If
you have recently purchased some property in Kenyan real estate for investment purposes, you are
in good company. Recent reports suggest that as many as 30% of these purchases
are made by those who plan on using the property for investment purposes only.
If you hope to "flip" the property there are 4 things you must be
aware of that can put a crimp on your profits.
1. Property Taxes.
Keep
the property for a few years and you may experience a surge in property taxes
especially if your taxes are reevaluated during that time. Some hot real estate
markets have seen taxes nearly double or even triple in just 3 or 5 years.
2. Renovation Expenses.
You
may have purchased a "fixer upper" at a bargain rate. Once your
project is complete will you be able to recover the expenses and make a profit
especially if the value of your renovated property is above those in your
neighborhood? In addition, can you withstand a correction in Kenyan real estate
values?
3. Insurance and Mortgage Costs.
You
will pay more for homeowners insurance if you do not occupy the residence and
you have tenants. If you are financing the property you know that your mortgage
rate is higher as well.
4. Rental Pressures.
A market saturated with rentals will mean that
the rents you can charge will be less than what you had hoped to receive. In
some markets you are required to get special licensing in order to be a
landlord. In other markets the legal rights of tenants mean you could have a
lengthy and expensive battle in ridding yourself of a bad tenant. Will the
lower income levels coupled with the added expenses drag your investment down?
Of
course, you can limit your risks [and costs] by doing the majority of the
upgrades yourself, appealing excessive property tax increases, and finding for
yourself a trusted and dependable tenant. It isn't easy flipping a home, but
with a lot of pluck and determination it can result in strong profits for you.
Get more exciting Kenya real estate information on www.kenyan-real-estate.com
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