My two friends and I recently saw a house on sale in Kitengela whose asking price was Sh6.5 million. The house, standing on sufficient space to park two or three cars and with adequate land for a kitchen garden, looked like a good deal and the three of us expressed interest. In addition, the house is in a gated community, a concept that is on fashion now for many property seekers.
Over lunch, we discussed the pros and cons of each of us getting a unit. Besides the proximity cementing our friendship in case we each got a unit, the idea of owning a house was persuading.
We went down to the specifics of raising money. Now that is where our dreams nearly hit a brick wall. If we each went for bank loans to buy the houses, it meant living 'below the poverty line' to be able to raise the required monthly repayments given that we are 'normal' employees. And at the end of it all, we could pay between Sh8 -10 million for the house. Was it worth investing?
We were about to forget the investment idea when one of us was struck by a brilliant idea. "What if we pool resources and buy one house? We would get three other friends and each of us can raise Sh1 million we buy a unit in cash."
We dwelt on this option and decided we could register a company and have tight laws in the articles of association to protect each other's interest as co-ownership is sometimes laden with conflict and some members expressing the desire to quit mid stream.
We are still fine-tuning the modalities but have gone ahead to pay the deposit to book the house we liked.
This is the path many Kenyans are walking as the cost of property reaches the sky.
Unlike a car that depreciates, the moment you drive it out of the showroom, property appreciates right from the day you acquire your piece. This particular property, the agent on the ground told us, kicked off less than one year ago at Sh4.5 million. In that short period, its value had appreciated by Sh2 million. Another plus for property is that there will always be a buyer who will also wait for a short while and sell it for profit or just have it for keeps, for posterity.
Success investment stories usually feature groups coming together to follow up an idea to fruition. To succeed, they must have a uniform vision, patient and trust, otherwise the group's ideas will just remain ideas. This is where chamas also come in. Many people have now found out that the quickest way to get a slice of the property is through joining investment chamas because it makes it much is easier to raise the required. It also spreads the risk.
Before you buy any property through a group, ensure the rules are set out clearly about your personal investment within the larger unit. In case something happens midway and you want to sell your share to the group, how much are you entitled to? Do you calculate using the investment you put in or do you use future expected rise of property? Are you entitled to any profit expected in future?
I know some groups are very strict and 'punish' members who want to withdraw membership. It is a good thing to make it prohibitive to leave a group in order to discourage non-serious investors, but then it is also good to bear in mind that sometimes the sky will not always be blue and some members will be compelled by circumstances to get out. Join a group whose rules, especially compensation ones, are friendly.
Do not shy away from investing with your friends or chama; that is one of the ways you are going to jump ahead of your contemporaries who are averse to risks. If you do not risk, you will be oscillating on same spot financially. Get the wings to discover your potential through the support of friends. The bottom line here is that trust must be the binding vein.