Empowering Chama Groups

The Secret to Saving Money

Saving money is not a matter of math. It’s a matter of urgency.

  • You won’t save money when you get that next raise.
  • You won’t save money when that car is paid off.
  • You won’t save money when the kids are grown.

You’ll only save money when it becomes an emotional priority.
We all know we need to save, but most people don’t save like they know they should. Why? Because they have competing goals. The goal to save isn’t a high enough priority to delay the purchase of that pizza, DVD player, new computer, or china cabinet. So we purchase, buy, and consume all our shillings away or, worse yet, go into debt to buy these things.That debt becomes monthly payments that control our paychecks and make us say things like, “We just don’t make enough to save any money!” Wrong, wrong, wrong! We do make enough to save money; we just aren’t willing to quit spoiling ourselves with our little projects or pleasures. It doesn’t matter what you make—you can save money. It just has to become a big enough priority to you.

Make Saving a Priority
If a doctor told you that your child was dying and could only be saved with a Ksh 15,000 operation that your insurance would not cover and could only be performed nine months from today, could you save Ksh15,000 between now and then? Of course you could!  You would sell things, you would stop any spending that wasn’t required to survive, and you would take two extra jobs. For that short nine months, you would become a saving machine. You would give up virtually anything to accomplish that Ksh 15,000 goal.
The secret to saving money is to make it a priority. But that happens only when you start to feel some healthy anger—or fear—and then focus that emotion on your personal decisions. Harnessing that emotion will make you move yourself to the top of your creditor list. Then ask yourself which bill is the most important. After tithing, who should you pay first this month? The answer is you! Until you pay God first, then yourself, then everyone and everything else, you will never save money.Advertisers and marketers are touching our emotions every day and taking every Kenyan Shilling we have by making us see our wants as needs.

Emotions make great slaves, but they’re lousy masters. It doesn’t matter how educated or sophisticated you are—if you aren’t saving money, you’re letting your emotions control your actions. You need to take charge!So whether you need to save for college tuition, House/Land Property, Vehicle, a plane ticket to the family reunion, new school clothes for little Ethan or Emma, retirement, or anything else, start now! It’s never too late!

Things looking up for hopeful home buyers

For over a year now, housing indices have been reporting a stagnation in prices for high end homes. At the same time prime rental yields have also dropped slightly. This, put together, with government policy moves promise to shift the focus to lower priced homes, offering those who want to buy homes but can hardly afford to due to the prevailing high prices and shortage of home sin the lower income brackets a lifeline. A Global Property Guide report released this year indicated that Nairobi is ranked among the most expensive cities in the world and the property market has experienced the highest number of costly houses ever in the last seven years. House prices and rents are also skyrocketing, making it hard for the low income earners to own and rent desired homes. “Using the ratio/rent, that is years of rent that would be required to buy a property, it would take up to 14 years to own a 300-square metre apartment in Nairobi’s up-market residential areas,” said the Global Property Guide report. It noted that the number of people who own homes in the cities is 18 per cent, on average. However, majority of the low income earners do not own homes owing to the few developers ready to finance projects in that segment. In July this year, the Knight Frank Prime Global Rental Index showed a mixture of rising supply and falling demand, which resulted in a decline in prime residential rents in the first three months of the year. At the time, Charles Macharia, Senior Research Analyst at Knight Frank Kenya, said: “Demand for prime rental properties has traditionally been from expats. Rents have trended lower as we are seeing weakened demand from this segment of the market due to multinational firms downsizing as a result of adverse economic circumstances driven by low commodity prices.”

