The subdivision process

Guest post by Samuel G. Njenga

We shall base the info herein on a subdivision of a freehold title.

Before you subdivide any land, you must get the consent to do so from the Land Control Board. Ideally the consent is issued upon the proprietor appearing before the Board. Notice that all land transactions are controlled. However, we all know that in Kenya, we may not necessarily appear before the board, but we can get what they call ‘Special Board’. I have put it in quotes because the concept is illegal. In fact what happens is that the consent date is backdated to the last Board sitting.

I once attended that board when I wanted to sell a plot in Ruiru. Those wazees really harassed my madam and I. “Kijana, kwa nini unauza shamba na wewe ni mdogo sana?”, they asked. I told them that I have other plots and I sell plots as a business. “Wapi bibi”, one retorted. I was with my significant other so I pointed at her. “Huyu sio msichana umeokota mahali?”. I produced the marriage cert and she produced her ID. They asked her “Na wewe unakubali mzee auze shamba mkae wapi?” She said she is OK with it and that is when they accepted. I swore never to return there. The wazees are famed at dismissing would be sellers unceremoniously. By the way, the idea behind the Land Control Board is noble especially to protect families from wazees who just sell land and leave their families desolate. Back in the village it is a common problem where fellows are selling inherited land and run away with young girls to squander the money only to return once the cash is over.

Once the consent is granted, the surveyor prepares the development plan on paper. The plots and access roads are earmarked and drawn to scale. Once the planning on paper is complete, the rest is to be done on the ground i.e. placing the beacons. Of course there are requirements that guide surveying including the width of the access road, minimum sizes and others.

Ideally, the proprietor is supposed to be present when the beacons are being put on the ground. Once the beacons are in place, a mutation form is filled in triplicate. The content of the form are as below:

1.     Title number (mother title) and approximate area. (page 1)

2.     Registered proprietor instructions to the surveyor on how they wish the land to be surveyed. (page 1).

3.     Sketch or development plan which ideally should be filled by the proprietor(page 2)

4.     Field diagram and observation on site with measurements to scale. This is normally filled by a licensed surveyor.

Once the mutation is filled and the proprietor has signed the 3 copies, they are presented to the district surveyor whose role is to approve the subdivision and allocate Land Reference numbers (new numbers to the new plots). The numbers are normally allocated serially based on a particular block of land. So the District Surveyor will just check from their records the last number issued for that particular block and allocate the new plots the numbers that follow.

The District surveyor then forwards a copy of the mutation to the registrar confirming that the survey work has been carried out and therefore the registrar can issue title deeds based on the LR Numbers already allocated by the DS. The DS also forwards a copy of mutation to survey of Kenya for purposes of amending the RIM (Registry Index Map).

Once the registrar receives the mutation, they open a green card for each of the new titles, issue a title for each of the new plots and then file the green-cards in the respective binders. The Proprietor then receives the new titles.

The Process gets is far more complex and trickier and expensive when subdividing leased land.

By the way, when someone tell you that they have subdivided their land and all they are showing you are beacons on the ground, 'ati titles ziko njiani,' please take note that they may just have done the easiest part of the process.

What is astounding is how land buying and selling companies take forever to process titles and ordinarily it is a process that takes 4-6 weeks. Land buyers need to be more careful and insist on buying land whose titles are ready.

Next lesson we will try and explain the sizes of plots. Someone once asked me what 1/8th acre is? Is it 50 by 100? What is this hectare thing? We can also look at land tenancy

Understand that Agreement before you sign it: Part 2

Continued from Part 1

“The sale is subject to the Law Society Conditions of Sale (1989 Edition) in so far as they are not inconsistent with the conditions in this agreement.”

The LSK Conditions of sale (1989 Edition) are boiler plate set of conditions to aid in drafting of agreements and guide the sales and conveyancing process. They outline how critical matters are to be dealt with including:

•          Deposits

•          Completion

•          Possession

•          Apportionment

•          Interest on purchase money

•          Objections and requisitions

•          Rescission

•          Easement, Liabilities

•          Consents

•          Subdivision

•          Notices

•          etc

Default clauses

These are meant to protect the parties in case of default. In the event the vendor defaults, common practice is to return the deposit paid by the purchaser mostly with some interests guided by the market rates.

