Building a home back home

 Two roads diverged in a wood and I – I took the one less traveled by, and that has made all the difference. ~Robert Frost

Once you choose to construct a home back home, the next immediate step is to identify how to start. Most people rely on  relatives or friends living within Kenya to select a site (location) , obtain designs and construct the home.  In order to ensure that the building commences and progresses smoothly  they periodically send money home. This arrangement has worked for some but an increasing group of diaspora get conned by their own family members because of poor workmanship or non-existent projects.  Family ties  prevent them  from taking legal action against them. Today we advice you on how to  avoid these problems.

1.  Let Professionals Handle your Project:

Building professionals ensure a number of things. First, by appointing a team of professional contractors, you benefit from expert advice in design, construction, costs and all other aspects of the project including legal standing.Building professionals also ensure that the quality of workmanship in construction is upheld. They become your eyes and ears on the ground.

Letting professionals handle your project also enables you to easily acquire mortgage  if need be, from lending institutions  In Kenya, a registered architect and some instances, a registered engineer is required for all projects.

2.  Don’t Send down all the Money at Once:

For construction projects, it is smart to remit funds gradually as opposed to in lump sums. The reasoning is this: the risk of loss of funds in unscrupulous deals is reduced.

3. Conduct due diligence

Always make an effort to verify all project details.  These details include:the validity of issued certificates, the evidence of the construction site, the status of the project and the reputation of the contractors.

4. Stay connected with your local team

Keep constant communication with your local contractors. Make an effort to visit the site at least once a year, to assess the situation on the ground. Keep your eyes on your investment!

5. Retain all relevant documents

Your property documents are what you need and will stand proof of ownership in case of legal tussle or private incursions. Examples may include the title deed/settlement agreement or share certificate for the land, the architectural & structural documents and significant agreements.

In KENYA?

You may find the paper below particularly useful.

The Cost of building works paper can be downloaded below

Average Build Cost Guide>> CALCULATOR

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Finding contractors/ fundis in Kenya

Today we talk about how to find a builder, and the key issues to consider when choosing building contractors.

Key qualities

Hiring the right builder is crucial to the whole building experience. People who have been involved in building or renovating a house typically report that the key factor in making it a happy experience is finding a good contractor and subcontractors.

We talked to a few home builders and they cited the following problems encountered during construction:

• Poor workmanship.
• Contractors not turning up when promised.
• No communication about variations and other issues that arise.
• Complaints being ignored and problems not being fixed.
• Phone calls not being returned by the contractors (Fundis)
• Delays which became a nightmare.

In contrast, people who’d had positive experiences reported that the builders they hired all had the following qualities:

• Skill.
• Honesty and integrity, i.e. someone who tells the truth, keeps promises and accepts responsibility when it is due.
• Knowledge of the housing industry.
• A personality that meshed with their own.
• Patience.
• Sympathy for their goals and budget.

Contractor selection criteria

When the tenders come in, don’t automatically choose the cheapest. Use a number of criteria to decide, such as:

• Price – if a tender is way above or below the others you should question it. Some builders tender low on the initial bid just to get the job – but they’ll probably be forced to cut corners, or rely on expensive variations along the way to make the job pay. They may even put their own business into jeopardy and be unable to finish the job. Expect to pay a fair price for the job – you get what you pay for.
• Examples of their work – ask them if you can talk to someone who has used them to build or renovate, and look at examples of their work.
• Qualifications – find out if they are qualified.

Finally, talk to each one and decide if you think you can work with them on a daily basis. You need to be comfortable with them, believe communication channels will be open, and confident they are capable of turning the designs into a high quality/satisfactory house.

Get an independent opinion

If you still can’t decide on which builder to choose, ask an independent person, for example a quantity surveyor, or another builder, to look at all the tenders. Remove the names of the builders and ask the independent person what they think of the quotes and the service being offered. You might have to pay them for this check but it will be a small investment to help you find the right builder.

Where can you get a good builder?

It may be part of your brief with your designer that they engage the builder and subcontractors. Usually an architect/designer works with a pool of contractors (who in turn work with a pool of subcontractors). So the architect/designer will advise you who they usually work with.

If you are going to select the builder yourself, start looking around early. If you see a house you like, ask the owners who built it and if possible talk to them about any problems with construction and what the builder was like to work with.

