The biggest mistakes Kenyans make when buying property

Summary

In this insightful conversation with Nishan Akua, a property manager and author of 'Don't Buy That House', key aspects of home ownership are explored. Akua highlights common mistakes made by homebuyers, such as neglecting to investigate developers' track records and overlooking important sale agreement details. He discusses the pros and cons of buying vs. building, explaining why building may be more affordable if done correctly. Akua also provides insights on mortgages, rent-to-own options, and off-plan buying, urging buyers to prioritize due diligence. Ultimately, he emphasizes the importance of making informed decisions to avoid costly mistakes in property transactions.

Takeaways

• 😀 Always check the developer's history and previous projects before committing to buying a property. Don't rely solely on advertisements or brochures.
• 😀 Thoroughly read and understand the sale agreement. If something isn't included in the agreement, it doesn’t exist, no matter what the developer promises.
• 😀 When buying a property, ensure that the house specifications, timeline, and construction details are clear in the sale agreement.
• 😀 Building a house can be cheaper than buying because you eliminate the developer's profit margin, but it requires strict adherence to regulations and professional management.
• 😀 Most people opt for shortcuts when building, which can lead to major problems. If you decide to build, hire professionals and follow the proper process.
• 😀 Mortgages are expensive and could result in you paying double the price of the house. It's often better to explore other payment options like milestone payments.
• 😀 Milestone payments provide flexibility, allowing you to pay as the project progresses, ensuring that you're not locked into fixed monthly payments.
• 😀 Rent-to-own is a viable alternative to mortgages, allowing you to make payments towards ownership without a hefty upfront cost or long-term debt.
• 😀 For property investors, price is key. Consider the return on investment (ROI) and the potential for capital appreciation or rental income before buying.
• 😀 Off-plan properties can provide good returns if you're diligent. You can buy at a lower price now and potentially sell for a higher price once construction is completed.
• 😀 Off-plan buying allows for staggered payments, which make homeownership more affordable for first-time buyers. It also provides flexibility for modifying certain aspects of the property during construction.

Q & A

What are some common mistakes home buyers make when purchasing property?

Two common mistakes include not checking the history of the developer and failing to thoroughly review the sale agreement. Many buyers focus solely on price or the property's appearance but overlook the developer's experience and the details outlined in the sale agreement, which could lead to issues down the line.

Why is checking the history of a developer crucial when buying property?

It's important to understand the developer's past projects and reputation. Buyers should inquire about previous developments, talk to past clients, and read reviews to ensure that the developer can deliver on their promises and has a proven track record.

What role does the sale agreement play in purchasing property?

The sale agreement is essential as it outlines all the terms of the transaction, including house details, payment schedules, and construction timelines. If something is not in the agreement, it doesn’t exist, so buyers should ensure that every promise made by the seller is included in writing.

Is buying a home better than building one?

There is no clear-cut answer, as both buying and building have their pros and cons. Building a home can be cheaper because you eliminate the developer's profit margin, but it requires strict adherence to regulations, proper planning, and professional expertise. For those willing to put in the work, building can be a more affordable option.

What are the advantages of building a home rather than buying?

Building a home can be cheaper since you remove the developer's markup. Additionally, it allows for customization, and if you follow the proper steps and hire qualified professionals, you can avoid the pitfalls that many face when purchasing off-plan property.

Are mortgages a good idea when buying a house?

While mortgages are an option, they are expensive due to long-term payments, which can tie up finances for decades. Alternatives such as milestone payments or rent-to-own schemes may be more suitable, depending on the buyer's cash flow and financial situation.

What is the key difference between buying a home to live in and buying one as an investment?

When buying a home for living, the emotional and sentimental value often takes precedence, and buyers may overlook the price. In contrast, investment buyers are more focused on price, return on investment, and long-term profitability. They need to calculate potential rental yields or resale value to ensure the property is a sound financial decision.

What should you consider when purchasing a property for investment purposes?

For investment purposes, price is crucial. The property's future value, potential rental income, and projected returns should all be considered. Additionally, the buyer needs to assess the economic outlook and how it could affect the property's appreciation or rental income over time.

Why is off-plan buying considered a good option for first-time home buyers?

Off-plan buying is affordable and allows buyers to pay in staggered installments, which makes it more accessible. While there are risks involved, like the possibility of being conned, the potential for price appreciation and customization options make it an attractive choice for first-time home buyers.

What are the benefits of purchasing property off-plan?

Buying off-plan offers several advantages, such as lower prices, flexible payment plans, and the ability to modify the property during construction. Additionally, real estate values generally increase during the construction period, allowing buyers to potentially flip the property for a profit after completion.