After doing his survey for months, Joseph Njau finally settled on housing as his preferred line of building wealth.
“I considered fixed deposits and A Treasury bills. I also considered opening a wines and spirits shop or even poultry farming. But I was hesitant because though they are low risk, the level of returns are low.” Mr Njau walked to Baraka property agent offices in Eldoret, in January, last year.
“I had Sh800,000 to invest. And I was afraid. This was my first step into the highly profitable property market,” says the 32-year-old banker.
You see, after evaluating all the investment options on his table, Mr Njau had resolved to venture into real estate business.
“I had been to home expos at Sarit Centre and KICC in Nairobi, in an attempt to network with property developers. I discovered that real estate is capital intensive but it has huge profit margins. From that point on, I had no doubt in my mind that this was the industry I wanted toinvest in. Moreover, I was fascinated by how building plans on paper could evolve into tangible homes, worth millions,” says Mr Njau.
“I didn’t have enough funds. Although I could not start with gated communities or office skyscrapers, there was space for me to develop a home.” Soon, he approached his employer and secured a multi-million mortgage.
“I got a good loan with a 300month repayment period. Immediately, I decided to buy a land and start my venture.” Thrill of a title deed With a ready title deed for a quarter-acre at Kapsaret, in Eldoret, Mr Njau says: “I was excited that I’d achieved something, but the thrill of owning a title deed lasted a few days.
At the back of my mind, I knew that the hard work had just begun.” The area has homes worth over Sh30 million at the moment.
To construct his first house, Mr Njau scouted for a contractor.
“I hired an advocate to oversee the land sale agreement and the signing of the construction contract. The contractor came in for 25 per cent commission on building costs. Then I began to source and supply building materials.” Interestingly, even before he could start building, his land had gained in value considerably. For instance, by June last year, it was worth over Sh1 million, he told Money. In September 2014, he started constructing his first three-bedroom bungalow.
“Soon after, I discovered that I needed an extra Sh1 million to finance cost over runs. Similarly, fencing and the set up of a water tank would require even more money, which I didn’t have,” he says.
And since he could hardly turn to his bank for a top up, Mr Njau counted on his mother and friends for financial boost.
“Luckily today, I have offset their loans.” In a period of three months, Mr Njau has managed to construct his first three-bedroom house. Asked how he plans to expand his housing business dream yet he is servicing a home loan: “I don’t see the mortgage as a yoke that is weighing me down rather as seed capital that I can offset from my salary while earning Mr Joseph Njau extra income from house sales.” Diversify And with his first house up for sale at the moment, Mr Njau is looking to spread his tentacles into the thriving homes business across Kenya.
“I am looking at buying sizeable pieces of land that I will sell together with the house I build. My investment will lean towards modern country homes,” he says.
His new house is selling at a negotiable price of Sh6 million. “This valuation is based on growing dayto-day property appreciation in a fast growing location,” he says.
However, his investment dream is not only restricted to the real estate sector only.
“Real estate will remain my core business. But as I grow, I’ll be looking to diversify into stocks trading as well,” he says.