Year in, year out, more and more people are building wealth through the property and real estate market. According to the Global Property Guide, an online publication Several Nairobi suburbs registered nominal house price rises.
Nyari Estate, one of the most secured upmarket neighborhoods in Kenya and in close proximity to many diplomatic establishments, saw the biggest rise in house prices of 12.4% during the year. It was followed closely by Ridgeways (10.6%), Loresho (9.5%), Muthaiga(8.6%), Karen (6.2%), and Gigiri (5.2%).
The largest percentage of property investors are not high income earners with the majority falling into the Ksh.70,000 income bracket. So, what financial tips do you need to make smarter investment decisions?
Create a Financial Calendar
If you don’t trust yourself to remember to pay your quarterly taxes or periodically pull a credit report, think about setting appointment reminders for these important money to-dos in the same way that you would an annual doctor’s visit or car tune-up. It is important to remember that loans are very unforgiving and could land you in hot soup if not catered to.
Consolidate personal debt
Always look for the opportunity to consolidate any personal loans which have a higher interest rates. It’s because these don’t only cost you more in interest but also impact on your borrowing capacity. This includes any interest on store cards from a department store.
Reduce your credit card limits and cancel any credits card you don’t use
Reducing your credit card limit can make a huge difference with how much you can borrow for your property. If you don’t use any credit cards you have you may like to consider cancelling them as lenders take credit cards into account when calculating how much you can borrow regardless of whether you use these or not.
Have a plan or strategy
No one plans to fail… they just fail to plan! We’ve all heard that saying before. Like any successful business, an investor should prepare a detailed business plan detailing the strategy to grow their property portfolio, the finance that is required to achieve this and a cash flow
analysis of how the debt and other costs are to be serviced.
Avoid Cross-Collateralizing securities
This refers to providing a lender with security over more than one property. This can cause enormous problems when the properties increase in value and you want to release some of the newly created equity. The lender has your assets tied up so if you want to go to another lender that is offering a better deal, the current lender may not partially discharge their mortgage to allow you to refinance the property.
Use an experienced mortgage broker who specializes in investment home loans
The biggest finance tip is to have the right experienced and connected mortgage broker which specializes in investment property on your team. Contact a financial advisor to learn more about easier investing.