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.

Real Estate Revolution in Kenya

The real estate sector has been a source of strength for the global economy since the most recent economic downturn. This has been particularly true of the residential property sector. In most countries, house prices have been particularly strong over the past few years. The strong performance of the property sector and the general resilience of financial institutions stand in sharp contrast to the experience of the early 1990s. In the previous episode, the boom and the subsequent burst in the property sector, particularly on the commercial side were a major contributor to the banking problems.

A house is a long lived asset that delivers consumption services over many periods. In many respects it is more like a durable good than an investment asset. Given that residential property can give accommodation to its owner, it has an intrinsic reservation value determined by the discounted by value of the expected service stream. Housing price fluctuations can be driven by macro factors and intrinsic characteristics of the housing market itself. Empirical evidence suggests that the market has its own distinct dynamics. While house prices are determined by construction costs in the long run, the supply of new housing can only respond sluggishly to demand in the short horizon. Hence, house prices may deviate from their long term trends for a considerable period of time.

Real estate is an important investment asset in the economy. When property prices rise above the cost of construction, it is profitable for property developers and other non financial firms to construct new buildings. However, the boom in the construction sector boosts employment and demand in the property related sectors. Kenya, among other countries continues to experience heightened pressure on land with gradual rise in population. The high demand for residential housing has witnessed land and property prices sky rocket to an all time high. Scramble for office space is no strange phenomena as a larger part of the younger population seem to be acquiring a bias to entrepreneurship. Business corporations too need additional space as they expand their operations. Although the government has in the last few years been devising formulas of settling her population, the problem is far from over. A large number of the populace still lack access to decent housing as a fundamental human right which is also part of the MDGs as we gear towards attainment of vision 2030.

The real   sector in Kenya in particular has seen a boom that begun somewhere in the mid to late 2000s because the property market is responding to increased demand. Amidst robust economic growth, values in Kenya’s residential property continue to rise. Many players have come in to offer solutions in different capacities. While most of the players come in to fund development of already acquired land, others do as much as acquisition of the land and developing on behalf of their client. Investment groups, labelled as chamas have also played a big role in acquiring property for their members by pooling resources together. In our special feature, we will have a closer look at one real estate company that has revolutionised land and property ownership in our time.

Gakuyo Real Estate

It was registered in 1997 by Rev David Ngari with a vision to change lives of the middle and low class population by providing affordable products and services. In a competitive market like real estate he says, ‘I have maintained a high level of trust to my clients in a field where crooks take advantage by stealing money from innocent and hardworking Kenyans who are simply out to own a plot or a house.’ There is need for investors to look at the bigger picture and provide housing for the neglected lower middle class.

Affordability re-defined.

An entrepreneur and renowned preacher, Rev Ngari has engineered a number of projects to ensure housing becomes more affordable and people can now have decent houses to bring up their families. Surprisingly at Gakuyo, one can get plots from as low as Ksh 70,000 and above and houses as low cost as Ksh 1.35M. Further, the company has thought to innovate by integrating Ekeza Sacco so that members can easily access funding through their savings in the Sacco. One only needs to book the house with as low as Ksh 100,000, join Ekeza Sacco, save for 6months and the Sacco buys the house for you.

Gakuyo has acquired 1000 acres between Mt kilima Mbogo in Machakos county and Thika East sub county in Kiambu county. The land is located 18km from Thika town on the Thika Garissa highway next to St Paul’s Kilima Mbogo teachers college. It is also near Oldonyo Sabuk national park and the 14 falls on Athi River, both of which are tourist attraction sites. The project will also be served by the proposed eastern bypass and the plots are already serviced with roads, water and electricity. Kilima Mbogo plains is suitable for agricultural, commercial, residential and tourism development. Gakuyo is selling a 1/8 of an acre at ksh156000, ¼ at 312000, ½ at 625000 and an acre at 1.25M. A buyer requires paying a down payment of 40% of the cost with the balance payable in duration of one year. The CEO Rev Ngari urges members of the public to join Gakuyo Ekeza Sacco save and acquire loans to buy property. He further urges Kenyans not to make themselves poor and miserable by getting prompt loans from shylocks who charge exorbitant interest rates and end up losing their collateral such as stock investments and even land. The projects by the company includes city of David located in Juja, Planet homes in Nakuru, Village Yatta in Matuu and the Chosen Green City located in Kenol/Kabati.