In the event of a default by the purchaser, the vendor is entitled to serve the purchaser with a 14 day notice and when the same expires, the Vendor at his sole discretion has the option of either extending the completion period or rescinding the agreement in writing.

Rescinding of an agreement: It basically means to declare a contract void—of no legal force or binding effect—from its inception and thereby restore the parties to the positions they would have occupied had no contract ever been made. In the event this happens due to failure of the purchaser to comply, then the purchaser loses the 10% deposit.

Completion

This is usually done by way of exchange of completion docs and balance between Vendor and purchaser respectively or upon successful registration of the transfer in the name of the purchaser.

Another common practice of late is signing on every page for the vendor and the purchaser just to make sure that a malicious party does not pluck out unsigned pages and replace them with unfavorable conditions or different content.

For the agreement to be valid, a Certificate to identify the vendor and purchaser, must be done by an advocate.

Another condition of late relates to simply stating who drew the agreement. “Drawn by”

Is an agreement which has not been witnessed by an advocate legal? Yes if there is a witness. However, the transfer documents must be certified by an advocate licensed to practice. Also certification of the other docs as true copies of the origin must be done by an advocate /notaries public.

Who is this notaries public? A person legally empowered to witness and certify the validity of documents and to take affidavits and depositions. Wow..and what is an affidavit? A written statement of facts voluntarily made by a person under an oath or affirmation administered by a person authorized to do so by law.

Arbitration of disputes

In the event there is a dispute between the parties over the agreement, they should issue a notice of 7 days to each other with a copy to their witnessing advocate who shall within 7 days invite both parties to a joint meeting and may arbitrate any disputes and his decision is binding and can only be reviewed by an arbitrator appointed by the two parties but in the event they cannot agree, then an arbitrator will be appointed by the Chartered institute of Arbitrators to arbitrate the dispute.

And what is power of attorney: A written document in which one person (the principal) appoints another person to act as an agent on his or her behalf, thus conferring authority on the agent to perform certain acts or functions on behalf of the principal. This means you can grant a person authority to act on your behalf and that includes the sales process. A power of attorney generally is terminated when the principal dies or becomes incompetent, but the principal can revoke the power of attorney at any time.

Enough of the agreement and the legal jargon. Next we will look at the subdivisionprocess…

Understand that agreement before you sign it: Part 1

Guest post by Samuel G. Njenga

I signed that agreement and I never really understood most of the clauses therein. This is a common issue with most land purchasers. Did you know in the unlikely event of failure to complete a land purchase transaction and in the event of failure to resolve amicably any issues that may arise, the recourse the purchaser or the seller have will be based on the content of the agreement. Let us try and understand the contents of a standard sales agreement.

The agreement must have a vendor (seller) and a purchaser and either could be an individual or a company. The agreement will not only quote the name (s) of the vendor / purchaser but also mention successors in title, assigns and personal representatives. These are parties to the agreement. Who are these? Successors in title basically mean the successive owners of the titled land. Assigns are third parties to whom the vendor / purchaser would transfer all of the rights and obligations he/she has. A personal representative is ordinarily an executor for the estate of a deceased person who left a will or the administrator of an intestate estate. Take note that all these parties are bound by the agreement you are signing.

The agreement will further mention the Land Registration (LR) number, commonly referred to as the title number of the parcel in question, its area (approximate) & tenancy (freehold or lease). In the case of a lease the agreement will quote the lease period.

The agreement will further quote the Purchase price and terms of payment. Ordinarily, a payment of 10% on execution of the agreement will be paid by the purchaser. However, this may vary depending on what the two parties have agreed. The agreement will mention the completion period and in most cases give room for extension of the period as long as the parties agree and do so in writing.

