How to Increase Your Chances of Property Investment Success

Numerous Kenyans have already succeeded in all aspects of property investment. However, stories of real estate triumph do not happen overnight, and a smooth sailing journey is not always guaranteed.

Aside from risks that are needed to be taken, equipping yourself with adequate knowledge is an important step to take before you buy your first property investment.

Following this train of thought, you need to consider these tips when buying properties – especially for those who are investing for the first time.

1. Financial capacity and risk profile

Understanding your own financial position and capacity to buy an investment property is essential. In addition, knowing how much risk can be handled as an investor is an integral step to start the investment journey.

These processes will be made possible with the help of a suitably qualified financial or investment advisor. It is recommended to spend on a sound, honest assessment of your situation, rather than losing money in the long run by going it alone and making costly mistakes.

2. Preferred property markets

Think about the type of location that will best suit your investing plans. Many of the properties on the market at any given time might be ideal for a family home, but they may also not be what is deemed an “investment grade property.”

Qualify potential locations based on the history of capital growth achieved and potential of future capital growth based on the local supply, demand factors, and demographics of the area, specifically the local residents’ ability to keep buying property.

Next, identify the best street in that suburb and the best side of the street in that suburb. Search for areas that have outperformed the long-term averages with consistency.

Do not invest in a place based on whether or not you prefer to live there. Instead, consider if it appeals to a broad owner-occupier and tenant demographic.

Here are some questions to ask:

  • Does current or future projected demand look set to outstrip supply and underpin values for some time to come?
  • Is the area undergoing gentrification? Gentrification is a change in the fortunes of a suburb as it is discovered by a higher income demographic which slowly pushes out the lower income residents. The new, more affluent residents invest time and money in improving their new neighbourhood, causing prices and rents to rise.
  • Is there a lot of spending (private and public) on infrastructure upgrades and development?

3. Investment loan options and partners

While there are a lot of options, you must select the right kind of loan that could lift your financial position. It is important to keep in mind that different investment loan options come with different benefits, and the best possible option depends on one’s need.

In other cases, people consider partnering up with their friends or relatives instead of talking an investment loan to start in the industry.

First-time investors need to carefully consider many factors while choosing partners, such as their comfortability with each other and the implications of a partnership agreement, according to a report by Forbes.

Investing can end either on a positive note or in a difficult condition. Hence, it is important to apply smart tips and research about the real estate business as often as possible.

Renting Out Your Property for The First Time: 8 Expert Tips

Luxurious Home
Image/ Kitisuru Terraces

Renting out a property for the first time can be both exciting and overwhelming. If all goes well, you can use of the rent to for your mortgage payments and gain equity as well as have positive cash flow.

However, becoming a landlord comes with an array of challenges and risks that can jeopardize your chances of success. You need to know of the pitfalls to avoid to protect your investment property while also maximizing your profits.

If you are thinking of renting out a house for the first time, here are 8 tips to help set yourself up as an expert landlord:

1. Understand the Housing Laws

Owning a rental property does not give you the right to just do anything you please with it. You need to understand the legal ramifications of being a landlord. For instance, landlords should not discriminate against tenants based on family status, race, disability, religious status or sex.

The rental property should also be kept habitable and safe. The landlord may face liability from accidents as a result of safety hazards. There are also laws surrounding other rental issues like setting rental rates, tenant eviction, and assistance animals that you should abide by.

Not researching the local, federal, and state Fair Housing Laws can be a costly mistake when renting out a house for the first time. Take your time to learn the landlord-tenant laws. You may want to consult with an attorney who specializes in housing laws.

2. Present the Rental Property in the Best Light

When renting out a house for the first time, remember to present it properly to attract the tenant you want. Make your rental property stand out in the competitive rental market by cleaning it thoroughly and repainting it before showings.

Consider staging it with decor and furniture to help potential tenants envision themselves in their new home. You can also boost the curb appeal of your rental through landscaping, adding flowers and plants, weeding the garden, and keeping the compound mowed.

If you have been staying in the house you want to lease for rent, ensure you remove all personal belongings and clutter from the living room and other storage areas.

3. Screen Potential Tenants Properly

A good practice when renting out a house for the first time is to screen potential tenants. Choosing the right tenants will make your business enjoyable and less stressful.

Bad tenants can cause property damage or they may fail to pay monthly rent. This can quickly derail your profits. By finding tenants who are responsible, you will also prevent evictions, which are costly and time-consuming.

Ask potential tenants simple questions about who they are, their employment, and the reason they are moving. It is also advisable to always set your criteria before you begin tenant screening to avoid being accused of discrimination.

4. Price Your House Right

To get where you want to be renting out a house for the first time, you should price your house right. You should not price your rental property according to perceived value or your expenses.

If you overvalue your house, you may end up with long vacancy periods. To correctly price your house, you should find its market value by looking at rental comps.

5. Have a Lease Agreement

The most important item to keep in mind when renting out a house for the first time is a lease agreement. Once you find the right tenant, you need to put everything in writing.

A lease agreement is a written contract between the landlord and the tenant that sets out the terms of the tenancy and is signed by both parties. The document states the rights and responsibilities of both parties for the rental period. It includes details about who is responsible for property maintenance, rules about smoking and pets, how long they will rent, etc.

In case of disputes with the tenant, the lease agreement will offer legal protection. It is difficult to settle disputes with your tenant without a written lease agreement. If you are renting out a house for the first time, you may want to consider hiring a local attorney to help ensure that the document is valid.

6. Collect a Security Deposit

A security deposit helps to ensure that the monthly rent of the lease is paid and other tenant responsibilities are performed according to the lease agreement, such as avoiding or paying for damage to the rental property.