This also followed a trend identified by the Hass property Index in January that showed a decline in rental prices. The Hass Property Index for the first quarter of 2016 said the average price for one to three-bedroom apartments in Nairobi’s leafy suburbs was Sh11.8 million. On the other hand, the average price for four to six-bedroom property was Sh36.5 million, thus largely alienating the lower income earners. Market slowdown This was in line with recent projections that has seen a slowdown in the prime market with some analysts saying developer-focus on this market segment was causing an oversupply. This would then, hopefully result in two scenarios. one a market correction that would see home being more reasonably priced and a change of focus by developers to lower priced homes targeting the lower income brackets. Fast forward to last month and two things happened that brought focus back to the question of helping Kenyans own homes. This time from the government. First, local firm Suraya Property Group signed a deal with the China-Africa development Fund, a Chinese construction firm and the government to construct 20,000 homes for government employees.
This also a move seen as a possible pressure valve that could ease up home prices for projects open to the general public. At the same time, it was reported that the The Finance Act, 2016 raised the portion of mortgage repayments that will be tax-free from Sh12,500 to Sh25,000. This relief would also be available to those who took loans, other than mortgage, to buy or refurbish their homes. The trend pointed to a concerted effort to enable more Kenyans own homes in a real estate market where the growth has been witnessed mainly in the high-end segment, with developers giving low cost housing a wide berth. Developers too are also beginning to focus more on the lower income segments with projects geared specifically to first home owners. One of these is Gakuyo Real Estate. “We felt we could not neglect the lower income earners. We have the tools to help them through land banking, which protects us from land price shocks, and offer them cheap financing models,” Kariuki Musa, the CEO of Gakuyo Real Estate. Gakuyo is putting up low cost housing projects targeting the lower middle income group in Nairobi, Kiambu, Kajiado and Mombasa. The bonus? Buyers don’t have to go through the hassle of raising a deposit, thanks to Gakuyo Zero Deposit Programme. The firm is financing 6,000 housing units valued at Sh9 billion. Construction for all the units will be complete in two-and-half years. Musa said the most expensive bungalow on an eighth of an acre will go for Sh1.5 million. The monthly payments, he said, are equivalent to the rent the buyers have been paying. Read more at:

Why You do not have to be rich to join property market

“Earth is the best investment on earth.”
That is a statement by Mr Gilbert Kibire, the CEO of Icon Valuers Ltd, a real estate firm based in Nairobi, a statement echoed by his colleague, Mr Martin Cheboror.“Land is the only asset you can invest in, where its value will almost always appreciate,” Mr Kibire expounds.Indeed, real estate has proved to be an avenue for creating wealth. Whether it is building your retirement home or buying plots as a group, many of us have dreamt of investing in property at a certain point in our lives.However, sometimes investing in real estate can be intimidating for beginners due to fear of the unknown.Mr Cheboror explains that these reservations are legitimate as he has seen people lose millions of shillings and go bankrupt overnight in real estate deals gone awry. “For smart investors who consult widely and seek guidance from professionals, the industry sure is lucrative, as we have facilitated deals in which people have made millions of shillings overnight,” he says. Below are 10 tips that will help you get started in real estate and turn investing in property into a lifelong pursuit to secure your financial future.


A common truism in property circles is that, with real estate, you don’t wait to buy, you buy and wait. “Many people lose out on making a fortune because they think the money they have is too insignificant to get them into the real estate business.They don’t know that there are investment packages and opportunities they can exploit if they seek guidance from a real estate agent,” Mr Cheboror offers.To drive the point home, Mr Kibire gives the scenario of two individuals with Sh100,000 each, and who both want to own a home in 10 years.While individual A might think it is better to save until he can raise the capital required to build a home, individual B, who gets into a joint land-buying venture with his Sh100,000, will be better off as his stake in the venture will have risen over the years since the value of land always appreciates.“There are many financing options available to people with an interest in the real estate, ranging from bank loans to mortgages and micro-finance savings packages. Just make sure the income or appreciation value of your property surpasses the interest on the loan to avoid burning your fingers,” advises Mr Kibire You don’t need to buy an apartment complex right out of the gate. It is okay to start small, even if it is with REITs or partnerships. Just start.


Most people find the allure of buying property today and selling it after a short time hard to resist. However, the two professionals caution against getting into real estate with such an attitude because, like any other investment, there is always an element of risk involved.“One virtue that will prove very vital in this business is patience, which goes hand in hand with the principle of delayed gratification.A person seeking to make a fortune in the real estate sector should be prepared to work hard and learn over a long time to understand how the market works,” Mr Kibire says.


If you are looking to  getting started in the property sector, quitting your regular job might not be a very sound move, especially if it is the job that provided the initial capital for your investment. According to Mr Cheboror, people who quit their jobs to concentrate on real estate are oblivious of the fact that they can get professionals to handle the management part of their investments.“Property agents and land economists have obviously been in the industry much longer, and are thus more experienced in competently managing your investments,” he says. Relying on professionals saves you time as it only requires you to play a supervisory role.