It will further list the completion documents as below (if it is an individual buying and an individual selling):

1.     Original Title in the name of the Vendor

2.     Consent necessary for transfer

3.     Duly executed transfer forms in triplicate

4.     3 Passport Photos of the Vendor

5.     Copy of Pin Number of the Vendor

6.     Copy of National ID of the Vendor

7.     Rates Clearance Certificate (In Case the tenancy of the land is leasehold)

8.     Rent Clearance Certificate (In Case the tenancy of the land is leasehold)

9.     Valuation form duly filled

In the case the vendor/purchaser is a Company, then some additional documents will be required as below:

1.     3 photos each of the 2 directors of the company executing the transfer

2.     Copies of PINS and ID copies for 2 directors executing the transfer.

3.     Copy of the registration Certificate if it’s a company.

4.     PIN Certificate of Company

There is this clause that goes like “The Property is sold with vacant possession which shall be given to the Purchasers by the Vendor against release of the full Purchase Price and apportionments (if any) to the Vendor.”

What does it mean?

Vacant possession: On completion of a sale, the seller is obliged to deliver the property with vacant possession which means clear of occupants and of any objects which are not included in the sale.

Apportionments: it refers to the allocation of property expenses such as insurance and taxes between the buyer and seller. Apportionment can also describe the division of property between tenants in common

Another clause will go like “The property is sold subject to all subsisting easements, quasi-easements and right of way if any, the acts reservation, special conditions and other matters if any attaching on the said property but otherwise free from any encumbrances.”

Let’s understand what these things mean:

Easements: The right of one party to use the property of another party. Easements are often applicable when public utility companies want the right to erect telephone poles, electricity poles or run water / sewer pipes either above or beneath private property.

Quasi easement: Similar to above but only applicable when a single owner has 2 or more adjoining plots. In this case, one or more parcels will be used to benefit the other (s). Notice how a quasi-easement becomes an easement upon the transfer of one or all of the parcels.

Right of way: It is basically the right to pass over property owned by another party. A good example would be KPLC power lines.

Special conditions: These apply especially in cases of leases. A lease is usually accompanied by special conditions which govern the lease.

Encumbrances: As earlier mentioned in another lesson, these will include restrictions, cautions, charges etc.

Take note that whenever you acquire that plot, you get it as is and consequently you inherit all of the above.

Next lesson we look at other agreement clauses including default clause, rescinding an agreement, certification of parties signing, validity of an agreement and disputes arbitration.

What is in this official search document?

Guest post by Samuel G. Njenga

Paul and I met this broker who was introduced to us by a friend in Rongai. This was on a cold Thursday morning sometimes in August 2010. The guy went ahead and showed us a very nice 2 acre piece of land around Rimpa, some place between Rongai and Kiserian. It had an old building and was on sale. We felt the price quoted by the owner was quite low. However, the story went that the owner was liquidating a lot of his assets due to financial constraints hence the low figure quoted. We expressed interest in the property and the broker called the owner who apparently was in Kiserian. We therefore decided to drive on to Kiserian and meet the guy.

On reaching Kiserian we navigated our way to some dingy looking pub where the owner was having a drink with some other guys. We got shocked because in front of us was a former KANU bigwig who seemed a shadow of his former self. The guy looked unkempt and in comparison to the man I knew in his hey days, it seemed like life had not be rough on him. He had a unique look and it was not possible to mistake him for someone else. I just realized how fast the tide can turn against you especially when in the political cold.

After the intros, we told the old man that we were interested in his property. He told us that we are not the first to express interest and if we really wanted the property, then we needed to make a commitment as fast as possible. Red flag?! Indeed yes, coupled with the fact that he was a former politician (another red flag), I knew we had to trend carefully. We informed the guy that however much we want the land we needed to confirm it is OK by way of carrying out an official search. He informed us that he is to travel to Kericho the day after so if we wanted his land then we had to move fast. We promised to revert back to him as soon as we had the search. No-one should ever force you into a quick deal before you perform the necessary due diligence.

As we departed for Nairobi, I called my contact in Kajiado and gave him the LR number so that he does the search. At around 4pm, my contact in Kajiado called me. He is usually a funny fellow but from his first words, he sounded shocked. He told me that he had the search with him and it was like none he had ever seen before. I was quite curious to know what was therein. He called me by my name and told me, “I thought I told you to be very careful with some of the land you keep attempting to buy”. I told him am usually careful and I do the best I can. “Forget about that land”, he retorted. He went ahead to inform me that the search had so many encumbrances to an extent that they could not fit in the space availed for listing them on the search document.

