This to us, is the most important factor to consider - can you really afford that property? Is this the right time? What are your objectives for buying it? What other important expenses or investments will you have to put off or delay in order to buy this property today?
Property can lock up your money for a relatively long time so it is important to consider these questions among others. It is critical to have an honest reflection about the true state of your finances ahead of making a decision to invest in property. Look carefully at the payment terms for the given property, talk to your financial advisor/ relationship manager (check with your local bank), talk to your spouse or other confidant - basically, speak to as many objective source of feedback as possible to give you a good basis to make this sizable investment decision.
If purchasing existing property, it is a good idea to carry out an exhaustive evaluation of its current condition to work out costs of any repairs or upgrades you may need to do. Talk to experienced professionals to guide you (see below).
2. Consult professionals
Transactions in Uganda, much like most African countries are largely informal. This introduces opportunity for fraudsters and creates room for costly mistakes from not understanding legal/ regulatory constraints or technical aspects of the property. Given this is the largest if not one of the largest transactions you will undertake in your life, it is important you consult professionals to help you appreciate the intricacies of the property you are investing in.
Professional fees (which aren't necessarily high as often speculated) may put you off but they can save you millions of shillings in losses and legal headaches in future.
Examples of professionals you can consult:
Learn more about RE/MAX Professional Services.
- Talk to your Bank's mortgage consultant about what options you qualify for given your current and projected income.
- If you do not already have one, find a financial advisor. Pension/ Insurance firms typically have such professionals available to guide you.
- A real estate agent such a trained and professional RE/MAX Sales Associate can match your budget and objectives to potential properties and help you negotiate a good deal that meets your best interests.
- A contractor can assist you in assessing costs for renovations or understanding the condition of the property. Get contractors (Mechanical & Electrical, Structural Engineers, Architects etc.) to examine the property you are looking to purchase. You will be surprised the amount of guidance (and money you'll save) that you can get from qualified experienced professionals.
- Get a Land Surveyor or Property Valuer to examine the property - especially to verify its title and boundaries.
- Lawyers and Tax Consultants can play important roles in opening your eyes to legal/ regulatory and tax considerations you may not be aware of.
Location, location, location! as the old saying goes. Most existing communities in Uganda are poorly planned and have grown beyond their existing infrastructure which reduces their appeal. That said, having the insight to spot emerging trends can help you tap into some excellent deals - think those that purchased property in the Lubowa area before International School of Uganda was established.
Other things to consider for a location: general noise levels, security (more on this later), diversity, access roads, drainage, and so on.
Take time to understand the neighbourhood you are purchasing property in. Talk to a RE/MAX Sales Associate to understand emerging trends in the neighbourhood, prevailing property prices and resale activity, going rents, and so on.
4. Positioning of the property
If you are looking for a single family/ standalone property such a bungalow or townhouse, look for a house that is well spaced from the neighbours. In prevailing cultural preference in Greater Kampala, good separation/ distance form neighbours is still considered a premium for many. Apartments are slowly changing this mindset but its dominance cannot be downplayed. Important to consider if you want to let out the property in future.
Consider topography. Try and avoid property at the lowest point in the neighbourhood or else you run the risk of flooding given the relatively poor drainage in most communities.
When it comes to Apartments, traditionally buyers and tenants prefer 1st to 3rd floor units because of the perceived convenience when carrying groceries or supplies upstairs and so on. In Kampala, new/ upcoming buildings with 5 floors or more are required to have a lift/ elevator which will over time start to impact this preference. As apartments become more popular and culturally acceptable, new 'Premiums' will emerge such as view, 'security in numbers', noise reduction (tends to be quieter on say the 15th floor than on the 1st floor), and so on. Think of these trends when considering investing in rental property in apartment developments.
We have also observed that for gated communities of Villas or Townhouses, the units nearest to the entrance or outermost walls are more desirable than those between them. Customers have quoted reasons such as privacy, ease of access, and so on as driving factors for the preference. In relatively less secure neighbourhoods, it can be a disadvantage in the unfortunate event that thieves were to break in.
5. Security in the area
If you are serious about a property, do you homework on the security of its immediate area. It will save you a lot if you do not rush into buying the property before you do thorough due diligence. Crime is everywhere these days but the degree varies according to location. For peace of mind for yourself or your tenants, look for property in relatively secure neighbourhoods or install necessary precautionary measures such as CCTV, 24 hour guards, security dogs, burglar proofing and so on.
Talk to a local security firm, the nearest Police Station or the area LC1 for more information on the neighbourhood.
6. Accessibility and Amenities
If buying to let out your property, consider local and proximity to major amenities. For example, how far is the property from the local kiosk, drug store, mini and major supermarket, daycare centre and so on. These factors are particularly appealing to tenants with larger households or younger children.
As a rule of thumb, the more diverse the amenities within a 5-10 minute walk, the better!
7. Resale Potential
Property is an investment. Take your time to make modifications and add value over an extended period of time to increase its rental or resale appeal per your objectives. It can prove expensive to attempt to make so many modifications all at once - they might not be to your target customers' taste!
Simple items like well aged wooden finishes, regular fresh coats of paint, quarterly deep cleaning, well kept compounds and clean blinds/ windows can really add to the appeal of a property. Enlist a good property manager or maintenance personnel to help keep the property at its best.
These modifications you are making will be important value additions in an event where you want or need to dispose of the property.
8. Total Cost of Ownership (including Closing Costs)
Purchasing a property does not end at signing papers and exchanging handshakes.
You will have tax liabilities, conveyancing (transferring ownership to yourself) expenses, legal and professional fees, utilities and so on. If purchasing property in a condominium or other planned community, there are or may be ongoing maintenance fees you pay to an association or management corporation so it is important to be aware of these.
Generally, getting as much of a realistic picture about the total expenses you will incur and in what period of time they will occur is good practice and lends itself to the budgeting exercise recommended above.
RE/MAX Sales Associates
are available to guide you on typical closing costs for given transaction.
Check out our guide to typical closing costs