The real estate business is one of the most profitable ventures for entrepreneurs in Kenya. The sector has experienced tremendous growth in the recent past due to urbanization and an increase in population. The demand for residential houses, raw land and office spaces is always rising. This has created business opportunities for entrepreneurs who want to meet the growing demand.
If you want to venture into the real estate business in Kenya and make good profits, it is important that you first decide on the type of real estate you want to invest in. This is how you can start a real estate business in Kenya.
Conduct a Thorough Research
Like any other business, it is important to conduct thorough research before starting your real estate business. Research real estate properties available before choosing a niche to invest in.
Decide on the Real Estate Properties to Invest in
Some of the best real estate properties to invest in Kenya include:
- Your own home. The first step for venturing into this business is to build your own home. A home is a good investment because it has monetary value and can be used as leverage when seeking loans from financial institutions. You can even decide to sell it later on when its value appreciates.
- Commercial investments. With many businesses coming up, they will need space to carry out their activities. As such, you can put up property and lease it to business outlets.
- Residential houses. With the growing population, most Kenyans are in need of houses and many more will still need home. It is for this reason that residential property remains one of the most lucrative real estate investments.
- Raw land. Many investors are currently investing in raw land (land with no development). If you want to make good money from this investment, watch out for catalysts that will allow you push up the price of land when selling it (catalysts can be external developments like roads, hospitals, etc.)
- Industrial property. Industrial property includes warehouses, depots, distribution centers, and other property set up for industrial purposes. Industrial property requires smaller capital to set up.
Write a Real Estate Business Plan
After doing thorough research and deciding on the real estate niche you want to concentrate on, draft a business plan. The business plan should include details of how you will start the business, capital requirements, your marketing strategy, business management structure, your business location and potential market and competitor analysis.
Read more: How to write a business plan.
Find a Strategic Real Estate Business Location
One of the factors that greatly determine the success of your real estate business is finding the ideal business location. From the research you conduct at the beginning, find out the areas where people want to set up businesses. As such, you will know the ideal location to put up your commercial property. Other factors to consider include urbanization and security.
If an area is well developed; has social amenities like hospitals, schools, and a good transport system, people will want to rent houses here, giving you an opportunity to build rental houses around such areas. In the same way, people will want to live in safe environments. You do not want to be stuck with a rental property that no one is willing to occupy. It is also important to look at market saturation. If an area has many vacant houses, do not set up a rental property here. Look for areas with a growing population.
Raise the Required Capital for your Real Estate Business
Every business requires capital to start. The amount of money you need to start a real estate business will vary depending on the nature of your business; the niche or real estate investment option you decide to venture into.
Factors that will determine the amount of capital you need include the number and size of properties you want to invest in, the cost of land, office space size, etc. For example, if you want to buy property in Kenya through a bank, most banks in Kenya will require at least 20% - 30% of the value of the property as down payment.
Build a Brand for your Real Estate Business
It is crucial that you build a brand that potential customers will identify with. Look for a good business name that is easy to remember. Many successful real estate businesses in Kenya started to build brands from the early stages of their businesses. Some of the best real estate companies in Kenya include Knight Frank Kenya, Villa Care Limited and many more.
Register your Real Estate Business and Get the Necessary Permits and Licenses
It is important that you first register your business before you start any operations. A business that is not legally registered will put off clients. No one wants to buy a house from an owner who is running a business that is not registered. In this case, you will need a real estate certificate. To obtain this certificate you must fulfill the Kenya’s instructional specifications and Restrictions on Access to Property.
Market your Real Estate Business
Once your business is set up and legally registered, you need to have a perfect marketing strategy in place. Your potential customers need to know that your business exists. You can create a real estate business website for marketing or market your business on social media platforms like Facebook, Instagram, or Twitter.
Alternatively, you can distribute pamphlets and flyers or put-up posters in public places. It is important that you develop different channels through which potential customers can reach you. It can be through email or phone.
Manage your Real Estate Business in Kenya
Once you set up your real estate investment, the race does not stop there. You will need to manage your properties. Property management involves handling tenancy leases, inspecting your property and making renovations in good time, collecting monthly rent, screening of new tenants, sending late payment and eviction notices, arranging for payback of deposits after a tenant moves out, and more. If you do not have the time to do this yourself, you can hire a property management agent.
Real Estate Business Returns in Kenya
If you are wondering if real estate is profitable in Kenya, the answer is yes. However, to make huge profits, you will need to get it right from the very beginning. Conduct proper research and work with facts to make informed decisions. Choose the right business location, come up with a good marketing strategy, and manage your property responsibly.
Tips on How to Start a Successful Real Estate Business in Kenya
To build a successful real estate business in Kenya, you need to do the following:
- Sell genuine land without disputes
- Offer ready title deeds to buyers
- Take your potential customers to the land for viewing
- Ensure your business meets all the necessary legal requirements
- Encourage your customers to do a land search before buying land
Summary of How to start a Real Estate Business in Kenya
The real estate business is one of the most profitable ventures to start in Kenya but its good to know that it is not a get-rich-quick investment. It will require hard work and effort to realize the profits that come with a well-managed real estate business. Then identify the right real estate property you want to invest in and get started.