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Common things about real estate scams

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Banda Homes, a real estate development company, was in the news recently for allegedly failing to live up to its contractual obligations to deliver homes on time for investors who had paid a deposit.

This comes just a few months after investors in the greenhouse scheme by Goldenscape Greenhouses cried foul over unpaid dues.

Real estate developers’ failure to deliver the homes promised after receiving money are quite common on Kenya’s property scene.

Many property owners will admit to having thrown money to the wind before they eventually learned the ropes of investing in this risky industry. Most property scams have similar traits. Let’s take a look at some of them.

Too-good-to-be-true prices

Shoes are affordable, a loaf of bread is also affordable, even a car can be termed as affordable to some, but a house has never been affordable. When someone offers you an “affordable” house, take a walk and reflect before handing over your hard-earned money. Many property scams have marketed their homes as affordable.

Take, for instance, a 2015 housing scheme that turned out to be a scam. The houses were sold on a ‘rent to own’ model whereby investors would pay questionably small amounts of money in the form of rent as instalments after paying a down payment of as little as Sh350,000. The instalments were friendly enough to accommodate one’s earnings. To sweeten the pot, investors were lured with a ‘no interest’ deal. Instead of paying mortgage interest, investors would co-own homes with the company, until they completed their payments.

Similar affordability was presented by the Shangilia Baba na Mama housing scheme of the mid-90s. With as little as Sh10,000, investors would earn a ticket to home ownership.

They would then be required to pay monthly instalments of less than Sh7,000 to own the small bungalows on Mombasa Road. Isn’t that a sweet deal? To date, the small bungalows stand destitute and empty without owners after the deal went south.

When you spot a property that is within your budget, or one that you can afford, your heart melts as you imagine yourself owning a home, at last. All logic goes out the window and you forget about consulting an expert or fact-checking. Price is a magnet in real estate.

Selling promises

Many property scams tap into the psychology of discounts by using words such as ‘affordable’ or ‘save money’ to attract the attention of low-income earners. Studies show that a majority of people will always go for the cheaper or ‘fairly priced’ commodity on the market. Unfortunately, in the property industry, cheap commodities often turn out to be expensive.

READ ALSO:   VIDEO: Kenyans in US among those heading to court after 'Banda Homes' fails to deliver as agreed

The pricing of a house depends on a number of factors, its location, size, design, and at times its age. A developer will obviously need to make a profit out of a project. They will therefore consider the cost of buying land and building the house when pricing homes.

Before committing to buy property, check the value of land as well as the market price of similar houses in the same location.

You may also talk to a number of people who have bought similar houses or professionals such as developers or consulting structural engineers. The prices may not be exactly the same for all properties in the area, but they should be close. The ultimate professional to consult is an independent valuer, who conducts all the necessary research and presents conclusive numbers.

Scammers are often big on words but slow in action. They will promise heaven but deliver little to nothing. It is hard to find a scammer promising real houses on the ground – it is only reasonable to purchase a house or a commodity you can see. Often, property scammers advertise houses at the design stage or a greenhouse that is yet to produce its first harvest.

Perhaps it is the speculation culture of Kenyan investors that they tap into, or maybe they just dream big like the target market. The most famous property scandals are all pegged on off-plan buying, an indicator that this concept can be an extremely risky one.

Also worth noting is that some of the schemes fail to take clients for site visits while others organise site visits of bare land and promise clients to transform the land into beautiful homes.

Quick results

Images have also proven to be deceptive when buying homes. Visit the sites and ensure what is on the ground is similar to what is in advertisements. The home-buying process should not be done from the comfort of your couch or online. It is a physical process involving several experts who may include a lawyer, a surveyor and a valuer.

The get-rich-quick greenhouse scams always promise hundreds of thousands after only six months of ‘farming’. Note that you are not asked to lift a finger or soil your hands in the process. You just need to pay a certain amount, sit back and wait for the money to trickle in a few months later – since when did agribusiness become that easy?

READ ALSO:   VIDEO: How Kenyans in Diaspora continue being duped and swindled by unscrupulous 'home developers'

Similarly, some off-plan house projects will promise to deliver hundreds of units in just eight to 12 months. Off-plan projects rely on investors’ deposits for construction to start.

That means there has to be rigorous advertising for many people to book and pay for units. In addition, all investors have to pay up their deposits on time and the logistics have to be favourable for a developer to deliver results within the promised time frame.

