Buying your own block of land and building the house of your dreams can be one of the most fulfilling and exciting experiences of your life. That being said, it is not as complicated as you might think. Unlike purchasing an existing home it’s much cheaper (with fewer strings attached) and probably the biggest step towards an independent future that you can make. There’s no construction quality issues to consider, no style to choose and certainly no details like the color scheme, kitchen finish or curtains to slow down the decision-making. But that’s not to say that buying a block of land is simple.
Your choice of land is intrinsic to the success of your investment.
Don’t let your enthusiasm for an “ideal” piece of property lead to costly mistakes when buying land. Remember, Informed buyers, make wiser purchases.
So here are some helpful hints and tips from DENKO Properties to help you make a wiser decision when purchasing your block of land:-
1. Buy within your means.
Denko Properties strongly recommends that you save up money and pay cash for the land. Loans are difficult to get, stressful, expensive, and multiply the things that can go wrong.
If for some reason you cannot save up the required amount to buy the property, try finding a vendor who provides owner financing. It’s less daunting than bank loans. But if you can, save up a bunch of money, set a maximum, and then push down from that maximum.
2. Do not get “land fever“.
If you’re overwhelmed with the desire to just get on some land right now, you will not get a good deal. You can practice this just buying cheap stuff on OLX or any other listing site: the more patient you are, and the more offers you are willing to lose, the better deal you will eventually get.
Also, land fever tends to make you ignore red flags. A few months ago one of our clients (before finding out about DENKO Properties) bought into an overpriced waterless land with a group that was undisciplined and defaulted on the payments. He ended up losing a lot of money since the land was eventually put under foreclosure—this happened just because he was in a hurry to buy and was excited to pull the trigger and get on some land. So bottom line, patience while searching for the perfect property always pays.
3. Before you start looking, research prices on the internet putting location and acreage into consideration.
It takes some time but it is well worth your time. You could save thousands of shillings going into a deal with prior knowledge or an idea of the expected price range of the property.
4. If you’re going to buy with a group, choosing the members of that group is even more important than choosing the land.
One energy vampire, one person who’s contributing more money and demands more respect or decision-making power, one person who can’t take criticism or won’t compromise, even one person with a selfish and competitive view of reality, and your group is doomed. If you’re lucky it will fall apart before you buy the land. I think one happy-dog person, friendly and easy-going but undisciplined, will add to a group, but two is too many. You need at least one person who’s good at working out conflicts between the other people, and at least one person who’s good with numbers.
5. The most common group-land-buying disaster goes like this: after a few years someone wants out, and wants to be paid their share of the land’s current value — but it’s gone way up, and the other people don’t have the money. So you have to sell your Eden to developers just so one person can make a profit. If you do not have a contract to prevent this, it’s almost certain to happen. Denko suggestion: You should all agree in writing that if someone wants out, they get, at most, what they paid in.
6. Think through what you really want, put that into consideration and take your time when choosing your piece of land.
Nothing feels worse than regretting your choice of land after you have bought it.
7. Choose negatives! Think through what you don’t care about.
The way to get a really good deal is to think of features that lower the price that you don’t care about, or even that you prefer, and actively look for those things! These could present a very strong bargaining edge for the land price and save you tens if not hundreds of thousands.
• No utilities (e.g. water and electricity) – If you don’t mind being off the grid.
• No Public transport system – if you will be using your own means and don’t mind lack of public transport
• No buildings – If you want to build your own.
• Land that’s just been logged – If you prefer naturally forested land, but you know you can’t afford land that is actually covered with big trees.
8. Don’t fall in love.
Don’t hold out for a piece of land that you are in love with, especially if you can’t afford it. And don’t fall in love with a piece you’ve seen, or refer to it as “my land” or “our land” until you actually own it. If you do, you are setting yourself up for the bait-and-switch, for ignoring red flags, for probably wishing yourself into a bad deal or a disaster.
9. Use your connections.
Tell family, friends, friends of family, family of friends, and friends of friends, what you are looking for, and if you’re lucky, someone will have a piece of land, or know of one, or refer you to a trustworthy person or company (such as DENKO Properties) that can assist, and that is what you want. Then you can deal directly with the seller, who might be someone you know and trust, and you can cut out the real estate agent and a lot of precautions you would have to take with a stranger. In any case, you might be lucky if your family has land that they’re willing to give you free.
10. The job of real estate agents is to lie.
“Buyer’s agents” and “seller’s agents” all work for the same person: themselves, trying to sell the property as quickly as possible for as much money as possible so they can rake in the commissions. If you ask for a low price, they will ridicule you for thinking you can find anything that cheap. But their own book of listings will have several properties that cheap! Then they will repeatedly try to seduce you into going higher, by showing you land that is above your price range but that you will fall in love with.
They do this because it works on most people, so you have to be stronger than most people. They will also say, this land is about to sell so you have to hurry and buy now. It might be true, but the point is, they will always say it whether it’s true or not, so it means nothing.
11. You can get a great deal by buying “problem” land if you have the time and skills to solve the problem that scared off other buyers — or if you don’t care about it.
Nothing lowers the price of the land better.
12. Finally, we recommend that you read the book Finding and Buying Your Place in the Country, by Les Scher.
It’s a book that outlines the various aspects of property buying and gives some useful insights to property buyers. Well, some aspects only apply to the American real estate system and it’s unfortunate that we don’t have a Kenyan version of the book, but most issues outlined are global and apply everywhere in the world.