A person who craves success will want to always be able to predict challenges and plan for them. Real estate transactions are not always straight forward. In some cases, they will be complicated and will drag on for a long time. In other cases, they sail through smoothly. As a landlord, you want to know what is keeping your property in the market for so long. You want to have this information beforehand so that you can plan accordingly and not be blindsided. Below are a few factors that affect real estate transactions. These factors will determine whether you will suffer a headache or if you are about to smile contentedly.
The Kenyan economy is not doing well. The state of an economy affects the real estate market quite a bit. See, if the economy is reducing the buying power of citizens who will have the money to buy houses? In a bad economy, the cost of development becomes quite hefty. If the economy is bad, foreigners will think twice before buying homes in the country. No one wants to buy property in a country that may be going down. There is always hope that the economy will improve and the value will go up but then if it does not it means that the house will lose value rapidly.
Kenya is generally peaceful. However, there is something about the politics of this country that tends to put things in disarray ever since PEV in 2007. People start to fear for their safety. There arises speculation of political unrest. Kenya was not that country before but every time the elections approach, there is a certain tension in the air. A tension that scares away even foreign investors. As a developer, you may want to slow down development as the elections approach. You should wait to see what the atmosphere is like first lest you put your property on the market at a volatile time.
If you are selling or renting out an apartment at a certain amount, you should think about what other options the target client would have. Could they get a house for the same amount or less? Could they get an apartment closer to their place of work or in a better neighborhood for the same amount or less? What other options could they possibly choose over your property? What can you do to mitigate that? Should you lower the rent? Should you install more amenities like a laundry area in the building? Should you enhance security? Should you offer free wi-fi? While determining the alternatives, you will be able to figure out how to compete with those alternatives and perhaps win.
The physical appeal and condition of the house is a big determinant of whether the house will be sold, rented out quickly or if it will remain on the market for a while. This is why landlords and property owners are advised to repair and renovate properties before they are put on the market. If the house has chipped paint and cracked walls or missing windowpanes then you are in for a wait. In fact, with the number of choices in the real estate market right now you might not get a buyer or renter until you have discounted your price way down.
How much you are charging on the house will matter a lot. First, does the price match the qualities of the house? For example, you cannot sell a two-bedroom apartment for 10 million but not have all the amenities that come with such a price tag. You cannot rent out a three-bedroom house at 95,000 shillings a month in South B. Your price should reflect on the size of the house, location as well as the rental package. The amount you are charging should be in the same ballpark as the baseline rent or housing prices in the area and country. This applies to both too high and too low amounts. If it is too low, prospective clients will doubt the legitimacy and transparency of the process.
The location of the house matters. Fifteen years ago, it would have been hard to rent out an apartment in Syokimau. It was only mildly populated but it had not been elevated to the status of satellite town yet. Fast forward, a decade and a half later, Syokimau and its environs are one of the most popular Nairobi outskirts neighborhoods around. This may have been helped by the train station but still, the change is remarkable. Today, if you sell a five-bedroom house for 100 million in Kitengela, you will be laughed at. The same goes for about 15 million around Athi River. If you are selling or renting a house in an unpopular location then expect that it will take long for you to finally bank that cheque. If you are also selling at an unpopular price then you may never bank that cheque.
This matters a whole lot. For example, selling a house in an industrial area is going to be very tricky. Unless you can find someone who works in the said industrial area to buy it then you may be in trouble. The environs matter more when you are trying to rent out. For example, you cannot target a family for a property that is among bars and other such entertainment joints. Imagine a family living in those flats at Madaraka Shopping Centre. It is not only noisy but there is a high possibility that the children will be exposed to a lot of nefarious activities. The solution, in this case, is simply to change your target tenant and the issue may be sorted out.
How would a tenant or buyer get to their home? How bad or good are the roads? Do the roads disappear when it rains? Does it become impossible to go home? Is it too much of a hustle to get home due to how many locomotives you have to take? Back to Syokimau fifteen years ago, you would have to take a Mlolongo bound matatu. Alight at the Syokimau stage then get a motorbike from there. Sometimes, when it rained the motorbikes would charge too much that it made more sense to take a taxi. Either way, it would cost you a pretty penny to get to your house. Now though, you can get away with only one matatu from town to Syokimau. The matatus still go only up to a certain point but it is not as expensive as it used to be. This issue of accessibility is a big determinant of transactions in commercial real estate. No one wants to open business premises in a place so far it requires a submarine and tandem bike to get to.
Sometimes, the property will be fine, the economy of the country will be supportive and everything else will be just right. But still, there will be no movement, so then you lo at the agent. Some agents may lack the people and sales skills that come with the job. So, clients will be constantly turned off from the property before they have gotten used to the idea of it enough for the agent not to matter. See, an agent gives a perception of the property as well as the property owner. If a client does not feel like the agent is right, they will take a step back and perhaps leave the negotiation completely.
Another issue may be how visible the property is to potential clients. See, if one is scouring the internet for prospective houses or rentals and they do not see your particular one often enough then you miss out on an important chance. You have done a good job. You have developed a good property worthy of the asking amount in a good location with all the right amenities. You should also invest time and resources in advertising.
Every landlord or property owner should have a specific target tenant or buyer in mind. The house will usually be modeled around this person’s preferences and needs. It will not be set in stone such that someone outside of that specification cannot engage though. That said, you should target properly. For example, you cannot build a house with all sorts of hazards and target a family. You cannot target people living with disabilities and not install ramps and other support equipment.
Owning property in Kenya and Nairobi is very beneficial. Not only will you gain some financial stability, but you will also have a safety net if you ever need it. You will feel secure and you will be free to make other investments, therefore, diversifying your portfolio. However, if you do not pay attention to the above mentioned your property may remain unused for a while longer than you anticipated. Good luck!