by Dorothy Okhako Anangwe
June 28, 2024
Benefits, Buying Land, Did You Know, How to, Joint Venture, Kenyan Real Estate, Partnerships, Real Estate, Uncategorized, Update
03 Mins

Mistakes to Avoid When Investing In Real Estate

In Kenya today, the real estate sector is one of the biggest investment avenues with various investment opportunities such as land, residential, commercial, retail, industrial, and publicly traded Real Estate Investment Trusts (REITs). With the real estate sector being as profitable as it is, more investors are choosing to venture into it looking for profitable opportunities which at times may be accompanied by mistakes that could have otherwise been avoided.

Below are some of the common mistakes that one should avoid making when investing in real estate:

Not consulting a certified real estate professional

The most important but usually overlooked step before one starts their real estate investment journey is consulting a real estate professional. These experts possess in-depth knowledge of the market, including property values, trends, and legal requirements. They provide critical insights that help investors make informed decisions, help navigate complex processes, and identify potential issues that may not be immediately apparent. By leveraging their expertise, investors can avoid costly mistakes such as losing their hard-earned money to real estate frauds.

Not conducting proper research and due diligence

When it comes to investing in properties the need to conduct extensive research on a prospective investment is crucial. Over the years, we have seen investors being evicted from properties that were either termed as riparian or illegally sold. Proper due diligence helps investors identify any potential crises and avoid properties that may require costly repairs or face legal challenges. This comprehensive assessment determines the future performance and viability of the investment by examining for risks such as flooding, landslides and other possible problematic issues that could significantly impact the property’s value and usability. Without due diligence, investors may face unexpected complications and great financial losses. At SIC we offer properties such as our Bluebells Apartments Phase 1 in Machakos County which have undergone proper due diligence guaranteeing investors security in their investment.

Not having a clear investment plan

Not having an investment plan can lead to poor decision-making and overspending. It is important when investing in real estate to always have a plan to help guide the process and ensure decisions are aligned with long-term goals. The plan does not have to be complicated, but it should answer the questions, “What, Why, and How am I investing?”. This means identifying what type of properties to invest in, understanding why these investments align with your financial goals, and outlining the specific strategies and steps to achieving your goal. By answering these fundamental questions, an investment plan provides a clear framework for making informed decisions, avoiding common pitfalls, and maximizing returns.

Poor financial management

Two of the biggest pitfalls for real estate investors are poor financial management and overlooking hidden costs. While making a profit is the ultimate goal, failing to properly account for expenses beyond the initial purchase price can significantly impact your bottom line. Property management fees, property taxes, routine maintenance, and potential repairs all need to be factored in. By thoroughly analysing these costs and implementing sound financial practices, you can ensure your real estate venture becomes a source of steady income, not a financial burden.

Not diversifying your portfolio

Another significant mistake often made in real estate investment is the lack of diversification. While real estate does offer exciting opportunities, diversifying your portfolio is key to mitigating risk. Putting all your eggs in one basket exposes investors to heightened risk such as market fluctuations. Diversifying across different investment opportunities such as land or housing can help mitigate risk and create a more stable and resilient portfolio with a better chance of achieving your long-term financial goals.

At SIC, we can help you avoid these common mistakes and ensure a secure, profitable, and well-managed real estate investment journey. Visit https://sic.co.ke/ to get in touch with your investment partner of choice.