What is Real Estate and Why should I Invest in it? – Story of the Kenyan billionaire Dr. Chris Kirubi
The Kenyan billionaire Dr. Kirubi, the business man and Investor began his journey as a successful businessman in property development before venturing in other businesses.
Priscilla Muisyo
Dr. Christopher John Kirubi is a Kenyan businessman, entrepreneur and industrialist. He featured in the 2011 Forbes annual rankings of Africa’s richest people in Kenya, Dr. Kirubi was ranked the second richest man in Kenya and 31st richest in Africa with a net worth of $300 million in the 2011 Forbes inaugural ranking of Africa’s 40 richest people.
The Kenyan billionaire Dr. Kirubi, the business man and Investor began his journey as a successful businessman in property development before venturing in other businesses.
Dr. Kirubi, upon graduation, his first job was a salesman, selling and repairing gas cylinders for Shell, the petroleum conglomerate, selling policies for an insurance company situated at the International House Limited, and when the company closed down its office in Kenya, they offered to sell him the building and they supported him spearhead talks with banks to help him buy the property.
Dr. Kirubi’s journey to success was his foundation as a property investor.
He would strategically buy neglected and abandoned properties and give them a facelift. Before the revamp, these neglected properties needed an expert eye to turn its prospects around by selling them.
Dr. Kirubi’s investments include but not limited to the following: 1) Centum - Centum is the real estate firm that has made some bold and iconic investments in the country with its biggest project yet being the dazzling two-Rivers Mall 2) Haco 3) Capital FM 4) International House Building 5) DHL Kenya.
As much as many people know that the tycoon came from rags to riches, a hardworker and a mentor.
The firm, which was launched in 1967, unveiled Two Rivers Mall, the largest shopping mall in Sub-saharan Africa, outside South Africa attracting over 200,000 visitors.
Capital FM is located on Lonrho House in Nairobi CBD
What is Real Estate and Why Should I Invest In It?
Real Estate is simply any piece of property containing a building or land. (both have the potential for investment strategies) to build wealth.
- Stable Income - people invest in real estate for the steady flow of cash in form of rental income
- Appreciation – Property appreciates over time, that is an added bonus
- Build Equity – being able to acquire various financial instruments/ borrowed capital thus enables one to buy more properties and increase cash flow and wealth.
- Leverage – an optimization approach generated by using borrowed capital as your funding source when you invest. This allows you to buy a much larger asset and increase the potential return on your investment than you could if you had to pay 100% of the purchase price upfront.
For example: Assume, an investor had Kes 50,000 toward a single-family rental real estate.
- Option 1: Buy a property for cash at Kes 50,000/-. This approach produces no leverage.
- Option 2: Put the Kes 50,000/- toward the purchase of Kes 100,00/- property, using financing like a bank mortgage loan to cover the other Kes 50,000/-. This produces 50% leverage.
- Option 3: Put the Kes 50,000/- toward the purchase of two at Kes 100,000 properties, again using financing to cover the remainder of the purchase price. This produces 75% leverage, and spreads your potential gains and risks over two properties.
- If property values increase 6%, the investor achieves these gains based on appreciation alone:
- Option 1: Kes 53,000/- property value for a Kes 3,000/- gain on the cash invested.
- Option 2: Kes 106,000/- property value for a Kes 6,000/- gain on the cash invested.
- Option 3: Kes 212,000 property value for a Kes 12,000/- gain on the cash invested.
Note: Using leverage principle to diversify your portfolio and buy more properties also creates an environment where you reduce your overall risk from vacancy loss, decline in value, capital improvements, etc.
- Diversification approach – It is necessary to have a diversified portfolio, meaning you do not have to put all your eggs in one basket. Buying real estate in different geographic areas can help reduce your economic risk in a single location. Investing in multiple types of real estate can reduce your risk and protect you from the volatility of any one market.
- Protects against inflation – Inflation is the rate at which general prices of goods and services rise and as a result, the purchasing power of money falls. In Kenya, as inflation goes up, housing values and rents go up and the monthly rents which can be adjusted upward in inflationary periods. For this reason, real estate is one of the best ways to hedge an investment portfolio against inflation.
- Increases Your Net Worth and Build Wealth - the opportunity to sell the property for capital gains of course, since that equity is essentially going into your pocket as a nice check at the time of sale. homeownership serves as a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity one has in their home.
- Real Estate Gives You Flexibility – meaning optionality. You can literally invest anywhere in the world. You can manage your properties and projects around your schedule and work for yourself. This offers you the flexibility of setting your own schedule.
In Conclusion: Whether it's financial freedom or a passive income in retirement, I am here to help you along the way.
To be successful in anything, you never stop learning, and property investing is the same. Start now by making a FREE No Obligation Appointment.