Ask for recommendations from friends and colleagues, your mortgage manager, the real estate agent and others in the house business. Word soon gets around about who is reliable and who you should avoid. Get a list of names and start a pre-selection list.

Group housing company Contractors

Group housing companies offer a range of standard designs and usually take care of the entire building process, including in some cases, the landscaping.

If you have chosen to build your home through a group housing company, the builders and subcontractors will often be part of the package. Unless you have objections to any of the people employed or contracted to the company, you won’t need to worry about finding and selecting your Contractor and subcontractors.

In some cases the company might insist on using their approved builders so that they can be sure the finished product meets their quality standards and therefore protect the company’s reputation. Or because the particular systems used in construction have to be installed by specially trained tradespeople.

Many companies provide project management, guidance and advice. Make use of it and avoid those companies that don’t offer this sort of support.

At Stroika, we provide full service to home builder. We undertake all tasks from design through to completion and offer expert advice throughout the project.

BUILDING POLICIES AND REGULATIONS

Q & A

What are the problems in the sector?

The construction industry everywhere faces problems and challenges. However, in developing countries like Kenya, these difficulties and challenges are present alongside a general situation of socio-economic stress, chronic resource shortages, institutional weaknesses and a general inability to deal with the key issues. There is also evidence that the problems have become greater in extent and severity in recent years. One of the charges leveled at the construction industry, as at the beginning of the 21^st century, is that it has a poor record on innovation, when compared with manufacturing industries such as aerospace or electronics.

Institutional weaknesses exist where a regulating authority is unable to effectively implement the set regulations. This is a fairly common challenge in the sector where incidence, incapacity and negligence of the parties concerned results in poor building construction and associated challenges.  In order to come up with a way forward, it is critical to examine the existing codes already in place.

 

2. Present Regulations

The regulations governing the construction sector are distributed among the following:

(a)    Government policies- Building codes.( DOWNLOAD HERE)

(b)   Statutory regulations

(c)    Contractual regulations

(d)   Law of torts

(e)    Rules of equitable law.

 

2.1 Government Policies

Property and land policies so formulated by the government were and still are gradually being adapted in the construction sector. These policies include;

i)        The National Housing Policy- aims at ensuring sustainable construction and proper administration of land

ii)      The national land policy- ensure sustainable use of land

iii)    The Economic Recovery Strategy for wealth and employment creation strategy- Enabled urban renewal and rehabilitation of infrastructure and previous mining areas.

iv)    Vision 2030- The present government policy that aims at ensuring effective, efficient and fast socio-economic development in Kenya.

v) Building Code (downloadable here)

2.2 Statutory Regulations

These are formulated by either government bodies or the associated agencies. These include, but are not limited to, The National Housing Corporation, The Central Organization of Trade Unions (COTU), The City Councils, The Professional associations, Bureau of standards, the courts among others.  Such include the following;

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2.2.1 The factories acts

It defines a factory as any premises in which, or within the close or curtilage or precincts of which, persons are employed in manual labour. In the context of manufacturers in the construction sector, subsection (VI) states as follows:

‘any premises in which articles are made incidentally to the carrying on of building operation or works of engineering construction, not being premises in which such operations or works are being carried on’

This act also makes provision for the health, safety and welfare of persons employed in factories and other places of work. The Act is predominantly socioeconomic in nature and focuses on the shop floor conditions of the factory, safety devices, machine maintenance, safety precautions in case of fire, gas explosions, electrical faults, provisions of protective equipment among others.

 

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2.2.2        Kenya Public Procurement and Disposal Act 2005

In the construction context, this act governs the procurement and disposal of public property. It defines who a contractor is, the form of tendering (open), the procedures to be applied in both the procurement and disposal of property.

Other statutory regulations include;

• Environmental management and coordination  act – Which established the National Environment and management authority (NEMA) to cater for all issue affecting the environment
• The Physical planning act- established to control land use
• The Land planning act
• The water act
• The energy act
• Building codes of 1968- Established to be enacted by the local authorities. They defined the building specifications and the quality of building material to be used. Connection to common facilities such as sewers, electricity and water pipelines was also defined.
• The land acquisitions acts- dealt primarily with the procedure of land acquisitions, ownership and disposal
• The Government Lands Act (Cap 280 Laws of Kenya)-This enactment is no doubt a replacement of the 1915 Crown Lands Ordinance.  It was enacted to make further and better provisions for regulating the leasing and other dispositions of Government Land and related issues.  Under this Act, only the President can sign documents granting title. The President can and has delegated his powers to the Commissioner of Lands. The GLA lays down the procedures the Commissioner of Lands must follow in allocating land.