Assuming you’re among the first to pay your deposit at the beginning of the year and the last batch of investors pay up in the middle of the year. Is it possible for the developer to construct all the units by the end of the year?

You have probably come across articles or advert headlines with titles such as “Try this and you’ll lose 10kg in seven days”. Such a concept may sound impractical and nearly impossible, but still, people will click on the links and try out the recommended method of losing weight.

This approach to marketing taps into the desire for instant gratification. Psychology and studies such as the Stanford Marshmallow Experiment show that most human beings would rather experience their rewards immediately rather than wait for a long time to gain something.

Unfortunately, the desire for instant gratification drives people to fall for unrealistic promises without fact-checking the details of a concept. You are better off with a real-estate company that tells the truth than one that promises unrealistic quick results, but disappoints in the long run.

Seemingly legit deals

Before investing in anything, take the time to analyse the concept and question its feasibility. In addition, research on projects that may have used similar concepts to establish the likelihood of success. If five greenhouse businesses have failed in the past, while only one succeeded, the chances of making money from such a venture are minimal.

Real estate scandals have shown a pattern of delivering results to the first batch of investors as a way of luring more clients and reassuring doubters. This motivates more people to invest with the company. Investors in most greenhouse projects allege to have received initial payments, but nothing came forth afterwards.

Shangilia Baba na Mama investors, too, were taken to the site and there was ‘evidence’ that the scheme was legit. To date, the houses still stand unoccupied, weather-beaten after years of abandonment and can easily be used by scammers to con unsuspecting investors.

READ ALSO:   VIDEO: Kenyans in US among those heading to court after 'Banda Homes' fails to deliver as agreed

What is worse is that first-time investors who receive the promised results will go ahead to give testimonials, which will then be published on the company’s social media pages and websites.

With testimonials and first-phase results as a point of reference, it becomes easier for people to invest in projects that may not materialise, after all, there is security in numbers and testimonials, and completed projects represent numbers. Even experienced investors will easily fall for a scammer with results on the ground.

It is hard to understand whether what follows afterwards is a case of financial mismanagement, unrealistic ambitions or pure scamming.

When cornered, most scammers will have pretty good excuses. Some will blame the weather, contractors or delayed supplies, while others will blame the economy. In addition to the excuses, angry investors will be told to remain patient. In many cases, the victims will be patient since the excuses are believable enough. Building properties is not easy anyway, and anything can befall a project.

Excellent excuses

When a developer is truly scamming investors, there will be no change on the ground. Some investors will just buy time to change agreements, disappear or scam more people. Others will rectify their mistakes and deliver, though way beyond the timeline on the contract.

Obviously, it is important to tread cautiously when investing in real estate. Many investors tend to leap onto “once in a lifetime” deals without consulting the right experts.

To evade scams, investors need to differentiate marketing from reality. Common marketing tools such as testimonials, catchy prices, enticing images and cleverly phrased words can be convincing, but real estate buying should not be an emotional affair. It should entail calculations, logic and consultations. As stated, houses are not cheap or affordable, sometimes you have to let go of a lifetime’s savings that take years to accumulate. Before investing, think of the hard work and the years you put in to acquire those savings.

The early mornings, ‘tarmacking’ for jobs, the business deals that did not materialise, working late and at times, the lunches you had to forego. Saving up is a process, so is owning a home. Take your time.

By Nation.co.ke

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Anxiety high over Uhuru speech

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If there was a day Kenyans have recently looked forward to, it is today. This is the day the dusk-to-dawn curfew imposed on the country to stem the spread of the novel coronavirus is supposed to end after President Uhuru Kenyatta extended it for 21 days last month.

But recent statements by senior government officials have tended to dampen the expectations of a majority of Kenyans, with some resigning to the possibility of the perpetuation of the status quo or a new order with just slight changes.

Friday, Cabinet secretaries seemed to be managing the people’s high expectations, with hints that a wholesome opening of the economy could lead to a spike in Covid-19 cases and put the vulnerable members – such as old parents – at risk when they host their kin from the cities.

Education Cabinet Secretary George Magoha Friday hinted that schools will not be opened any time soon.

“The ministry will advise the level of preparedness that will be required of all stakeholders involved in the running of schools and teacher training institutions,” he said.

