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top 8 best Real Estate Financing Options in Kenya

top 8 best Real Estate Financing Options in Kenya

This article is about top 8 real estate financing options in Kenya. Real estate is the fastest growing industry in Kenya, resulting in growth for residential and commercial properties. It is one of the few companies that has a real payback due to its complimentary nature. As a result, it attracted and still attracts many local and international investors.

The biggest challenge that hinders investors is money, regardless of the area. However, Kenya has a variety of housing finance options that keep the industry going.

best Real Estate Financing Options in Kenya

Say you want to get into real estate business or expand an existing investment; Find out about the financing options you can consider in Kenya.

1. Personal saving


Using your savings is the easiest and safest place to start investing in real estate. However, you should evaluate the type of property you want to invest in, considering how much money you will need.

The challenge with personal finance is that housing prices are rising, which makes it difficult to predict accurately. In addition, you will need to save money for the right amount of time to have enough money to buy a house. In addition, you need to have a good financial training to save until you can buy real estate.

2. Sacco


Sacco is the most effective way to get home investment money, especially for people with low income and self-employed. However, you must save with a Sacco to qualify for a loan.

Also, different Saccos have different approaches to lending; Most take into account how much money you save and how long you’ve been a member. Suppose you want to join a reliable Sacco that can help you buy the property of your choice; it is advisable to do a thorough research of the Sacco you wish to join. You need to consider the entry fee, after a long period of time you will be eligible for the loan, the interest rate and the process of exiting the Sacco.

3. Joint ventures


Partnerships are good for investors who are looking for projects that offer good returns. Real estate is a fast growing sector and it promises high returns.

To finance joint venture projects, equity investors (including the landowner) form a joint venture company for the project. They agree on many conditions, including how profits will be shared.

Once they agree on how the project will work, the owner hands over the land to the company and the investors provide the money for construction.

4.  Pooling resources

The idea behind pooling resources is to allow everyone to contribute to a goal that they would otherwise not be able to achieve. This group can be established as a formal or informal partnership agreement. They then agreed on how they would contribute to the project, including land purchase and development. Once the building is completed, they proceed with the sale or rental period as agreed in their partnership agreement.

5. bank loan


Kenya has many commercial banks that lend property investors the money they need to complete their projects. However, you can use the acquired property as collateral for the loan. The advantage of getting money from banks is that they have long and flexible loan repayments.

In addition, Kenya has many banks that offer “Chamas” loans. Some use long payment periods paying up to 10 times the amount of chamas. They also have security requirements and fast loan approval. This is the standard required to qualify for a Chama loan at most commercial banks in Kenya.

Must be registered with the king to borrow money
Must have at least 6 months experience with the Bank or Sacco
Ability to pay must be demonstrated

6. Seller financing option


Brokerage funds are the most popular type of property financing option in Kenya. In this case, the seller of the property allows the buyer to pay for the property for a certain period of time before he becomes the owner. As a buyer, you must provide a deposit, plus 30% of the property’s sale price, with the balance paid in installments of an agreed amount.

Seller loans provide buyers with an alternative source of credit, especially when loans are difficult to obtain. On the other hand, sellers can sell their properties quickly and at high prices.

7.  Rent-to-own


Suppose you want to own a house but you don’t have enough money; You may want to consider a real estate agency with a personal loan system. Rent-to-own is another example of buying a home in the real estate market. In this arrangement, a potential buyer can rent the home he wants to buy for a certain period of time, paying a down payment to cover the purchase price. Real estate financing options are ideal for first-time buyers who are not financially ready. However, this method is a little more complicated than the leasing process. Therefore, it is wise to seek professional help from a real estate attorney to help you understand how it works and the risks involved. For example, there are two types of rent-to-own contracts. The income obtains the monthly investment for a given time, when that they submit to the banks
The resident who agreed to rent rooms longer than the price of rental sales, the rent and balance is about to buy price.
As a buyer, you will understand the two and make determination before engaging in the contract.

8. Moratorium on development loans


This is a real estate investment option that the bank gives the developer a grace period of up to 24 months during construction without paying the principal. The bank continues to finance construction regardless of cost. After the job is done, the bank starts collecting principal and interest. Moratorium development is the highest amount of the highest houses, such as development will cover the loan payment. However, some business require a developer to increase at least 30% of the currency.

Summary


Although real estate investing is an expensive business, these financial options reduce the burden on investors. All you need to do is find the one that suits you best, and you’re good to go.

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