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Land Investments

Investing In Land In Kenya

You have a couple of millions or hundreds of thousands stashed away in some zero- interest-bearing bank account  and  you  are wondering  where  and  how  to  invest  it?  Gone  are  the  days  when  the  local  stock market yielded high returns.  You should consider real estate and land in particular. The reason why real estate is a smart business idea is because it is an investment that will boom overtime. This can be justified by the increase  in population each year which subsequently leads to a demand for houses. Another good reason especially in Kenya is that we are developing we have more cities cropping up.

Investing  in  land  may  seem  to  be  an  easy  task.  People  make  money  every  day  buying  and  selling  land. This  land  in  turn  can be  used  in  a  number  of  practical  ways. You  can  develop  the  land,  harvest  the resources, rent  it, put up  a greenhouse  on  it, subdivide it, build a  home  or business, the possibilities  are endless.  However  the  land  investors, who reap good returns  from  land sales,  do their  research  and  have most  likely  learned  some  important  investing  lessons  the  hard  way.   This  is  because  investing involves risk  taking.  As  an investor you should be able to put your  money  into an asset and  be  ready to face any challenge as well as setbacks that will come along with it.  

With reference to Kenya, land buying can be a tedious  and tricky process.  One  ought to be  very careful before procuring any land because many have burnt their fingers  while bidding for the same. In the past buyers have fallen victim to conniving land brokers, corrupt land officials at the Ministry of Lands and at the  hands  of  two-timing  owners.  Even  the  lawyers  you  are  supposed  to  trust  have been  known  to  be manipulative and two-faced.

The  good  news  however, is  with  the  right  procedure  the  land  buying  process  can  be  a  straightforward process  and  you  no longer  have  to  deal  with  unscrupulous  land  brokers.  Professionalism  and  ethical standards  are  being  encouraged  with  time  with new  entrants like  Coldwell Banker Kenya  embodying  these beliefs.

Before you settle on a particular choice of land you should conduct a market research on it. Find out why the land is vacant. Many people have lost money by buying land and then discovering that it could not be developed. If the property’s zoning will not permit the land’s highest and best use, it’s not a good buy. In order to be resold at a profit, the land must be able to be developed. Lack of utilities like water, electricity, a  good  sewerage  system,  communication  lines  and  signal  boosters  etc.  is  a  huge  negative  for  anyone wanting to  build.  Required  building  setbacks  could  make  a  narrow  plot  worthless. Is  the  property  too rocky or hilly for building? Are the taxes too high?

Another important factor to consider is the market demand of that area. Choose an area where people will want  to  rent  peradventure  you decide  to  build  housing  units  on  that  land.    Some  people  might  prefer  a quiet urban area for privacy issues; some people appreciate nature and  would like an area overlooking a lovely view, but what most people look at before settling somewhere is the nearness to social amenities. It is not possible to find an area that contains all of this, but at least make sure it is near the CBD of the said town.

You should also check  if the said area has  room for future expansion.  A  good  example  is  the upcoming city of Machakos, which has already attracted quite a number of investors.   

These  investors  will  need  offices,  and  likewise  there  will  be  job  seekers  who  will  in  turn  need  homes. Other good places include Thika, Nakuru, Eldoret and the north of Mombasa just to name a few.

Moreover,  evaluating  the  financial  capability  of  the  people living  in  a  certain  area  helps  the  investor  to determine the type of houses that they can build  in the future as well as the charging rates  e.g.   Building luxurious  villas  in  Kibera  is  not  an  ideal  business plan  as  this  area  houses  the  lower  income  earners  of Nairobi who cannot afford such houses.

Land survey is another process that most people overlook. Before you purchase any land it is important to do a land survey on soil testing, wetlands or site engineering. Cases of buildings collapsing or houses that sink usually arise from this  ignorance. However  you can cut cost by purchasing a piece  of land that has already been approved by the local authorities as an "approved building site".

After  you  have  identified  the  parcel  of  land  you  would  like  to  purchase,  you  should  hire  a  real  estate consultant  or  agent who will  be  the  intermediary  between  you  and  the  seller.  It  is  a  tedious  and  time consuming process and is also the most delicate part of the whole real estate process. A number of people have fallen victim to fraudsters. The most astounding part of these frauds is that they can be orchestrated by  the  brokers  themselves!  So,  whether  you  hire  one  from  a  recognized  company,  or  not,  it  is  very important to include a reputable lawyer in the transaction process. The lawyer would be able to conduct a search  on  the  land,  and  make sure  the  property  details  reflect  that  one  at  the  registry,  to  prepare/review clients  agreement  stipulating  the  mode  of  payment, the  exact  amount  agreed,  duration  the  two  parties want  the  transaction  to  extend  and  abstract  of  title.  The  search  would reveal  the  true  land  owners  and establish  the  presence  of brokers  if any.  It  would also  show  whether the title  has  been charged or has  a caveat  e.g.  when  a  title is  used to secure a loan, or there  is  a court order barring any transaction  on that land, etc. The search also gives you the exact position of the land as well as the acreage. Your advocate is also supposed to prepare a transfer document, which the seller’s advocate should approve and later hand in the transfer documents for registration at the Ministry of Lands in favor of the land buyer.  

While  the  process  of  buying  land  seems  foolproof  and  straightforward,  it  is  important  to  realize  that fraudsters are always prowling for gullible buyers to con. “For instance, when they realize that Person X owns  land in South C, they will make fake Identity Cards with Person X’s name and photograph. When the buyer asks for the ID, they will gladly give you the fake ID and the search results will come out with the name of the rightful owner.

In  most  cases,  fraudsters  will  insist  that  the  buyer  pays  in cash.  A  smart  lawyer  will  insist  that  the payment be through a banker’s cheque that is traceable, or through an electronic funds transfer. Fraudsters also work with people at the Ministry of Lands to alter names from the title deeds. You are highly advised to desist from purchasing land without a title deed. You can buy land that has a lease and not a title deed, as  most  plots  within  town  are  leased.  A  lease  can  expire  after  30  or  99  years  depending  on  the arrangement. While a lease is renewable at the Ministry of Lands, a title deed shows absolute ownership. So how do you determine the validity of a title deed? The truth is, you cannot really determine the validity of a title deed, but if you went for a search and the Ministry gave you fake search results, then it will be up to the State to compensate you.