When I received the search the day after, it made some interesting reading. It had as many as 4 entries other than the normal entries of the name of the proprietor and when the title deed was issued. The 4 entries were as below:

1.     A restriction that no dealing will be registered on the land unless the registered owner appears in person.

2.     Caution by some guy claiming lender’s interest.

3.     Charge in favour of a financier.

4.     Further charge in favour of the same financier.

In total the land was charged to the tune of 9M and it was only worth 3M at the time we viewed it. I am sure by the time of the charge which was around 2004, it must have been worth 300k. How the charging was done for such a value, don’t ask me.

An official search is a confirmation by the respective land registry on behalf of the government on the ownership and status of a particular title. It shows the following details:

1.     Title number, search number and the date the search was done.

2.     Nature of title: Absolute or lease.

3.     Approximate Area in hectares

4.     Name and address of proprietor and whether a title deed has been issued to the proprietor.

5.     A section on inhibitions, cautions and restrictions.

6.     Encumbrances section (leases, charges etc.)

7.     Pending applications

The search document details are filled based on the content of the green card upon and must be signed and sealed by the Registrar. For a title to be clean, then No.s 5 to 7 must be nil. If not, and especially section 6, a charge entry must have a corresponding discharge entry to free the charge. A title with the any unresolved issues in No.s 5 to 7 is not transferable.

A quick look at the title document itself:

Other than confirming the title number, the approximate area of the plot/land and the proprietor details, one needs to confirm the entries in the proprietor section (part B) which should tally with the entries on the search. Take note of the date the title was issued and confirm it is the same with what appears on the search. There is also the need to have a look at any entries in section C (encumbrances section) because therein they list them. Any entry in this section must be accompanied by a signature by the registrar. Remember the following important points:

•       A charge entry must be accompanied by a discharge entry for the same amount and by the same chargee to release the charge.

•          A caution can only be removed by the entity that placed the caution, same with restriction.

•       If you come across a discrepancy in the proprietor details as in names, nature of title and approximate area, then be very careful. Take for example a discrepancy in the name of the proprietor (e.g. use of initial in the title as compared to full names in the ID), the legal process get quite interesting where the proprietor must go through a correction of names in the title. The process starts with swearing an affidavit, the same is presented to the registrar who writes some letter to the area chief, who must identify the proprietor and give them a letter. The proprietor must then present themselves to the relevant Land Control Board to get consent to change the name and he/she takes all the docs to the registrar for the change to be effected. Quite a procedure.

Special circumstances when you can proceed with a deal when a title is encumbered:

For developers who are financed, the titles for the land they are developing are usually charged by the financier. What normally happens, in the case when a customer who pays up for a house, a partial discharge for the specific title to the unit is done hence freeing it from the charge and allowing for the transfer to proceed. So whenever you carry out a search for the title of the house you want to purchase, you should not be worried to find it charged by a financier because essentially it’ll undergo a discharge and the transfer will be executed. However, a vacant plot / land must be free from encumbrances.

Next lesson will dwell on understanding a sales agreement, I know most people have signed it but they were not sure what some clauses meant.

Due Diligence when investing in real estate

Guest post by Samuel G. Njenga

On this particular Saturday morning sometimes in 2008, my partner Paul and I met one of our brokers who showed us a very nice piece of land in Ruiru off the Eastern bypass. It was approximately 2  km from the junction of Thika Road and Eastern bypass towards Ruai, third row from the tarmac. The site was wonderful but we have since learnt not to be so excited by the aesthetics of a shamba (farm). The shamba was up for sale and the good thing is that the broker knew the owner at a personal level.