The average Kenyan looking to get into real estate is always paranoid. This is because cases of people buying land whose title deeds are later revoked are rampant in many parts of the country.“We have had people asking us to do a title deed verification when their investments have already gone up in smoke.By then it is too late, and there is little we can do. To avoid being sucked into such unscrupulous deals, we advise land buyers to consult  professionals , who will carry out due diligence to verify the legitimacy of the property in question,” says Mr Kibire. Even when buying property from a family member, a friend or a person you think you know very well, resist the temptation to skip carrying out due diligence as unforeseen circumstances  could later lead to life-long scarring.“We know of people who spend the rest of their lives servicing loans for properties that turned out to be phony,” Mr Cheboror offers. Given the kind of emotions land  issues raise, it is certainly better to be safe than sorry.


When getting started, it is advisable to build a team of professionals  you can easily consult before making any move, especially one that involves high financial expenditure. A property valuer, a conveyance, an accredited contractor and a loan adviser are a few of the professionals whose advice you cannot afford to shrug off. While adding the professionals to your payroll might seem costly at a glance, a closer look will reveal that it actually saves you money. Mr Kibire, the CEO, cites the case of a client who wanted to buy a house in Nairobi valued at Sh10 million, a week before the interview. Before he could seal the deal, however, the prospective buyer decided to call  the valuation firm for advice. “Our team visited the property and advised the client not to pay a cent more than Sh7 million for the property. He later sealed the deal for Sh6.5 million. While we only charged him 0.25 per cent of the property price for our services, he ended up saving a huge sum,” Mr Kibire  says.


“The importance of location in any real estate investment cannot be over emphasized. This is because property in prime locations is measured not so much by the cost of construction, but by the value and high appreciation rate of the land on which the property sits,” Mr Cheboror says. Investing in a simple establishment in a high-end neighborhood always pays handsomely. However, the reverse can be the worst mistake an investor could ever make. Buying the best house in the worst neighbourhood, he warns, will always turn out to be disastrous as the value of the land underneath hardly appreciates, and future buyers will most likely shun the property because of the neighborhood.


When putting up commercial or residential property to let, seek advice from your agent and do your calculation in such a way that, when the property is finally ready for occupation, the money collected as  monthly rent is always more than 1 per cent of the total investment cost. This is what Mr Kabire refers to as the 1 per cent rule.

“Say you put up rental apartments at a cost of Sh1 million. The total monthly rent collected from an apartment should always be at least Sh10,000.This will enable you to recoup your investment in less than 10 years,” Mr Kibire says. However, the 1 per cent rule is not cast in stone.“Some investors recoup the principal investment in a shorter time, even four to six years. But those whose buildings on prime land in places such as Westlands and Kilimani take as long as 30 years. These investors rest easy knowing that the land on which their buildings sit is gaining value at a much higher rate than the rents,” he adds.


Mr Cheboror points out that many small-scale constructors do not appreciate the value of accounting for every shilling spent while constructing. They thus end up getting duped by unscrupulous foremen and contractors, so building a house ends up feeling like pouring money into a bottomless pit. He advises that investors get into the habit of keeping all the financial records pertaining to the construction. This, he explains, is useful in determining the amount of rent to be charged, or the price of the building, were it to be put up for sale. Keeping records can also save you money when the time comes to file your tax returns with the Kenya Revenue Authority (KRA). The financial records put you in a good position to enjoy tax exemptions.


When buying property for resale, you are better off checking your emotions at the door. “There are buildings put up for sale that are over-designed and over-decorated. These buildings have great curb-appeal, that is, they look appealing at a glance. People tend to fall in love with such buildings and hence end up paying inflated prices, only for them to get shocked when they later cannot sell the building at a profit,” Mr Kibire says. “We always advise our clients that real estate is not a sentimental business. One should always be on the lookout for profits and not let the visual appeal of a property cloud their judgment,” he adds. However, when buying your own home, you can go ahead and fork top dollar for a property with great curb appeal.


The temptation to cut corners to save some money will certainly arise at some point. The agents agree that taking shortcuts is rarely ever worth it; if anything, it usually results in the loss of entire investments, and sometimes even lives. Going by the book might seem expensive, but it saves you a lot of mental agony and is actually cheaper. “Hire only contractors accredited and licensed by the National Construction Authority,” advises Mr Kibire. “Take note of the national construction regulations and county by-laws to avoid the possibility of your property being demolished in future. Conduct surveys to avoid encroaching on public land, and use only genuine materials while constructing. I have seen entire buildings being marked as unfit just because the owners did not see the need to conduct the necessary inspections at the foundation stage.”When it comes to contracting services such as borehole digging and hiring heavy machinery, deal only with reputable companies  to avoid getting into trouble with the KRA.

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