Ask hard questions early to detect fraud in real estate
Casualness is the enemy of pretense. This is one rule phony real estate ‘investment’ companies have mastered in their journey of conning unsuspecting Kenyans. They deliberately invest in many public relations stunts that legitimise their operations in the public eye.
Most have hoodwinked Kenyans through choreographed property talk shows, prime news time television advertisement and appealing billboards across the city. Employees are then drilled to always be formally dressed or in branded company wares that without doubt portray a professional company image. It is nearly impossible to resist them having your money. And yet many of these companies have camouflaged histories if any.
Many Kenyans have been conned in the recent past by dubious real estate investment companies into pouring their hard earned money and life savings into ghost investments. It is not about to end any time soon since I have painfully accepted that we just don’t learn from the past. Our gullibility and appetite for quick wealth overrides commonsense that we shelve when making decisions. I concede that these unscrupulous companies have accelerated their wit of deceit but still simple commonsense would get anyone out of their snare. It is easy to tell – not rocket science.
The over lucrative promised return on investment should always be the first red flag. One day, I returned home to exciting news from my wife of a real estate investment opportunity that was shared in a WhatsApp group by her colleagues. In it, a real estate investment company was seeking those who can invest Sh1 million and expect nearly 30 per cent annual return. Isn’t that a Guinness book joke? What real estate investment could the company be purportedly undertaking that allows them to make their own profit and still pay investors 30 per cent annualised return? Since 2015, the growth of the construction industry has been plummeting. The economic survey report in 2016 showed a growth drop from 13.9 per cent in 2015 to 9.2 per cent in 2016.
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It further dropped to 8.6 per cent in 2017 and from last year’s observation I postulate a zero or marginal growth. The industry has been limping for close to three years now. The uptake of office space and residential unit has been slow with nearly every developer on the edge. Who then are these genius promising paradise returns in the storm times? Flee!
I have always wondered why Kenyans don’t ask hard questions to avoid being duped into bogus real estate investment. When someone says that they will invest your money in real estate, it is imperative not to stop at anything but details - probe. Which project is this that they will invest your money in? Where is it located? Who are the consultants and are they registered with the relevant professional bodies? Request for construction approval documents from relevant statutory bodies and if they are cagey in giving this information seek help from an expert in the industry to assist you verify this. How about digging into company history.
Who are the owners and where have they been before? A simple goggle of the directors can unearth critical information to help your judgment. Are there investors they have paid before and can you find them? Be wise! Visit the purported location of the project. You will be surprised at times that the land owner may have no idea about any upcoming project or even realise that the said project being advertised for investment stalled with serious delay and claim issues.
If this is too much ask for you, find other ‘easy’ investment areas and forget about real estate. It has been both painful to watch but equally laughable that some Kenyans have been conned into investing in projects that don’t even exist.
We must stop this careless and lackluster approach that is enriching some people. At least make someone sweat to con you. The peace of mind that you did everything you could to ascertain the truth before jumping in will be a good comfort – it must not be as easy as it is now.
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- The writer is chairman of Association of Construction Managers of Kenya. ([email protected])