We expressed interest to acquire it and decided to carry out due diligence. The 1.25 acre shambas in Ruiru were originally owned by shareholders of Githunguri ranching company. The first thing we do is to check on the survey maps to confirm that the ground we are being shown and the title number as seen on the map adds up. We then check the original owner from the records of Githunguri coz the company still exists. It is easier to trace the original owner and any subsequent transfers of title in Thika. For this particular shamba the story went that the original owner (an old lady) had given the son the land as a gift but the son had never transferred the title in his name. It was thus easy to confirm coz the title was still in the name of the original owner. After that confirmation, we carried out an official search at Thika and confirmed the records. When we finally met the son, we negotiated the price further and agreed. However, we insisted that the son takes us to the mother, who in actual sense was the proprietor. We drove all the way to Githunguri and met the old lady at her home. She actually confirmed the story and agreed to appear before a lawyer and sign the agreement and any other document.

We normally demand that the Vendor must have all the completion documents including the consent to transfer. On the day of signing the deal, we met the Vendor and insisted that we go to the site first so that we are shown the beacons before we enter into an agreement and pay 10% deposit. When we landed at the site, we got the shock of our lives. We found fresh subdivision beacons on the land. In my estimation, the land must have been beaconed the day before. You can imagine the reaction of the Vendor. He was tongue tied, speechless ama aliona na mdomo… Of course the deal never proceeded but I advised the old lady to carry out investigations and establish what could have happened.

A week later, I met our broker and he told me what exactly had happened. The land in question had been on sale for like 6 months or so. The original broker in charge of the sale had circulated copies of its title to so many other brokers. The guy had also narrated the story to other brokers of how the son had acquired the land from the mother as a gift and the fact that the son had never executed the transfer. Crooked fellows just did another title (similar to the copy they had accessed) and the ID in the name of the old lady. When a prospective purchaser got wind of that the land was on sale and the guy was given the story behind the ownership he decided to purchase. When the prospective purchaser did a search in Thika, the title was clean and in the name of the old lady. Little did he know that the purported vendor was an old lady whom the crooks just hired and one of the crooks posed as the son and the vendor was convinced that the story added up. So he paid for the deal in cash and received the fake title, consent to transfer, passports and copies of the fake ID and fake PIN. So the guy decided to physically subdivide the land as he awaited the transfer to go through. It was shock on him…. He was suckered and lost a whopping Kshs. 2.5M.

Basically, I’d also think we survived by a whisker though we were dealing with the real owner but the prospects of a court case chasing our hard earned cash was not anything we’d have wanted. But again you may wonder what error of omission or commission did the conned guy commit.

How best can you carry out due diligence?

1.     Always trust your 6th sense; basically your instinct. When you feel like there is something not adding up, most likely there is a problem. When you meet a vendor who does not sound confident and wants the deal done as fast as possible, it is a red flag.

2.     Get to know the history of the land you are buying from the locals. You’d be surprised at the kind of info you can gather from locals. Biggest challenge is land / plots in town; imagine CBD, whom do you approach? Like I remember in 2003 when I first bought a plot in Syokimau, the sales lady from the Company I bought from mentioned that there is some contentious land whose ownership is claimed by KAA but some fellows are selling. It is so sad that turned out to demolitions witnessed the other day…so so painful. My point is, the info is always there if you are keen to ask around.

3.     Check the land / plot on the survey map. This will also ensure that whatever you are being shown is in line with what the area map shows. A survey map clearly shows the LR numbers, the access roads etc. Make sure it is an authentic map. At the survey of Kenya they go for around Kshs. 300.

4.     Carry out an official search for the land /plot and ensure that the title is clean. A clean title has no encumbrances (cautions, restrictions, charges, etc. we’ll talk about these later). Take note that a search cannot tell you anything about a fake title. It is just shows the records as per the green card at the land registry. However, when a fake title is presented to the land registry for a transfer to be executed, then they’ll notice at that point; but by then you’ll have probably lost your money.

5.     Use an Advocate who understand conveyance and one who is not only licensed to practice but has renewed their license. Some advocates have no clue about conveyance. They normally must renew their licenses annually. By the way, a transaction done by a lawyer who is not licensed is voidable. This site gives this info: http://online.lsk.or.ke/online/searchengine.php

6.     There is that Ndung’u report. It is wise just to confirm that what you are buying is not mentioned in that report.

