Investing in real estate can be very exciting and rewarding though a bit daunting for a first time investor. With the stress and constant self doubt of whether the decision one is making as an investor is the right one, it can only be simpler if one was aware of the factors to consider before making such an important purchase decision.
Here’s what to consider when choosing buy-to-rent properties;
Table of Contents
Location and Neighbourhood
The area in which your property is located greatly influences the kind of tenants you have and the value at which you’ll price it at. A neighbourhood can either be composed of students, families, working class young people, among others. For an investment to make sense, it is important to ensure that you have reliable tenants, and this is in terms of consistency in payment and in how long they live in your property as well as how well your property is taken care of.
Urban areas like Nairobi, Mombasa, and Kisumu, for example, draw different tenants compared to rural regions. For instance, Nairobi’s neighbourhoods such as Westlands and Kilimani are popular with young professionals and expatriates due to their commercial hubs and entertainment spots, while areas like Ruiru and Thika appeal to families seeking affordable housing.
Proximity to universities, such as Juja (Jomo Kenyatta University) and Ruiru (Kenyatta University), attracts students, offering high demand but higher turnover rates. Conversely, family-oriented neighbourhoods provide more stable, long-term tenants. Additionally, areas like Karen and Runda in Nairobi are known for property value appreciation, making them attractive for long-term investment.
Choosing the right location involves assessing the neighbourhood’s demographic, tenant stability, and potential for property appreciation to ensure a profitable and sustainable buy-to-rent investment.
Proximity to Amenities
Closeness to amenities is for a fact such a major point of consideration for a lot of tenants. Having a property that is close to roads, public transportation, shops, gyms among other things serves as a great advantage and as an attraction to your property. This is because people love convenience. Therefore, before buying property to rent out, ensure that you survey the area well and find out how close the property is to amenities so as to be able to use it as one of your greatest selling points.
READ MORE: Top 5 Upcoming Areas in Kenya
Development
A developing area can be a promising investment opportunity. Before committing to buying a property, it’s essential to assess whether the area has potential for growth or if it is already developed. In Kenya, emerging areas like Ruaka, Syokimau, and Kitengela are experiencing rapid development, often attracting infrastructure projects, shopping centres, and schools.
When investing in a developing area, be aware of new developments that might affect your property’s value. For instance, upcoming infrastructure projects like the Nairobi Expressway can significantly boost property values in nearby areas. A developing area often brings new amenities, such as schools and shopping centres, enhancing the attractiveness of the location to potential tenants.
Community development is also crucial, as tenants often seek neighborhoods with a strong sense of community. Areas that foster a communal environment, with accessible amenities and infrastructure, are likely to attract and retain tenants, ensuring consistent rental income and long-term investment stability.
Average Rental Income
Understanding the average rental income in your target area is crucial for a successful buy-to-rent investment. In Kenya, rental income varies significantly depending on the location and type of property. For instance, in Nairobi’s upscale neighbourhoods such as Westlands, Kilimani, and Karen, the average monthly rental income for a two-bedroom apartment can range from KES 80,000 to KES 150,000. Conversely, in more affordable areas like Ruiru, Thika, and Kitengela, similar properties might generate between KES 20,000 and KES 40,000 per month.
READ ALSO: How to Calculate Return on Investment on Your Rental Unit
It’s essential to research and compare rental rates in various neighbourhoods to gauge potential income accurately. BuyRentKenya offers current listings that can help you understand prevailing rental prices. Additionally, engaging with local real estate agents and property managers can provide insights into market trends and tenant demand.
Considering the average rental income relative to property prices and maintenance costs will help determine the profitability of your investment. Ensuring that rental income covers mortgage payments, property management fees, and other expenses is key to achieving a positive cash flow and long-term investment success.
READ MORE: Leasing vs Renting: Which Option Is Better for Landlords?
Conclusion
Investing in buy-to-rent properties in Kenya can be both exciting and rewarding, especially when you make informed decisions. By carefully considering factors such as location and neighbourhood, proximity to amenities, area development, and average rental income, you can ensure a more secure and profitable investment. Each of these elements plays a crucial role in determining the success of your buy-to-rent venture, from attracting reliable tenants to ensuring a steady rental income. With thorough research and strategic planning, you can navigate the real estate market with confidence and maximise the potential of your investment.
YOU'RE SUBSCRIBED. 