Interior Principal Secretary Karanja Kibicho earlier in the week said the government was considering a phased easing of the Covid-19 restrictions to help people to generate incomes.

READ ALSO:   VIDEO: Kenyans in US among those heading to court after 'Banda Homes' fails to deliver as agreed

He said Kenyans should not expect a sudden return of normalcy.

President Kenyatta has also been facing pressure from religious leaders to open places of worship. Religious organisations have formally written to him asking for a review of the measures and promising to adhere to the guidelines issued by the Ministry of Health.

Interior CS Fred Matiang’i and his Health counterpart Mutahi Kagwe met with religious leaders ahead of the handover of the report from the National Coordination Committee on Coronavirus to discuss how to proceed with religious activities in the event the government agrees to relax some of its guidelines.

Dr Matiang’i said the contents of the report will be communicated by the President.

Mr Kagwe urged religious leaders to assist in effecting home-based quarantine, a measure that the government is advocating as it moves to ease the Covid-19 restrictions.

Kenyans took to social media to express their optimism – and pessimism – about today’s speech by the President.

From making merry at entertainment joints to travel and reuniting with loved ones and lovers, expectations were so high that the hashtag #June6th was the number one trending topic locally on Twitter.

Tweeters filed their wishlists, a majority of which were hilarious.

Yet others just wanted the economy to be opened up.

READ ALSO:   VIDEO: How Kenyans in Diaspora continue being duped and swindled by unscrupulous 'home developers'

By Nation.co.ke

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How working from home charted a new career for me

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When her children began going to school, Frida Mwangi, a stay-at-home mum, found herself in a crisis: she didn’t know what to do with the free time in her hands.

Though she really wanted to work, one thing she was sure of was she didn’t want an eight-to-five job.

“I wanted to be able to manage my house as usual. I had heard about online work and I started researching on what it was and how I too could do it from home,” she narrates

The research took about a month, and during this time, she connected with a Facebook community in Kenya comprising people who worked online.

It is by following the conversations that she discovered what she wanted to try out: transcribing.

“I was in the house for so long and lacked technical skills. I realised the easiest work I would have done there is transcription because all I needed was to understand English, which would assist me in following guidelines clients were looking for,” she says.

Determined to learn more about transcribing, Frida reached out to one of the ladies doing transcription training for tutorials and that’s how she learnt the craft.

In 2015, she began working as a transcriber in one of the leading global freelancing market spaces, where she became top rated after only four months in the job.

In 2017, she built a website, and registered her own online company dubbed, Kazi Remote.

“When I was still working as a transcriber, I thought transcription was a western thing and Kenyans did not need them.

READ ALSO:   VIDEO: Kenyans in US among those heading to court after 'Banda Homes' fails to deliver as agreed

After creating the website, I began getting calls from academics doing their thesis, market research companies in Kenya and law firms in need of transcription services. This expanded the base of my customers,” she explains.

Her website has also attracted clients from Europe, Canada and American clients, some of whom have come to the country for research and are looking for a person who understands and can write Kiswahili.

“I got Sh1,000 from my first client, but after PayPal charges I received Sh800.

For the first six months I worked alone and after that, I got a big client who had over 200 hours of work, which would last up to six months. He was a Stanford university student,” she says.

Frida soon realised she needed other trained transcribers to assist her with the workload.

Due to the nature of the work, Frida doesn’t have a permanent workforce, but works with freelancers who can work from home, provided they have a laptop and reliable Internet. She began with five freelancers, but is currently working with 20.

She says one hour recording can take four hours of writing and two hours for going through the work if one is a very experienced transcriber.

The standard time given in transcription is 24 hours hence one can plan on the amount of time they can spend on work.

“When I started, I charged clients Sh1,000 an hour of recorded work. Currently there are clients paying Sh6,000 or even Sh10,000 an hour, especially if you are working with business companies,” she says.

But working indoors came with the challenge of people dropping in her house all the time thinking that she was free with nothing to do.

READ ALSO:   VIDEO: How Kenyans in Diaspora continue being duped and swindled by unscrupulous 'home developers'

“I would receive visitors and I didn’t know how to tell them that I am working.

It got to the point where I would lock the house after taking my kids to school so that people would think am not around.

Or if they managed to come in, I would leave them in the living room on their own,” she narrates.

Slowly by slowly, Frida managed to resolve this issue as family and friends began taking her work seriously.

