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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