Factors To Consider Prior to Purchasing Investment Town-houses, Flats & Apartments in Zimbabwe:

Introduction: Know what to consider:

“Every prudent man acts with knowledge...”(Proverbs 13vs16; New King James)

Whether an “old money” situation wherein one does not want to fritter-away a family fortune, or a “new money” scenario where one would like to leave an inheritance for posterity (see Proverbs 13vs22), acquiring alienable rights to investment residential real estate in Zimbabwe – specifically in this brief treatment, town-houses, flats and apartments - is a prudent move.

Here are eight factors to consider prior to making that pecuniary commitment.

8 Factors:

1) Location: Still (and most likely will be) the most weighty of the factors; thankfully, its’ bearing is carrying less weight with the passage of time, owing to the more recent spatial-planning best practice of recommending and green-lighting mixed-use residential developments. Such developments are simply ones which aim to have amenity at one’s door-step, such that one may live, work and play all within the general locale in question. Prominent recent examples in Harare, are Millennium Heights by WestProp Holdings in Harare North, as well as Aspire Heights & Aspindale Park in the western quadrant of Harare.

Outside of nascent mixed-use residential developments, a sagacious residential real estate investor has to factor in location, and come up with their ideal tenant profile. For instance, if they are targeting neophyte urban-professionals who are just getting their foot in the career door, then it makes sense to snap up studio or single bedroom flats right in the heart of the concrete jungle. If they are targeting an ex-pat or C-suite executive, then, in Harare, they are better off investing in the northern areas, or, if daily commutes are an issue for a subset of that lucrative segment, then acquiring an immovable property in the upper avenues (8th, 9th and 10th streets) areas is ideal, as there is enhanced safety, more tranquil environs, as well as lowered risk of urban blight.

Thus, always have a profile of one’s ideal tenant in mind, and where they would prefer to be situated.

2) State of repair of the investment property itself: After amortizing the purchase price, risk and profit typically pass on to the investor. Will any costs need to be “sunk” or “ploughed” into the investment property from the outset, because, for example, it is a “fixer-upper” in need of some tender attention? Or is it a straight-forward, “purchase-and-profit” scenario? The state of repair will influence this.

3) State of repair of the apartment/town-house complex or block of flats: This will affect the investment in all its facets; from on-boarding of an ideal tenant, to the rental they may expect within reason, to one’s entry and exit strategies. Take time to appreciate the complex, and gauge whether the other owners and residents care about their investment. It is difficult to care when others don’t, and conversely, it is difficult to not care when others do. Peer pressure 101.

4) How active or dormant is the owners association?: This is bar none, the most important factor affecting the entire investment, from the experience of the tenant on-boarded, to the expected yield of the investment, to how pleasant or regrettable one’s entry and exit are. An active and proactive owners association is like a rising tide which will lift “all boats” or units in the apartment/town-house complex or block of flats in question, both in terms of capital values of the immovable properties therein, as well as their rental yields. The commons will be kept in good-nick, the local authorities (i.e. City of Harare, City of Bulawayo, etc) will not hound the association about violation of by-laws or health and safety, the security of the complex will be kept intact as the portal/gate will be well-maintained & operational; there will at least be security at night, solar street-lighting, operational elevator, et cetera.

What is more, a proactive/switched on owners association will likely maintain a kitty or “sinking fund” to take care of the replacement of key fixed-asset items upon the end of their useful life (e.g. gate or elevator replacement, et cetera), with “special levies” only being resorted to by buy-in, for the improvement of quality of life for all (e.g. drilling of a community borehole).

Really take the time to delve into how alive or moribund the owners’ association is. For instance, consider:

a) Inquiring (in good-faith and from a posture of curiosity) why the transferor is selling: Are they leveraging their position? Moving on to bigger and better things? Or, has the association made them pull out all their hair, and they are heading for the nearest “emergency exit?”

b) Probing how conscientious and dutiful a member of the association the seller is: Are they up to date with their levies? Do they know what the monthly levy is? Are they forthcoming with such information? Are they jittery about you checking all this out with the leadership of the association? Do they have a copy of the association’s constitution, or just extracts (or worst-of-all, nothing)? If their tenure document is sectional title/undivided shares, do they have a copy of the notarial deed of the complex?

c) Interacting with the caretaker(s) of the complex: They usually won’t hide how well or poorly treated they are, as well as how functional or dysfunctional the owners’ association is; as they typically interact with its leadership, owing to the fact that they are the “boots on the ground.”

Again, sans location, the state of the owners association is the most weighty of factors. If it is active and vibrant, showing several green flags, then please take to it like a Doberman to a bone; yet, if the converse prevails, by all means...head for the hills.

5) Amenities that the immovable property itself provides: For instance, on-site reservoir in the form of a water tank, and/or the presence of a solar PV system augment the resilience of the immovable property in question, raising its value both capital-wise as well as on the rental-yield front.

6) Complex-wide amenities: Concierge service? 24 hour security? Tenant/owner parking? Visitor’s parking? Clubhouse or gymnasium? Tennis court? The presence or paucity of complex-wide amenities influences the capital and rental values of the investment.

7) Layout, features & finishes of the town-house/flat/apartment: For instance, are there built-in-closets? The master bedroom (does it have a walk-in-closet)? Any ensuites? The finishes? Modern or dated? Certainly, function-over-form and steak-over-sizzle any day, yet, fashion and tastes do have a bearing on investment value. The key? Moderation and strategy. No need to necessarily be at the avant-garde of fashion and tastes, or worse, to chase trends at any and all expense (lest one risks over-investing); rather, when the need for a necessary repair presents itself, incorporate some “style” into that substance, thereby incisively killing two birds with one stone.

8) Tenure document/mode of ownership of the immovable property in question: From the outset, mother-lode of respect for considering some sort of investment real estate. Period. Yet, the tenure document/ownership configuration of the investment property sought after, will affect the investment value in most all major facets (i.e. from entering and exiting the investment, expected capital value, to leveraging or parlaying one’s position). For instance, whilst share transfer certificate promises and usually delivers less of a pecuniary barrier to entry and exit (i.e. purchase price and closing costs on entry, as well as closing costs on exit), it will yield less in selling price on exit. Also, one is not able to (easily) leverage or parlay their position, because with “sectional title”/undivided shares, one is able to apply for mortgage finance and fund further immovable property acquisitions, and/or improvements to the investment property in question, and/or take a calculated risk in a strategic business venture...in essence, playing 3 or 4-D chess.

Where possible, aim for sectional title, yet, regardless, again, a mother lode of respect for aiming to acquire some investment residential real estate.

Conclusion: Proceed with knowledge...

Thank you so much for your invaluable time and attention. As mentioned from the outset, “Every prudent man acts with knowledge...”(Proverbs 13vs16; New King James) or, in essence, walks into scenarios prepared and with their eyes wide open.

Here’s to your entering into a lucrative residential real-estate investment deal.

Good-speed.

Tatenda Kangwende is proud and honored to be a real estate professional in Zimbabwe. For serious business pertaining to real estate in Zimbabwe, please contact him via:

Mobile (GSM calls, SMS, WhatsApp) = +263 714 729 043

Email = [email protected]