A DIASPORA INVESTOR’S NOTEBOOK - Part 1

ACHIEVING YOUR DREAM INVESTMENT

Thomas Jefferson — 'If you want something you've never had, you must be willing to do something you've never done.'

Thomas Hardy — It's better to want something you don't than have something you don't want!

Investing in real estate is a smart move that is very convenient as a source for additional income and creating post-retirement wealth. Today, Kenya is marked by rapid growth in economy, infrastructure and urbanization which makes real estate a highly attractive avenue for investment. This has resulted in an influx local and diaspora investors.

However, investing in real estate is compounded by intricate processes that require proper planning and effective risk mitigation tactics. Owing to this fact, it’s often very challenging for investors to successfully realize their investment objectives and more so for those living in diaspora.

Diaspora investors are often forced to rely on friends, relatives and associates back at home when investing. Unfortunately, many have lost their money to unscrupulous agents, developers, friends and relatives. Others have failed due to their projected financial capacity falling short especially where contingencies become overwhelming.

It’s fair to note that a considerable number have succeeded despite these challenges. Having said that, it’s also evident that a large percentage of them ended up with substandard or low-quality results. Additionally, some have found the result to be unsatisfactory with regard to their specifications which are mainly driven by diverse individual tastes and preferences.

By performing ample due diligence, some investors do manage to successfully realize their dream investments. If you asked them how they were able to do this, the answers might NOT be as surprising as one would expect. Apart from the lucky few who were able to get help from trustworthy and reliable friends/relatives/associates, every other will tell you that they had to go through several essential steps before starting their projects and throughout during project implementation.

After some research, the said steps are found to be fairly easy but time-consuming too. They are processes and considerations that help an investor to set up a robust investment strategy that will lead to maximum satisfaction. This strategy will ensure:

·         They have established their main objective, chosen the right investment project and are capable of financing it to completion.

·         They have all the market information relevant to their investment, including financing options, legal requirements and responsibilities, community neighbourhood assessment, price comparisons or similar projects, etc.

·         They have established the most appropriate and safest means of completing payments.

·         They can engage qualified and reliable experts in the field. To ensure proper checks and balances, it’s highly recommended that these experts are able to act independently of each other. The most critical ones being:

1.       The project’s developer/contractor who carries out the actual project implementation (construction),

2.      A legal representative who reviews contract details and helps clear contentious concerns,

3.      A surveyor who will carry out research on the relevant property and conduct land searches,

4.      A project consultant (which is the main service we offer) to liaise between the investor and the developer while documenting the whole project process from start to end. The consultant by all means should be highly trustworthy as this is the person entrusted with;

§  Maintaining an open channel for communication between buyer and seller,

§  ensuring the core objectives of the investor are met,

§  seeing that specifications and required changes are communicated and well addressed,

§  working with the investor to ensure there are no red flags posing any potential risks as well as discussing all viable risk-mitigation strategies.

§  relaying discrepancies to all the involved parties.

§  working to ensure the investor, especially those away in diaspora, is confident and at peace knowing that they have a friendly ear on ground.

5.      Transact only after being profoundly convinced that all is well and every crucial detail has been addressed to satisfaction. Primarily: Conducted a physical/virtual tour, doubts have been cleared, experts have reviewed the intricate details, and all doubts have been cleared.

6.      When making payments, it should be through a monitored bank account or, where possible, through an accredited legal professional.

7.      Lastly, owing to the fact that most projects are inherently dynamic, it would be wise to put in place a contingency plan to cater for any unforeseen changes. Putting aside some savings for such occurrences would avoid a lot of headache during the process. One can discuss with the engaged professionals on what would be a sufficient plan depending on their project.

 

In a follow-up section, we will discuss the steps that are far-reaching in setting up this effective strategy. Please stay tuned.