The Best Investment on Earth: Investing in Land

Louis J. Glickman, a real estate investor and philanthropist, once said, “The best investment on earth is earth,” which is very true. Acquiring land is affordable these days; you can buy a plot and build your dream home with the little money you have. This goes for both those in employment and those running small businesses. Now you do not have to do it alone. You also do not need to wait until you have saved enough to invest in real estate.

The exponential appreciation of land and other real estate assets has for long blocked young people from investing in real estate. Thanks to title loans from commercial banks and other financial institutions, the wave is changing, and more people are now able to buy land and construct their homes.

What to Consider When Buying Land in Kenya

Buying land or investing in real estate is a long-term commitment. It is one of those things in life where you just have to get it right the first time (mostly true for those who look to build residential homes for their own use). As a real estate investor, there are many boxes you will need to check before finally settling on a location.

In Kenya, buying land is a sensitive topic. There continue to be cases of people buying “air.” (I mean that in the literal sense). Many people have lost their life savings on scrupulous land brokers. Others have ended up paying loads of money to corrupt government entities with the aim of speeding up the purchase process.

We want to let you know that you can buy genuine land in Kenya without bribing anyone, without being duped, and with the little amount you have.

Ideal Process for First-Time Land Buyers

As a first-time land buyer, there is an ideal process you should follow when seeking to buy land. This applies to those paying for the land themselves and those being financed by a bank. Also, do the same whether you are buying from a company or from an individual. You will need to:

Make a physical site visit to the area you seek to buy the land.
Let the seller know you are interested in purchasing the plot and ask for a copy of the title deed.
Do a search of the land at the county ministry of lands where the land is located.
For large portions of land, you can engage your own surveyor to make sure everything checks out.
Have the seller draft a sales agreement, sign it, and have it authenticated at the Huduma center.

How to Buy Land Through a Bank in Kenya

Banks in Kenya are willing to engage their customers in their pursuit to own land. Generally, different banks will offer different percentages of the cost depending on their own valuation. From experience, most commercial banks will want to shy away from ancestral lands and agricultural freehold land for different reasons.

So then, how do you buy land using a bank loan? First, you need to understand that banks will rarely offer loans to buy from individuals. Most commercial banks will want to deal with incorporated companies or real estate dealers. As with other loan products, a bank will want to confirm your ability to pay before advancing the loan. They will, therefore, want to check your finances and your credit history to compute the loan amount to advance.

For those who qualify for this type of asset financing, the process of buying land with a bank loan is as follows:

The bank will require the title deed to do a search to ascertain ownership.
They will then engage different professionals to do a valuation of the land. This ensures that the land is not overvalued.
If everything checks out, the bank will pay the agreed amount. Given that the plot is the collateral, the title will bear the bank's name or your name together with that of the bank depending on the percentage of the amount advanced. This also depends on the bank.
The title can only be transferred to your name once the loan is repaid in full.

Apart from the cost of the land, there are different charges that will apply throughout the purchasing process. Have your bank, and the company selling the land disclose all of them.

What You Need to Get Land Financing

For most banks offering land financing or loans on title deeds, the requirements for those employed and those in self-employment may differ.

Requirements for Employed Individuals

A KRA pin certificate
Your three months payment slip
A bank account statement for the last 6 months
A letter from your employer

Requirements for Self-Employed Individuals

An identification document (ID or Passport)
A KRA pin certificate
Audited financial records for the last 3 years
1-year bank statement
Other documents as required by the bank

Who Offers Loans for Buying Land in Kenya?

You can get land financing from most of the commercial banks in Kenya. Talk to your banker and have them explain what they offer and what their requirements are. Some common loan products out here include:

NCBA Bank
Commercial Bank of Kenya plot purchase loan
CFC Stanbic Bank vacant land loan
Faulu Kenya real estate business loan
National Bank of Kenya plot purchase loan

Among others.

Simplify Your Homeownership Journey with Fanaka Real Estate and NCBA

Fanaka Real Estate Ltd., a leading real estate company based in Nairobi, has partnered with NCBA, one of Kenya's most respected banks, to streamline the financing process and make your dream home a reality. This collaboration between Fanaka Real Estate and NCBA offers several significant advantages for homebuyers:

Simplified Financing: Fanaka Real Estate's experienced team will work closely with NCBA to guide you through the entire financing process. They will help you understand your eligibility for different mortgage products and navigate the paperwork, saving you time and hassle.
Competitive Rates: Through NCBA's extensive portfolio of mortgage products, you're more likely to secure a loan with attractive interest rates and flexible repayment terms that suit your budget.
One-Stop Shop Convenience: Having both your real estate agent and lender under one roof eliminates the need to coordinate between different parties. This streamlined approach ensures a smoother and more efficient home-buying experience.
Expert Guidance: Fanaka Real Estate's market knowledge combined with NCBA's financial expertise empowers you to make informed decisions throughout the process. You'll benefit from valuable insights into the property market and personalized guidance on securing the best possible mortgage deal.

Through this partnership, the Bank will provide mortgage loans to both salaried and non-salaried customers of Fanaka Real Estate. Salaried buyers will benefit from payment terms extending up to their retirement age, while non-salaried customers will enjoy terms up to the age of 65. The Bank also offers a Buy and Build financing option, covering up to 100% of the costs, allowing customers to purchase land and construct a home simultaneously. For those who already own land, the Bank's construction solution helps turn their vision into reality, ensuring that all customers have the financial tools needed to achieve their real estate goals.

With Fanaka Real Estate and NCBA as your partners, the path to owning your own home is clearer and more accessible than ever. Contact Fanaka Real Estate today and take that first step towards turning your dream into reality. For more information about the partnership and how to get started with a plot purchase loan, buy and build product, or the easy build option from NCBA, feel free to reach out to us.