PROS AND CONS OF REAL ESTATE INVESTMENT IN KENYA

Real estate investment in Kenya is one of the investments that are viewed long term and can build wealth over time. It is one of the business that one can never go wrong with. There is however its own pros and cons just like other businesses. They include;

The pros

• Appreciation

They increase in value over time. You can buy the property at a discount and make improvements on the property and sell it at a profit. Real estate investment has been known for appreciation in value. Buying property in a prime region can be more than twice the same amount in a few years, research shows. Also, buying property and repairing or making renovations to it can significantly increase value of the same property. property is always as an appreciating asset.

• Provides a continuous flow of money

Real estate investment provides a steady flow of money, that is, the income after paying for all the bills. This is useful in reinvesting of the business and meeting others needs. Although other types of real estate investments give income over time, rental property investment gives steady flow of money easily. Many of the wealthiest people have had their wealth accumulated and rising from real estate investments.

• Provides an opportunity to have control  

You will have control over your investment with real estates compared to other investing classes. You will be the decision maker of the properties you own. The fact that you control your investments makes you determine success or failure of the business in real estate investment. It also helps you manage property you can see and touch as compared to other types of investments such as stock market.

• Shields you against inflation

Inflation is whereby the value of money decreases as the price increases. Inflation varies in different times of the year. Inflation causes a decline in the value of many investments. Real estate investment however has the same rate of inflation. It goes hand in hand. The more inflation pushes the cost of living, the more your cash flow goes higher.

The Cons

• Capital intensive

Real estate investment is capital intensive. It requires a lot of money to make a lot of money. Yes, you could start from small amounts such as trade in of property among others. However, real estate requires money even after owning the property. you need money for insurance, taxes, land rates, repairs. Starting off actually requires the high amount of money.

• Long Term Investment

If you are interested with short term investments, then real estate is not your type. You realize your profits on a long term basis. The returns take time. Like stock can be converted easily into easier cash, real estate investment is different. It is not easy to convert that type of investment into quick cash. If you decide to enter into real estate investments, then think of long term strategies. Buying and selling off the property also requires time, from transfers to transactions and everything involved in the process.

• Risks

Just like any other business, real estate investments have its own risks. It has its own unique set of risks including;

-purchasing of wrong property at the wrong time.

-risks of dealing with criminals risking your huge capital investment (refer to our article on crime and money laundering in real estate industry in Kenya)

Bottom Line

Real estate investment is a type of investment that will take time and will not create wealth instantly. Real estate investment requires time and can be a powerful way to create wealth when patience is applied. You must learn to find, evaluate and purchase the right real estate deals.