7.     Last but not least, ensure you confirm that the ID of the vendor is not fake. You can use security experts / firms to confirm that.

8.     If you can, get to have an idea where the vendor works or lives. Wherever possible, just pay a 10% deposit and le the balance be held by an advocate to be released upon successful transfer.

Play safe because losses in land deals are usually big and painful. You might cry in the toilet after s**t hits the fan.

Next lesson we’ll talk about how to interpret the official search document and special circumstances where you can go ahead and deal in a plot which has encumbrances especially when charged by financiers.

What is a FAKE TITLE DEED?

Guest post by Samuel G. Njenga

A deed is a signed agreement especially about the ownership of property or legal rights. A Title deed is a legal document providing somebody’s right to property and subsequently ownership.

Then what is a deed plan? This is a signed plan by the Director of Surveys showing the precise particulars of a surveyed piece of land. It shows the details as in the shape of the plot, the distances and bearings all-round the plot, scale of plotting, Deed plan number, land reference no., size of the plot in hectares, signature of the Director of Surveys, the date of authentication by the Director of Surveys and above all it shows if the plot is a New Grant or an extension of lease. This is practice is under the provisions of Registration of Titles Act (RTA). This deed plan once it is duly prepared, it is attached to a certificate defining the current owner and any endorsements by the relevant Registrar in the event the property has changed hands or there are encumbrances therein whatsoever relating to the plot.

What about a mutation? Under the Registered Land Act (commonly referred to as Cap 300) the mutation form shows how a bigger land (mother) mutated into smaller pieces and the details of the proprietor (Names, ID, box number and signature). It further shows the date the surveying was done. It also details the subdivision details (existing roads, LR numbers of the resultant plots, the exact measurements of the plots and their areas in hectares). Other signatures therein include the one of a licensed / district surveyor and the land registrar who prepared the resultant titles. This document is ordinarily forwarded to survey of Kenya for purposes of amending the RIM (Registry Index map) which basically keeps track of all subdivisions in a specific area.

Then what is the meaning of the word “fake”? To make something false appear genuine.

From the foregoing therefore, a fake title deed is a false replica of a genuine Title deed where it could have all the attachments but does not relate to any physical piece of land. Equally it purports to confer a right that doesn't exist.

In early 1990's there was the infamous 13th floor of Ardhi House where false documentation was done to support surveys and issuance of Title deeds by the unsuspecting authorities. This floor was in reference of a room in River Road Nairobi. After all Ardhi house goes up to 12th floor. The fraudsters could therefore generate documents including allotment letters, Part Development Plans (PDP) and all that appertains to excision of land from the Government land (GL). They could even go ahead and file these documents in the files of the Ministry of lands using inner house staff of the Ministry at a small fee. That is the point where corruption sets in the process. It even becomes difficult for the Ministry to trace the entry point of the fake documents in the Ministry’s genuine files. Where allocation of a genuine plot is substituted with the “fake” one it becomes even more complex to unearth the conversion stage from a genuine Title deed to a fake one.

Would a naked eye be able to identify a fake title? From the aforementioned info, it gets very tricky because most fake titles are replicas of the original, meaning the details therein are the same. How then can you tell it is fake? It is pretty hard, but the easier approach is to tell a fake owner because obviously the ‘owner’ should have other document especially the ID card. We also have document experts who can verify the title. Most security companies / experts can verify IDs. Banks when financing land deals use experts to detect forgeries of titles and IDs. If you carry out proper due diligence you should get to know if the owner is the real one and if the documentation is proper.

By the way, other than fake titles, whenever then you transact with plots, take time to carry out proper due diligence to establish the history and more importantly the conception process of the plot. Only then you will tell the plot was grabbed or was acquired the right way. Else you could invest on a road reserve where caterpillars of the Ministry of Roads will be your obvious guests. In this case no compensation by the state will come your way as the rights of the society surpasses individual interest.