If the tenant damages the property, the cost of the repairs wilbe deducted from the security deposit.

The laws pertaining to these security deposits usually vary from state to state. Therefore, make sure you understand the security deposit rules of your area.

7. Have a Good Real Estate Marketing Strategy

No matter how good your rental property is, you will not get tenants if nobody knows about it. Therefore, it is essential to have a good marketing plan to avoid long vacancy periods, which are costly.

With a good marketing plan, you will be able to attract lots of good tenants and lease your property quickly. Take quality professional photos and invest in good advertising packages on popular real estate websites.

8. Get Insurance

Although specific landlord insurance is not a legal requirement, it is prudent to consider it to protect yourself from the risks you may face as a first time landlord. This includes missed rental payments, accidental damage, legal expense, unoccupied periods, etc.

Most standard home insurance policies usually cover only the building and the possessions of the occupant. This does not provide the level of protection that a landlord needs. As a landlord, you need a policy that will protect the rental property, the renters, and the real estate investment as a whole.

You can also recommend that your tenants get renters insurance to protect themselves from any unforeseen losses.

The Bottom Line

A rental property business can be a good source of income that can put you on the road to financial independence. However, if you are renting out a house for the first time, you must constantly learn and adapt to be successful. You need to know how to rent out your house and avoid the traps that most first-time landlords fall into. With the 8 expert tips listed above, you are sure to get started on the right path.

10 Smart Tips for Buying your First Real Estate Property

10 Smart Tips for Buying your First Real Estate Property

Congratulations! You are on the road to securing the purchase of your first real estate property, which is a very important milestone in your life. Some opt to buy property to live in, while others see it as an investment opportunity. Whatever your motives are, you want this significant investment to deliver what you expect from it, but you might feel overwhelmed or afraid because you have no experience in the field.

We have compiled a list of the most commonly given tips by seasoned buyers and realtors to help you go through the process as smoothly as possible:

Related: Top 10 tips to Successful Home Buying

Be Aware of What You Can afford in the market

It is amazingly easy to dream about a home you have seen online, but the reality is usually much different. You have to ask yourself if you can afford such real estate at this stage.

You need to know exactly how much you can afford to spend. That means you should be very familiar with your personal finances, keep track of your credit score and try to improve it as much as you can.

A loan will be approved much more easily if your credit score is better, so make sure you do something about it.

You also need to think about the down payment. As a first-time buyer, you are likely to be asked to put up a higher amount as a down payment, so make sure you have the necessary funds.

Analyze the property Market Carefully

Before you put an offer on a home, you need to have a very good picture of the situation on the market in the area where you will be buying. That means you should monitor the prices for some time and pay special attention to the length of time that most homes in your price range stay on the market and whether there are any major shifts in the asking price.

If you are not sure you can do this properly, the best thing to do is find a reliable realtor to help you.

Calculate Expenses (and Profits)

It is vital to take into consideration all the expenses related to your purchase, which means you cannot only look at the price of the property

You might need to invest in renovating the house, especially if you are planning on renting it or selling it quickly to make a profit. If you do the math correctly, you will see if you can make any profit, based on the expenses you are expected to have and the realistic resale price of the property.

Make sure to leave a certain margin in case there are some unexpected expenses that need to be paid. You should not spend all the money you have on the property since you might need to splash out some cash for works you have not anticipated, which brings us to the next tip.

Make Your First Investment Property a Low-Cost Home

Staying in the safe-zone when buying your first investment property is a sound move. That way, even if you lose some money, your loss won’t be that high and you will stand better chances of recovering from the loss.

Most people do not need to buy an expensive house, especially if they have no experience in the field of real estate. If you stay realistic about your needs and financial ability, you will have much better chances of making the right call.

Pay Your Debts

You need to seriously consider the investment loan options as a new investor and you should by no means carry debts with your investment portfolio. That is why you need to clear all of your debts, such as student loans and medical bills, before starting out in real estate.

List Your INVESTMENT Priorities

When you know exactly how much you can afford to spend, it is time to start looking for a home among the listings in the area of your choice. Chances are you won’t find a place that fulfils every single item on your wish-list, but you definitely need to have a list of priorities to ensure you know what to look for when making a purchase.

Everything else that a house offers is simply a bonus, but make sure you find a place that boasts all the items from your priority list.

Find an Agent

Now that you know how much you can invest and what kind of place you are looking for, it is time to turn to professional help. Find a real estate agent who can help you find exactly what you want.

Real estate agents can also facilitate negotiations with the seller or show you similar properties that fit your budget and meet your needs.

Making an Offer and Negotiate

Your real estate agent will also assist you in making an offer that includes a fair price. It is a wrong approach to make a low-ball offer since it can easily put the sellers off and they won’t engage in further negotiations.

This is why it is important you find an agent you can trust and who is knowledgeable when it comes to the housing market and the rules that apply to home offers.

Organize Inspections and Secure a Loan

Do not skip home inspection as a part of the home-buying process and do not treat it as an expenditure, but rather as an investment. You want professionals to inspect the house you are interested in, since only they can establish if there is some damage or signs of structural wear.

This might have a great impact on your offer and the budget you have in mind. After the inspection and the appraisal of the property, you can secure your loan with a bank or lender.

Submit Paperwork and Rent Out the Property

Make sure all the paperwork related to the purchase is in order. If you are not certain, your agent should help you with it, so that you can focus on getting the property ready for tenants finally.

Once the paperwork has been completed and the seller of the house has been paid, you are free to enter the first home you have purchased on your own.

Your investment can go either way. It can turn into a disastrous experience or you can get exactly what you want and need or even make some profit if you’re selling the place quickly. To make sure the latter scenario applies to you, follow the tips above.