Owning a piece of land is a dream of most Kenyans. It is not only a cultural issue but also an investment strategy. This demand and need for land have seen the prices rise in the country as more Kenyans seek to buy.

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However, it is possible to own a piece of land as long irrespective of your salary as long as you are disciplined financially.

A good plot of land, also known as an eighth or 50*100, costs an average of 1 million shillings in the outskirts of major towns. With the average salary of most workers in the country being 50K, let’s look at the best approach to owning land with such income.

There are various ways through which you can acquire land. These include savings, taking a loan, or a combination of both.

1.  Savings plan

Most financial advisors say the average required amount of savings is at least 20% of your income. This makes it 10K if you have a salary of 50K. Hence, to get the property, you need to save for at least 100 months to make 1 million shillings. This translates close to 9 years.

Although this is possible, the price of land changes fast. As an example, land that cost 1 million 9 years ago could have doubled in price by the time you are done with savings. This makes the savings approach less effective due to the price appreciation element.

To acquire the land through a savings approach, you need to save more to reduce the timeline of having the capital.

2.  Loan plan

This is the most common way for Kenyans uses to buy plots. A loan allows you to have the necessary finances to acquire the plot immediately.

However, a loan comes at a cost in form of interest. As an example, most loans in Kenya attract an average interest rate of 12%.

With the asset financing in the country averaging 5 years, your monthly repayment for such as plot comes to at least 20K per month.

To benefit from the loan, you should ensure the value of the land is appreciating faster than the interest rates. This ensures your net flow is positive. Here is a detailed breakdown of factors to consider before taking a loan.

Most institutions readily offer plot purchase loans as long as your income allows installment payment.

One key advantage of financing your plot purchase is ensuring you get it at the current value.

3.  Mixed plan

The mixed or hybrid plan entails using a combination of both savings and loans to purchase your plot. This is a good approach as it ensures the loan and interest payments are reduced.

Some financial institutions also don’t finance the plot purchase 100%. As an example, some do 80% requiring you to have at least 20%. Hence, making it necessary to combine both savings and credit.

However, it is also key to note other critical costs arise when buying a plot such as legal fees, valuation fees, and tax. This makes it necessary to factor them in as well to avoid stalling in the process.

From the above, there are various ways how to buy a 1 million plot with a 50K salary. It is all dependent on your preference and financial flexibility.

When buying a plot in Kenya through a loan, ensure to seek the financial institution with the least interest rates to reduce the interest costs.


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