A green card is a document that holds original records of all transactions relating to a piece of land/plot. This means at the issuance of a new title, it must be preceded by opening a card for it. Any subsequent transactions relating to the plot/land are recorded there. Normally when a subdivision is done, a green card will be opened for each sub-plot  Maybe the seller had reached the stage where the card had already been opened but the title not yet issued. However, that is the last and the easiest process when subdividing land. The green card is applicable to the registered Land Act and is resident at the district land registry level.

We also got the white card applicable to Registration of Titles Act, mostly leases and is resident at Ardhi house as well as at the district level; they are usually put together in binders.

Finally, do you know that an official search at the land registry office is not sufficient due diligence?? I’ll expound more in the next topic as we look at how to carry out a comprehensive due diligence you can carry out to protect yourself from getting conned when purchasing land.

Our next lesson will be on paying due diligence before investing in real estate.

Making Real Estate Part of Your Retirement Nest Egg

Guest post by Young

At one time or the other, everyone will retire or be retired (by organisation or by nature). You cannot continue to work with the same passion and strength forever. One day, you will be tired of work or the work will be tired of you. Faced with this inevitable end of work, you need to have a solid, reliable and stable retirement plan.

Many employees are discovering nowadays that most companies and organisations are more interested in employees taking care of their pension rather than relying on them.

Even more disheartening is the unfortunate realisation by those who were part of previous pension programmes that their money had been invested mostly in the stock market and other financial schemes and had been lost. This shocking discovery came to many when they had passed their peak working years.

One of the reasons for this unfortunate development is the fact that apart from real estate, only very few investments are under the control of the owners of the funds.

In real estate you are literally in charge. However, in several other financial investments, you are either at the mercy of the fund managers or those running the company you have bought into. That is why astute real estate investors keep a significant portion of their funds invested in real estate. So, if you are interested in retiring young, and rich, or you are already approaching your retirement age, then use real estate as a retirement vehicle.

One of the basic issues you need to decide is the amount of money you need annually to sustain or maintain your standard of living after your active working years. You will have to estimate the likely rate of inflation and other expenses that will come with it, such as increased school fees, feeding, transportation, health care and other utility bills.

The essence of this is to help you estimate the minimum income you need annually and set a real estate investment goal that will generate the income you need and more.

In addition to the above, you need to determine the real estate investment that seems best suited for your purpose. For instance, a person who has set an investment goal of having a steady cash-flow of 6 million every year could focus on residential properties located within certain environments that will generate the desired amount yearly, or is projected to generate such an amount yearly.

This individual could also focus on commercial properties such as shopping complexes, or event centres with a similar projected cash-flow. Whatever your goal, there is a suitable real estate investment vehicle for you.

There are several models that have been used and have worked for others. I believe you can adopt any of them and make them work for you. Some years ago, a property developer built a mini-estate of about ten (10) semi-detached duplexes in a GRA as a retirement investment. His aim was to rent them for residential purposes and use the income coming in to maintain himself and his family.

Another individual concentrated on buying prime properties during his working years. By the time he retired, he had three properties in prime locations including the one he and his wife were living in. By then all their children had completed their university education and were all settled.

He then sold two of the properties at very good prices and used the gain as a fixed deposit at his bank. The interest accruing on the money was always in excess of their monthly expenses.

These individuals were not dependent on any government pension plan for their upkeep and survival. This is the essence of planning for your retirement yourself.

Real estate fulfils several roles. It provides cash-flows as well as capital appreciation. Over time, real estate is usually the asset that will eventually outpace inflation in its capital appreciation.

With proper planning and sacrifice, an individual can focus on the number and type of real estate properties he or she would like to have as at the age of retirement. Those who successfully achieve this feat would have a peaceful and more relaxed old age.

Finally, you need to understand that practically any goal is achievable if you give it enough time and sacrifice. For most people, their earning years span between 20 and 30 years, during which a person could save and invest in having at least two or three rental properties.

The key is to start early, start now and stay focused. Using the law of compound interest, appreciation and leverage, and several other tools, an individual can secure his or her future with real estate as one of his retirement nest egg to compliment other asset classes.

But before investing in real estate, understanding /interpreting an agreement, understanding a search (cautions, restrictions, and encumbrances), caveat emptor and paying due diligence is necessary. This will be covered in the upcoming lessons.