Getting into real estate business is every entrepreneur’s dream thanks to the immense promises it holds. However, not many are able to break into this lucrative sector due to a number of reasons.
Entrepreneurs who have successfully ventured into this space have gone through diverse experiences, with each saying the realm is no walk in the park especially for startups.
Chief executive and one of three founding directors of Username Investments Limited Reuben Kimani recalls the hurdles they had to go through when they set up their first office in 2013.
“We had a small room in Nairobi’s CBD when we started turning our dream into a reality. At that time, the industry was very tough but we never gave up. We made our first sale, and that set the rhythm for wading through the challenges,” he tells Enterprise.
Entrepreneurs say the main challenges to a successful real estate business include a web of complex cartels, greedy brokers, a hesitant regulatory government agency and conspiring government officials. These, they note, are among the setbacks that prevent entrepreneurs and investors from putting their money into land projects.
“This industry lacks proper structures. There are too many brokers and fraudsters who swindle innocent clients out of their hard-saved money,” says Joseph Gitonga, Username’s co-founder and marketing director, adding that widespread fraud gives the sector and entrepreneurs a bad name.
“Agent conmanship is complicated because it has ties within the government. There is runaway bribing led by government employees who collude with brokers to facilitate illegal transactions,” he says.
“It is choreographed in way that the client comes to know of the reality five to 10 years later when he or she has developed the land.”
He says a cartel sold his young company land belonging to someone who had relocated abroad for several years. This, he said, complicated matters for his venture at the time it was looking to establish its footing.
“The brokers knew the owner was in diaspora, so they colluded with a member of the family to sell us the property. It became difficult to trace where the forgery happened and getting all the documentation needed for purchase was also hard,” he says.
His firm paid dearly for this fraud.
“It cost us double because we had to repurchase the land from the rightful owner when he came back to Kenya. We lost tens of millions but we had to protect our client and image,” he remarks, adding that government laxity has allowed this to keep happening.
The Ministry of Lands has repeatedly said all land purchase processes have been digitised but that has not protected the sector against fraud.
Kwetu Real Estate chief executive officer and founder Kaburu Mwiti says the digital process needs to me made more watertight in order to “firmly and permanently” shut the door on fraudsters.
He says aside from properly digitising the registry, it is crucial to maintain the integrity of the information in the system.
“The digital process is not comprehensive yet. Computerising the registry fully will help but we have to ensure we maintain the integrity of the system as well by in-putting correct data,” he says.
“The system should be shielded from interference by criminals. We have witnessed instances where digital systems are compromised even by people who are supposed to protect them.”
A more aggressive war on corruption and entrenched cartels, Mr Kaburu adds, will ensure the sanctity of title deeds.
Moses Muriithi, the founder and CEO of Fanaka Real Estate started saving to purchase his first property while still a student at Kenyatta University. He advises young entrepreneurs to be disciplined and be focused to attain their dreams.
“At my time in 2014, there was a lot of pressure from my peers against saving. They were buying cars and living large but I remained in my bed-sitter house not because I could not afford a two-bedroom house but because I was focused in what I wanted in ten years ,” he tells Enterprise.
Mr Muriithi highlights low bank credit score for the youth and lack of information as stumbling block to venturing into the sector. He is however quick to say savings can bail one out.
“Many think that you need to save millions to own land and venture into real estate business. They are unaware that saving at least Sh20,000 a month can get you a plot within a year,” he says adding that one can use that one plot to start a business.
Mr Muriithi’s company valuation is currently in the region of Sh500 million.
Mr Kaburu says existing government financing such as Youth Fund and Uwezo should be made more accessible to the needs of young people.
“These funds haven’t lived up to expectations as we still see too many young people struggling to get capital for their brilliant ideas,” he says adding entrepreneurship is the answer to the current state of unemployment.
To succeed in real estate business, he adds, calls for persistence.
“You have to be thorough in compliance to avoid getting into problematic deals. If customers realise you are prone to corrupt deals they will give you a wide berth,” he says.
“However, if your transactions and properties are clean, you will build a good name, inspire confidence and attract customers.”
Kwetu Real Estate has been selling land, but it now plans to expand its business into building affordable homes.
“Our vision is in ine line with the government’s objective of setting up affordable homes for Kenyans,” Mr Kaburu tells Enterprise.