CONSTRUCTION CONTRACTS

There are three essential requirements of any contract.

1. Incentive: The prime aim is to provide an adequate incentive for efficient performance from the contractor. This must be reflected by an incentive for the client to provide appropriate information and support in a timely manner
2. Flexibility: the prime aim is to provide the client with sufficient flexibility to introduce change which can be anticipated but not defined at the tender stage. An important requirement is that the contract should provide for systematic and equitable evaluation of such changes.
3. Risk sharing: the prime aim is to allocate all risk between Client and Contractor. This must take into account the management and control of risk which materialize.

Types of Construction Contracts

There are various types of contract strategies in construction industry. Some of the main choices available are:

• Traditional Contracts

A consultant (or team of consultants) undertakes the process of feasibility, detailed
design, and contract preparation. A tender process follows and thereafter construction
installation and commissioning by the appointed contractor. The consultants who
developed and designed the project supervise these.

• Design and Build

A consultant undertakes the process of feasibility, establishing the client’s basic needs
and contract preparation. A tender process follows and thereafter the appointed
contractor undertakes detailed design, construction, installation and commissioning.
This type of contract is also known as turn key or prime contracts

• Management contracts

The client initially appoints consultants to undertake feasibility and costing and
perhaps outline design.A management contractor is appointed early in the project life and has considerable design input.

The management contractor’s responsibility is to prepare and appoints trade contracts or supply packages. Separate contracts are drawn up for independent parts of the construction project. A large amount of work is divided amongst several contractors.

• Build Own Operate Transfer (BOOT)

In its many forms a BOOT contract not only includes the initial design and
construction of the facility but a continuing maintenance and perhaps refurbishment
of over a number of years until final transfer to the client. Finance is often provided
by the contractor who recovers his cost through the life of the project. Other terms are
PFI, PPP etc

The concession agreement is the structured contract between the client and contractor.
It identifies and allocates risk. 

Modes of Payments

The two main payment systems used in construction contracts are:

• Price Based: this system consists of lump sum and admeasurements. Prices or rates are submitted by the Contractor in his tender
• Cost Based: This payment system consists of cost-reimbursable and target cost. The actual costs are incurred by the contractor and reimbursed, together with a fee for overheads and profits.
• Price Based Payment System

Risk Allocation
A prime function of the contract is to allocate risk. The identification and
consideration of risk is a logical way to develop the organisational and contractual
policies for any project. Some of these uncertainties will remain whatever type of
contract is adopted and the contractor must then include a contingency sum for them
in his tender.
Different levels of risk contingencies can explain the wide range of bid prices
frequently received for admeasurements contracts. Another consequence of risk is that
fewer contractors are prepared to respond to or submit unqualified bids.
All parties to a project are at risk to some extent whatever the contract between them,
for instance that work may be frustrated by the forces beyond their control. If so, the
time lost and all or some of their consequent const may not be recoverable. The
choice of type of contract can motivate (or fail to motivate)

 

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Buying property for FREE

It’s sounds unbelievable but every entrepreneur knows that it does not take money to make money.

Today we are sharing ideas on how to buy property ( Real Estate) with no money down.

Many real estate investors think that money will make or break a real estate deal. A lack of funds can stop a potential purchaser from bidding on a property. However, it is possible to purchase real estate with no money from the buyer’s pockets. If the deal is right, the funding can easily fall into place.
Although there are many ways an investor can purchase real estate without handing over a down payment at settlement, it’s important to understand the pros and cons of each type of agreement before signing on the dotted line. Here are some examples of no-money-down real estate deals:
BORROW THE MONEY
Probably the easiest way to purchase a property with no money down is by borrowing the down payment. Either find a lender offering a low interest rate, or use a home equity or other line of credit loan (friends, family, other network) or you can also borrow from your real estate broker – arrange to borrow the broker’s commission for a short time and use those funds for the down payment.

