5 Reasons why you Should Invest in Real estate in Kenya
In today's world with its constant finance fluctuation, a need for a way to invest and safely save money is risen. There are many way to invest your money out there such as stock market, investment bonds, mutual funds, saving accounts and physical commodities. Each one has its own pros and cons and its complexity and risky levels that is if not proceed with caution and knowledge, it will have a negative return instead.
1. It’s safe form of investment
Kenya has a relatively safe and vibrant property market that offers investors a unique opportunity to invest their hard earned savings safely. When you factor in the return and risk associated with property and shares, property wins hands down. Shares have higher capital growth, but the difference in risk is huge. The risk is measured in variation, returns and capital growth (or loss) on shares can range from +40% in a year to -40% in a week! You don't get that sort of variation in property, hence it is considered a safer investment.
2. It’s easy to get started
Investing in real estate in Kenya is straight forward. You don’t need specialist knowledge to start investing in property: in fact, many Kenyan property investors didn’t start off intending to make their fortune through property. Instead, they just bought a house to live in. It’s only after seeing the value of their home increase – and realizing how much wealth you can generate – that many investors take the leap and start proactively investing.
3. It’s easier to research than stocks and shares
Real estate investment is much simpler than trading in stocks and shares, as you can simply jump online and start looking at properties. Admittedly, there’s more to getting property investing right than just picking a property, but a significant amount of research can be done online (and is usually either free or inexpensive) or by visiting suburbs, open houses and auctions without having to garner tons of specialist knowledge as compared to the stock market
4. It’s relatively easy to get finance
Asset financing institutions in Kenya offer very competitive and flexible rates for real estate purchase, because lenders like property. Home loans are a major part of any bank’s business model, and lenders are more likely to lend on residential property than any other asset class – as evidenced by the fact that they will lend a higher proportion of the value (up to 95%) and at lower interest rates than any other asset class – including commercial property. This makes it a lot easier to borrow to invest in property than in any other asset class.
5. You can use leverage
Borrowing to invest in property also means you get greater access one of the oldest and most powerful tricks in the financial book: leverage. You can borrow more when using property as security as compared to using a share portfolio. Lenders will lend up to 95% of the value of the property, whereas they may only lend up to 50 or 60% of the value of a share portfolio. This greater borrowing power allows you to benefit from the capital growth of a larger asset.