Whether you are looking for a property for investment or a home to live in, it would be great getting one at a bargain price. So is it possible to find one? The short answer is yes only if you know where and when to look. Fortunes have been made by shrewd people who know how to look for a bargain and snap it up in time.
Stephen Adonga, a real estate sales manager, says his firm makes a fortune from buying bank-foreclosed properties that are later resold at a profit. A foreclosure happens when someone fails to pay a mortgage or loan payment for an extended period of time, forcing the bank or money lender to ultimately repossess the property and evict them.
Once the property is empty, the lender generally lists it for sale and it is fair game for anyone with the money to buy. “Banks ideally are not interested in the properties but just to recover their money so they offer large discounts just to get them out of the way.
Some of the discounts are as low as 50 per cent of what the property’s actual value because the foreclosure process takes some time and the property might fall into disrepair. This, however, does mean that the property is really bad only less shiny,” Adonga reveals.
Adonga further recommends that if you are looking for a home to buy, ask your real estate broker to show you the ones on bank disclosures first, if you like them, you might get yourself a great deal. The great deals usually come from properties that have been on the market for a long time. Adonga notes that whether they are foreclosures or normal sales, property owners get tired of holding onto property and will sell at any price to liquidate them.
Look at several options
Look at as many properties as possible. Expand your horizon to neighbouring towns as well. Limiting yourself to a geographical area limits your chances of finding great bargains in areas that you might surprisingly eventually come to like.
“Many times a client comes with their mind made up not buy anywhere further than Kira Town Council for instance, yet they end up settling comfortably and happily in Gayaza when they find something superior than what Kira could offer them at the same price,” Adonga shares.
Arthur Kyemba, a property developer, says learning when to make the offer has been one of his greatest tricks of the trade. Whether you are looking to buy an investment property or purchase a home for yourself, you make your money when you buy properties cheaply.
“I have learnt that timing is very important so I always make sure I am always the first one on a property I am interested in. I have ended up buying the properties for which my offer came in first 70 per cent of the time. Serious sellers want to sell and be done with the process.
“They usually do not wait for many other offers if they consider the first one good enough. Conversely when I do not come in first, I wait until the seller has exhausted all the possible offers and I come in last which usually does the trick,” Kyemba reveals.
Interest owners into selling
Kyemba says he sometimes interests property owners into the idea of selling.
“This is a delicate art and needs to be done without looking callous or greedy. You see I was born and raised in Nkumba Village, I know almost all the original home owners and they know me. I know when they are struggling but have not realised liquidating yet some of their properties could help their financial difficulties. So I approach them and suggest to them to sell. They might not do it right there but when they are ready, guess who they will call first? Me. And that way, I get myself an exclusive hot deal,” Kyemba shares.
You might not have the privilege of having that kind of background information with other property or landowners but Kyemba says you can always try your luck when you look at a property that looks abandoned.
Another great place to pick up discounted properties is attending auctions. Not the actual auctions but after the events. Brian Mwesigwa, says he always waits around and picks up the properties that did not get any bids. “Just because properties did not get bids does not mean they are worse than those that did, but one does have the advantage of knowing the agent is less ambitious about them.
Be careful though not to get carried away and put in a ridiculous offer, which the agent might find offensive and turn you down in anger. Put in a reasonable offer and you might get yourself great bargains,” Mwesigwa tips.
The internet is one of the most powerful tools available for real estate investors today. Of all the different methods, the internet is by far the most user-friendly way to get in touch with the latest property listings.
The trouble with these listing is also exactly that which makes it great: easy access. By getting access to brand new listings faster than ever online, there is an emerging issue where the competition is so stiff that it can be hard to have any single offer stand out. Better online deals can, therefore, be found via private listing websites, or on social platforms such as structureshub.com a local platform that links buyers to sellers.
Gavin Ziraba, the platform manager says tech savvy real estate agents have built up online brands and portfolios of their work that can guide a buyer.
With information accessible from anywhere, commercial and residential investors are able to make faster and more informed decisions on where to allocate their capital. Increasing access to information that was once hidden to the everyday consumer will further differentiate the best agents, those with good track records, from those who have made lots of mistakes in the past.
Instead of going the traditional route of using local brokers to market their properties, more people are now engaging the services of online companies such as Jumia, Posh Properties and Estate Online. LinkedIn is another valuable, albeit unexpected, source of good real deals.
Posting on personal profiles or in groups, reaching out to other professionals directly via the LinkedIn network or even putting out paid advertisements can help narrow down the property search.
Process of buying property
The 1995 Constitution grants land ownership rights solely to citizens of Uganda. Foreigners cannot own land freehold. They may, however, obtain leases for 49 or 99 years. Foreign investors, individual or corporate, cannot acquire land for the purpose of crop or animal production.
A real estate lawyer is needed in real estate transactions. The lawyer conducts a title search and obtains the transfer forms from the Lands office.
A licensed surveyor then visits the property to establish the boundaries. When this has been done, the transfer forms are submitted to the Land Office to receive consent to transfer. The property is inspected by a government valuer to ascertain proper taxation. An assessment form is given to the buyer, which is then presented to a commercial bank for payment of stamp duty.
When all has been cleared, the lawyer draws up the sale agreement. A deposit of 20% is paid upon signing, with the remaining balance to be settled within 30 to 60 days.
The transfer forms are then submitted, together with the signed sale agreement and stamp duty receipt, to the Registrar’s Department of the Land Office, and registration fee is paid. This process, dealing with the Registrar’s Department, takes about three weeks to accomplish.
Legal fees are around 1% to 2% of the property value.
Stamp duty is around 1% tp 2% of the property value.
Registration fees are around 0.05% of the property value. Registration fees include registration fees , bank fees, search fees, consent fees, and other related costs.
Real Estate Agent’s Fee
Real estate agent’s fees are around 5% to 10% of the property value.