not a good idea to use up liquid cash when investing in real estate. Whether you believe it or not, borrowing money is the best option. Unlearn if you’ve been taught otherwise.Having said that, you should never settle for any random loan plan. Always consider your options. 

There are numerous options available today for raising funds to purchase your first property. Choose the best option for your financial situation. Throughout the process, make sure you understand which loan option allows you to split the credit or if it offers a line of credit.

In conclusion you should consider your overall asset allocation and liabilities. As a result, assessing your exposure to debt, equity, and other asset classes in relation to real estate is critical for understanding how a real estate purchase will affect your finances. 

If you enjoyed this article and gained inspiration for your next investment, please consider contacting us for assistance. Please browse our properties if you are looking to invest and share it with a friend who may also benefit. Thank you very much!

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