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Investing in Land in Kenya: 5 ways to get maximum returns

Investing in Land in Kenya: 5 ways to get maximum returns

Buying land in
Kenya is a good investment strategy for good returns. The cost of purchasing
land will vary from location to location, but the bottom line is with time, the
value of every piece of land appreciates
in value.  As a landowner you not only get
financial security but also peace of mind.

Read: Top
factors to consider before investing in property in Kenya

Once you buy
land
, there are
two ways to generate cash
.
This can be through active
utilization of the land or holding the land and wait for it to appreciate.

Below, we
evaluate in detail both passive and active ways that you can use your land to
generate value
:

1.      Buy and wait for
appreciation
.

2.      Develop the
land
.

3.      Divide into several plots and sell.

4.      Lease the land

5.      Farm on the land.

1.   
Buy and Hold

This is the most common way real estate offers a
profit
as Land
appreciates
over time.  Thus, its near guaranteed that if you buy land
and sell it later, you are bound to make returns on it by
buying and holding onto it. appreciation in value
happens when new developments happen like roads, schools, administrative
offices or other infrastructural developments occur close or next to your land.

The only
challenge is that the amount of appreciation is beyond your control.

Related: The
Key Steps in the Process of Buying Land in Kenya

2.    Develop It

Depending on the location of the land, you may
develop it to generate active income including building rental properties. The rental
properties generate income while the value of the land keeps appreciating.

3.    Subdivide and Sell

If you purchase
a big piece of land, you can get returns by subdividing the land and sell off
the pieces to other individual buyers. S
ubdivided land is more
marketable as its
easier to find a buyer for a smaller, more affordable parcel of land, as
opposed to
selling a bigger piece. Currently, Malindi is
experiencing growth and land is still relatively cheap. You may but 10 acres
for Ksh 1,000,000 and subdivide to one-acre portions. You can then sell an acre
at Ksh 200,000 and make at least half a million shillings after you take out
subdivision and other expenses.

Read:
Ultimate step by step guide to land subdivision in Kenya: Guide to doing
subdivisions

4.    Lease It

If the land is
located strategically, there are
businesses looking to lease land whether
on a monthly
and yearly basis.
The lease
could be for commercial purposes like setting up businesses like petrol
stations, car wash, garage etc. I have seen road contractors looking for land
to lease when setting up sites to operate from.
 Other lease opportunities
include
billboard rentals and cell towers for companies like
Safaricom.

If the land is
in a quarry, you may let companies extract building materials and pay a royalty
to you. For agricultural land and you lack the necessary background or
experience in farming, you may lease the land to an experienced farmer.

5.    Farm on it

If you have farming skills, putting your
land into agricultural use can be a very lucrative business as the produce will
always yield good income in the market. This is because food will always be in
demand.

The final takeaway

Investing in
land in Kenya remains one of the best investment decisions you can make. There are
various avenues as above on how to generate returns and I hope you find one
that works for you.

Whatever way you decide
to profit from owning land
, certain strategies will help you succeed.

Be financially prepared: Real estate is a capital intensive investment.
You thus need to ensure you plan your finances well. As it takes time to sell
land, buy land that you do not have to sell quickly.

Get to know the local area:  It
has always been said that t
he three most important factors in real estate are
location, location, location.
This still
holds to date. Whether it’s from a physical visit or starting off with online research,
do your best to
know the local market . Find
a few real estate agents in the area as well who can advise you on property prices.
 

Keep things simple: A simple strategy always
takes you
a long way in real estate investing
in Kenya
. If
you are starting off in real estate, i
t’s best to start small and then
grow steadily and you gain more experience.

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