8 Best Real Estate Investment Strategies in Kenya
Investing in property is an excellent idea that produces long-term results. However, it can be tough to succeed in the sector without the best real estate investment strategies.
This article alienates the property investment strategies to help you make the right choices depending on your ability. People who have successfully implemented these strategies have made a fortune.
Keep reading to learn about the best real estate investment strategies you don’t want to ignore.
Property investment strategies that work in Kenya
- Choose the best location
Your success in the real estate business, no matter the type, depends on location. Each type of real estate has its suitable location.
For instance, a residential property may not do well near an industrial property due to emissions of gases harmful to the environment. So, no one would love to stay near factories. That’s why factories have designated areas in each city.
A good location determines the occupancy vs. vacancy ratio of your property. That’s why you should be so keen when choosing the location to buy real estate.
Buy-to-let properties are income-generating houses that you charge monthly rent. These houses can be for commercial or residential use.
The good thing about buying to-let properties is that you won’t undergo the whole process of building the property. You will get property that is ready to start generating income.
Buy-to-let real estate tends to bring in returns on investment faster than buying undeveloped land.
- Consider Airbnb
Airbnb is a modern way of earning through real estate. Actually, once you start an Airbnb business, you will earn more in a month than a typical residential house.
If you have extra rooms in your house, you can get clients to stay on a short-term basis. Furthermore, if you don’t stay in your house that is near tourist attraction sites, you can earn money by renting to Airbnb clients.
What makes Airbnb stand out in the real estate sector is that you charge your houses per day, not per month or year. That’s why it’s easy to earn lots of money with Airbnb.
However, the location of your house determines whether you’ll get customers. Mostly, Airbnb users are tourists visiting the country. And as you know, not every town has an attraction phenomenon.
In addition, even when you have a house in a tourist attraction area, you won’t get clients throughout the year. For instance, Kenya’s coastal region is a tourist attraction site, but it’s rare to get someone on the beach during winter.
- What real estate brings the highest returns
Do your research to know what type of real estate has huge returns. This real estate investment strategy will help you make the right investment choices.
Analyse the options you have after choosing a suitable location. Commercial real estate comprising retail stores, office spaces, and hospitality buildings goes hand in hand with residential houses. However, due to the business nature, commercial properties have high returns because of high rent rates.
Work out the possible returns and cash flow of the property you want to buy.
- Consider buying undeveloped land
Undeveloped land is cheaper than developed land with buildings. It’s even easy to save enough cash to buy land.
However, the appreciation rate of land is different in all areas. For instance, the land appreciation rate in Nairobi differs from that of Narok. That’s why you need to choose your location wisely if you want to buy raw land.
In addition, future projects can improve the appreciation rate of a piece of land. For example, since the announcement about the development of Konza city, the land in that specific area became expensive, and is still going upwards.
However, you should research the authenticity of the mentioned project before investing in a bad location.
- Renovate old properties and resell
An old property will definitely have a lower price than a new property in the same area. You can research the market value of the nearby houses to know the price range.
Before buying an old property, also on the cost of building materials and repair services. This will help you know the rough estimate of renovating costs.
The estimated repair costs plus the buying cost should determine whether you’ll gain after selling at the current market value in the area.
- Are REITs a good idea?
REITs are companies that enable low-income earners to invest in real estate without much capital. These companies pool investor funds to invest in residential, commercial, or industrial real estate.
The investors earn a percentage of returns that these companies get, basically depending on the amount of money they have invested.
If you want to begin real estate investment, REITs can be a good place to start because you won’t carry the burden of property buying and maintenance. You can learn through these companies till you are fit to buy real estate property.
- Mixed-use properties
Mixed-use properties mean that the property can be residential in one part and commercial in the other part. There are two main types of mixed-use properties:
- Vertical mixed-use
This comprises vertical buildings with several floors. You can segment the floors such that the ground floor has commercial stores and the upper floors have residential apartments.
- Horizontal buildings
These buildings are common in Kenyan rural areas where businesses have the front side and residentials carry the back side.
Due to different incomes from commercial and residential properties, a combination of both can help you realise your investment goals.
To Sum Up
Now that you know the best investment strategies in Kenya, why don’t you go ahead with your investment plan? When done well, real estate investment can be an excellent long-term solution to your financial needs.
However, never get tired of doing research, actually, it’s among the skills you should have as a real estate investor.
Frequently Asked Questions
- Which is the most reliable real estate in terms of long-term financial freedom?
A rental property in a good location is suitable for long-term financial solutions. With a low vacancy rate, you will earn a regular income for a long time with little effort, just maintenance once in a while.
- What is the fastest real estate strategy to earn money?
Buying to renovate and resell is the fastest strategy to get your return on investment faster. However, to succeed in this strategy, you must be good in marketing and financial planning to ensure you don’t make losers instead of gaining.
- How do beginners make money in real estate?
Being a beginner investor has its set of risks. That’s why it’s advisable to start with less risky operations such as earning a commission by renting an investor’s property on Airbnb, REITs, and managing other people’s property. These strategies can help you earn as you learn how the business is done.