But even while others understood she was working, there were those who branded her a mzungu, because of this strict way of living.  Another challenge was the consistency of work.

“When it comes to bidding, this is online and it’s not about where you went to school or how many degrees you have, but whether you are able to solve the client’s problem,” she says.

Frida notes the reason most people fail in online work is because they treat it as a side hustle instead of a main gig and also don’t conduct enough research while at it.

“Online work is something you can do as a career. For instance, right now, the highest paid job is intellectual property something that a lawyer from Kenya can do if they acquire the relevant skills.

There is a lot of demand for them in that they can actually earn Sh15,000 per hour online,” she explains.

People interested in this field should ensure they learn new skills on top of the ones they have and be intentional on their career path.

READ ALSO:   VIDEO: Kenyans in US among those heading to court after 'Banda Homes' fails to deliver as agreed

Her customer base increased after she created her website as people were able to find her on Google.

Frida notes one reason transcribing is not established in Kenya is because unlike in the West, it is not included in the laws.

In countries such as the US, there are laws which ensure that videos, audios are also texted so people who can’t read or write can access the information.

“In America, there are companies who have earning calls (teleconference, or webcast in which a public company discusses financial results of a reporting period), which must be transcribed.

These calls need to be transcribed within six hours and uploaded to the company’s websites. These are the ones who pay up to Sh10,000.

There are also universities, which require students doing research projects must have their interviews transcribed when it’s qualitative.

Some colleges there go as far as having budgets for transcription,” she adds.

Her effort was rewarded in 2018 when she was listed among the Business Daily 40 under 40 Women.

“When you look at that whole list, there was no single person in the online industry so I am happy that through me, they were represented.

One of my aunties saw that and asked how the media found me when I’ve always been in the house,” she recalls.

By PD.co.ke

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Adopt cremation instead of burials, Kenyans urged

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Kenyans have been urged to adopt cremation instead of burials in order to save trees and also reduce the cost of resting their loved ones.

According to Rotarian Mburu Machua, using wooden coffins during burials had contributed to the depletion of both indigenous and exotic trees thereby posing a serious global climate change.

He says that the country’s forest cover had continued decreasing due to logging and charcoal burning as well as using firewood in cooking in rural areas.

Machua who is a lawyer said that it would be prudent for the government to encourage people to be cremated if it expects to achieve the globally required 10 per cent forest cover.

‘I have been prevailing upon my clients writing their wills to state that they should be cremated upon their death and believe you me, most of them have embraced the idea’, he said.

He spoke at Bibirioni primary school in Limuru during a tree planting exercise which saw the Limuru rotary club in conjunction with the Limuru municipality planting close to 500 indigenous tree species.

Machua said that the cost of burials has become very expensive compared to cremation which is cost-effective.

‘Being cremated wastes fewer resources than burial more so because one does not incur plot or land fees’, he said.
Several prominent Kenyans including environmentalist Wangari Mathai, Kenneth Matiba, and Bob Collymore were cremated when they died.

READ ALSO:   VIDEO: How Kenyans in Diaspora continue being duped and swindled by unscrupulous 'home developers'

Many Kenyans take cremation as a bizarre and unchristian exercise arguing that it’s lack of respect for their loved ones.

Municipality manager Michael Muna said that Kenyans should endevour to live in a paperless society for absolute afforestation to be realized.

Muna who is also the Kiambu West Kenya National Union of Teachers branch secretary said that Kenyans ought to embrace using metals and plastic instead of timber and wood.

‘If only it can dawn on every citizen that trees play a crucial role in our health particular in the prevention of respiratory diseases such as Covid-19, they can choose to voluntarily plant trees in every open space within their localities’, he said.

He said that the municipality is planning to plant trees in all schools and road reserves even as it engages in other development matters such as improving infrastructure.

‘The county government has channeled resources to municipalities from the World Bank and we have used the same in street lighting, drainage, and rehabilitation of bus park and roads’, he said.

He said that tree also prevent soil erosion thereby increasing productivity’s in farming.

The manager encouraged Kenyans to plant indigenous trees and fruits adding that the collaboration between Rotary clubs and the area municipalities envisages planting 1 million trees every year.

READ ALSO:   VIDEO: Kenyans in US among those heading to court after 'Banda Homes' fails to deliver as agreed

By PD.co.ke

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