While many new real estate companies often receive funding from venture capital partnerships dating back to the 1970s and ‘80s, or simply mortgages which mean loan capital, Heri Homes, a five-year-old local real estate company has a different story to tell.
For Kimotho Kimani, Heri Homes CEO the mention of the word mortgage makes his skin crawl. When asked what he prefers between a mortgage and social capital when buying a property, his answer was blunt; “Unless you work in a bank where you are entitled to a loan of six per cent, please avoid loan mortgages like you can drop a hot potato.
Mortgages for people who depend on their meagre monthly salary can become a major liability in the future.” Speaking to Boma at a recent ground breaking ceremony for a housing project in Mwimuto, Lower Kabete, Kimani said that mortgages, besides being liabilities, attract unnecessary huge interests.
Heri Homes’ upcoming project, illustrates his vision to pool interested investors, avoid debt equity and grow together. The wealthy are often the only ones to penetrate the property market, buying plots to develop into houses, which are then sold at exorbitant prices, making the middle class resort to loans.
Costing them almost double the price that social capital ventures would. Social capital investment refers to partners pooling resources to build houses in a cost effective model at affordable rates. With these cheaper ways of owning a home coming up, Kimani says many Nairobians are slowly achieving their dreams.
“Everyone benefits, the rich included, with the social capital kind of investment to owning houses,” notes Kimani, adding: “With social capital, you don’t need to go to the bank for a loan, you only need to bring together interested investors to get the cash needed to put an apartment.”
The Kitisuru View Apartments is such a venture, where the model enables people who dream of owning a house do so at almost half the the market rate. “It’s better to avoid a mortgage where one pays double the price of purchase.
The company is helping the middle class in the country develop through this form of investment. Partners pool resources together and build apartments at affordable rates with us,” he explained comparisons between loan purchase as opposed to social capital investment.
Marketing director of Heri Homes Paul Mugo reiterates; “We are enabling Kenyans to build trust. They come together to either contribute to build apartments like the Kitisuru apartments and in the end save a lot of money and energy.
The uniqueness of this model is every citizen and in particular Nairobian’s can own houses at almost half the price in the current market rates,” he explains. According to Mugo, with this model, everyone can be an investor; from those who earn Sh 40,000 to Sh500,000.
This is the group that is most likely to go for loans or mortgages from banks to either buy or build property. “The new model is all about financial freedom because under mortgage or loans terms, one incurs a liability that attracts huge interest and debts,” he added.
The bottom-line is, with the high interest rates and inflation, Kenyans are encouraged to build trust with one another rather than with banks or a job which could be lost at any time.