How to own a home before the age of 35

Home ownership in Kenya has been riddled by myriad challenges, making prospective home owners shy away from this high-capital investment. Young people, especially, have been locked out of real estate because they simply cannot afford to buy a house or a piece of land to develop.

But this is fast changing, and we are now seeing a crop of young Kenyans who have broken barriers and boast impressive investment portfolios when it comes to real estate.

In the wake of limited financial muscle, and even as many mortgage financing institutions continue to charge as high as 18 per cent on their products, young people are beating the financiers in their own game by opting for simpler and more plausible ways of acquiring property.

Charles Peter Mwangi, a real estate consultant and CEO of Rubyland Limited, says a good number of his clients, some as young as 25, are determined to make their investment debut in real estate.

Starting small

“There are young clients with small money who want to start with a simple plot within the outskirts of Nairobi or out of city,” says Mwangi.

Their maiden investments would go as low as Sh200,000, but are very ideal for starters.

Today, several real estate companies and financiers are creating packages tailored for this crop, which saves monthly but consistently.

“We tell them to set aside part of their income, at least 10 per cent. If, for instance, you save Sh 10,000 monthly, that is Sh120,000 in a year and you could own property worth Sh200,000 by the end of the year,” says Mwangi.

Starter homes

Caroline Kariuki, the Executive Director of The Mortgage Company, confirms that indeed a lot of first-time home owners are young people in their 20s, eager to own the roof above their heads.

The key to owning a home before 30, Caroline believes, is creating a really strong saving culture that will ensure you raise the deposit you will require to buy a house. This is normally 10-20 per cent of the price of the house.

“It is important that young people begin to think about owning a home. Make it a habit to save with an ultimate objective. Even when it comes to paying off a mortgage, you will have the discipline to make your payments on time,” she says.

Any additional income, for example through bonuses or side-hustles, should be channelled to your dream home. This way, you will be disciplined and you will save on your interest a great deal.

“Your income is not stagnant,” says Caroline, “therefore start with a starter home and use the increments to move on to your next home. The trick is to start with what you can afford and be clever when you want to sell.”

Take note of property cycles in the country when buying and selling property. It is now common knowledge that property prices go up every five years after elections. Plan your life in line with these opportunities and you will own a home before you know it.

Chamas

The other option that young Kenyans have turned to is investment groups, popularly known chamas. The concept has birthed joint ownership of properties by groups of five or more.

This concept has also come to be appreciated by real estate consultants and mortgage financiers alike because of its overwhelming advantages.

“Collective investment, in my view, is much better than individual investments because the risk is shared and also because of economies of scale. Through a chama, you can do much more within a very short time. You reap more benefits and, of course, more capital to move on to your next investment,” says Mwangi.

Low-end housing products

Yet another way through which young people are acquiring property is through the low-end housing products that have made a grand entry into the Kenyan housing market.

Harun Nyamboki, a developer with Moke Gardens, notes that the Kenyan housing market has now turned its attention to the low-end products to target the previously rubbished ‘un-bankable’ population, who largely included youth and average-income earners.

Says Nyamboki: “The low income class is now the hottest hunting ground for mortgage providers and property developers alike. This segment has previously faced an acute housing shortage due to the high cost of land, high interest rates, and the complicated process of acquiring housing plans. The lower-income bracket has been largely circumvented by the property boom of the past decade.”

Designed to be as rudimentary as possible, affordable housing concepts are proving popular within this group.

Rent-as-you-buy

One such example is the Lukenya Hillside Apartments, whose core target market is young people in the lower income bracket. Based on the unique concept of ‘rent-as-you-purchase’ that is now fast gaining momentum in real estate circles, young people are renting as they purchase studio, one- and two-bedroom apartments.

“This change in attitude has encouraged developers and financers to put up housing units that cost as low as Sh1 million for, say, a 30-square-metre studio apartment,” says Nyamboki.

In such arrangements, young families are buying off-plan, which has several advantages, including manageable risk, flexible terms of payment and also because prices increase by 20 per cent after the ground breaking.

To top it up, young families are enjoying capital gain over the construction period and can choose finishes and fittings while monitoring construction progress and quality of their homes.

Article Source: Daily Nation

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Njoki Chege