“They should, however, remember to buy the units with the intention of later selling them when they have appreciated in value,” adds Mr. Musa.
ALTERNATIVE INVESTMENTS
One can also buy land and invest in something temporary that will make more money for them, other than a permanent house that will be a liability. For instance, one can plant trees and harvest every 10 years and sell as timber.
Five acres will carry about 10,000 trees. Even if half of the trees die, the other half when sold at Sh5,000 per tree will make about Sh25 million after ten years. “Surely, one can get a very decent house with Sh25 million without the hustle of repaying from one’s pocket,” says Mr. Waweru.
“Incomes are also changing and with time, the lower and upper middle class that is the target of many of these apartments are changing preferences. In time, the majority of this market will opt to move with the current trend-which is living in gated communities.
For a developer who has put up rental apartments for instance in Kahawa Wendani and is charging rent rates of Sh30,000 or Sh40,000 to this middle class, he or she may be forced by market trends to bring down the rent rates to sustain his or her tenants. According to Mr. Musa, there may come a time when people will not be renting out as they will own the houses they live in. It may even get to a point the only tenants such a developer may have are the student population that may not be able to afford higher rents.
“People should engage in real estate investments that grow them, other than limit their investment potential,” says Mr. Musa.