Updated: Mar 29, 2021
An investment discussion in Kenya cannot end without the mention of land as an investment.🏘️
Real estate is one of the investments most people are familiar with. It's fair to say Kenyans fall in love with real estate before any other asset, mainly because people consider it a safe and easy investment. You purchase land, wait for a couple of years and sell it for an appreciated amount, right? 💰
Well, read on 🤓
Property investment can take on different forms and traditional property investment is more or less the property investment most people are familiar with. Buying land, holding it for several years and reselling for a higher price.
Many young investors always shy away from this form of property investment, blaming the high capital costs.
💡 Let's find out how young property investors can have access to ownership of property and a very low capital cost.
Real Estate Investment Trusts (REITs)
What are REITs?
REITs are an investment vehicle that allows the public to access the property market with minimal capital requirements, meaning investors who have limited capital to get exposure to real estate investing. 🙌
💡REITs are available in the Nairobi stock exchange.
A comprehensive article will follow on REITs' viability and the process an interested investor can follow to buy REITs in the Kenyan market.
Back to traditional property.
One of the mistakes many property investors make is that they do not factor in the hidden costs while buying a property. They account for the quoted purchase price while making their investment decision.
You mean there’s more?🤔
Yes, way more! Below is a breakdown of some hidden costs that an investor should be aware of.
Let's take a hypothetical example of property worth Kshs 500 000 🏠in Kasarani, Nairobi. The bank will finance 70%, which is Kshs 350,000, while the investor will finance 30%, which is Kshs 150 000.💳
The hidden cost of buying property using a bank loan
The above table is a classic example of how a down payment of Kshs 150 000 translated to Kshs 227 050. This is approximately 50% more than the buyer had planned for the actual acquisition. This is approximately 50% more than the buyer had planned for the actual acquisition.
As an aspiring property investor, you should learn to perform this calculation while planning for acquisition.
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Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor. Full Disclaimer