Challenges Real Estate Investors Face

 


Real estate is one of those sector in economy that is highly volatile and keeps adapting to the new changes. Due to the dynamic nature of real estate, investors have to continually find new ways on how to handle challenges that they come along in their investment journey.

With this in mind, investors need to be aware of the challenges and have a dynamic strategy that they can you to maneuver in business so as to realize capital gain and build their real estate properties portfolio.

“Dealing with market changes especially during this time of COVID 19 is one of the top priority for most of the investors so as to stay afloat. And this applies to even real estate brokers, and agent,” says Reuben Kimani, CEO, Username Investment limited. One of the leading real estate company in Kenya.

Here is a list of the most hurdles that real estate investors are faced with and how to possibly deal with them.

a)      Land permit Restriction

This is one of the first hurdle that you face as an investor when you want to develop your property. Often, most investors fail to conduct due diligence especially when investigating the land permit restriction attached to the property that they are buying from the real estate vendor.

As investor, you are supposed to find out with your local planning and regulator to establish the kind of structures to be developed in the area. If you want to build commercial structures, you should never consider land that is zoned for residential as it will be hard for the government to approve your structure, same case applies to when you want to build residential property on zone place for commercial or farming only.

b)      Securing loan to fund purchase of property land

Securing funds to purchase your first real estate property can be a real hustle. This is because banks does not accept to offer loan for purchase of property that doesn’t directly generate immediate revenue.

A proven way of buying a property is often through savings and partially via loan. However, if you are lucky to find a real estate company that offers you’re a flexible payment plan for certain period, then you are good to go. It is common strategy that is used by investor when they are buying plots to build their residential homes.

c)       Low rental and occupancy rate

Now after you have manage to buy or build a real estate property and now ready to let. Then another problem sets in. The low occupancy and low rental income bumps your investment journey. The best remedy is to ensure that your market your property well and have the right clients who can afford to pay and this is achieve by having a standard screening process for new tenants.

In addition, finding strategic location to your property often plays a key role in increasing the rental income. Ensure you buy property only in a place where it has great potential for growth and secure for tenants.

d)      Eviction of Defaulting tenants

The defaulting tenants especially during this pandemic has been high as people lose jobs. Depending on your state laws, evicting of tenants is the toughest and hardest thing to do. This issue often end up in court of law and the procedure is long and costly.

In conclusion, investors in real estate have to be educated so as to understand better on how to manage risk associated with the business.

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