In Kenya, banks are the typical lenders but there also exists hard money lenders. You may be limited by the amount or the interest rates may be too high. The key however, is to to determine beforehand whether the income from the property can be able to equal or exceed the monthly (or annual) loan repayments.
ASSUME THE EXISTING MORTGAGE
Some purchasers can use a “subject to” contract, where the buyer uses the seller’s existing financing for part of the purchase price. Using the seller’s existing financing is especially successful if the current loan has a low interest rate. The buyer receives the title to a property in return for making payments on the seller’s mortgage.
LEASE WITH OPTION TO BUY
Many purchasers do not realize that they may be able to rent a property from the owner with an option to buy. Under the terms of the lease/option agreement, the buyer and seller negotiate a sum to be paid at regular intervals for use of the property. This agreement allows the lessor to purchase the property at a predetermined price during the term of the lease. Usually, a portion, and sometimes all, of the rental payments will be credited toward the purchase price.

NEGOTIATE THE DOWN PAYMENT

Along with everything else in a real estate contract, the amount of the down payment and who pays it is almost always negotiable. A buyer may elect that the seller pay the down payment, or give credit at closing for the buyer’s down payment. A buyer could also request to pay the down payment in installments, whether in monthly installments or as a balloon payment at the end of the year.

Real estate transactions, like all other business transactions, can be customized

SWAP PERSONAL PROPERTY

Anything you own may be useful as a cash substitute for a no-money-down deal. For example, if the seller is planning to retire, your unused motor home would probably be much more valuable than a cash down payment. Cars, furniture and appliances are all acceptable replacements for a cash down payment.
EXCHANGE YOUR SKILLS

A buyer may be able to offer skills instead of cash. Accountants, contractors, mechanics, plumbers, doctors, lawyers, and so on, all have tradable skills that would be useful in lieu of a cash down payment.
TAKE ON A PARTNER

Finding other cash buyers is another way to purchase a property with no money down. However, this could get messy as other hands get into the deal. To simplify this process, you can organize the deal on a smaller scale by bringing in one or two more people at the most. In return for their financing, you can promise to take on the responsibilities of putting together the deal and managing the real estate investment.

OFFER A HIGHER PRICE OR BETTER TERMS

Again, Real estate transactions, like all other business transactions, can be customized. Some owners may be willing to accept a higher price for the property, even if it comes in installments, in lieu of accepting a down payment.

EXCHANGE PROPERTY
If you already own property, you may want to exchange it for another property. You could either exchange the property with a buyer, or use it in combination with a small amount of cash to obtain the property you want.

it does not take money to make money

The key to getting these kind of deals is research and actively searching for such opportunities. You must also think outside the box and remember, NEVER make the first offer.

 

Email us at info@stroikagroup.org for consultation.

Planning building cost for construction (Location)

Now that you have decided to build a home, the next stage is to plan for construction.  The aims  of cost planning are to:

1.  Ensure that you are provided with value for money.
2. Make you, as the home-builder, and designers aware of the cost consequences of their proposals.
3. Provide advice to designers that enables them to arrive at practical and balanced designs within budget.
4.  Integrate costs with time and quality.
5. To keep expenditure minimal

LOCATION, LOCATION, LOCATION….

In real estate as in business, the choice of location has a tremendous impact on cost and opportunities. It is therefore important to select a location which will favor you as home builder.

For example the cost per meter squared of building a home in Nairobi can be Kshs. 43,000 but constructing a similar unit in Nakuru can be KShs. 40,000. That Kshs. 3000 difference  counts for a significant relief on your wallets.

Generally, building costs tend can to vary between locations due to one or more of the following factors:

• materials/products available or commonly used;
• ground conditions normally encountered;
•  material/product prices due to distance from place of manufacture or distribution;
•  distance from labor source;
•  local regulations;
•  labor productivity (e.g. due to adverse climatic conditions);
•  builder’s risk and market conditions;
•  labor rates – In Kenya,the rates for labor  especially for individual home builders, is determined by personal negotiations with the the key contractor.

Another factor closely related to location is the characteristics of the land/plot

LAND CHARACTERISTICS

These are the geographical influences on land, including topography, climate, soil conditions, area, availability, cost and liability to earthquakes and  flooding. In the past.

1. Soil or geological conditions

These may have a bearing on the pattern of land use, the density and costs of development. Foundation type and complexity for any particular building are determined by the subsoil conditions. Unstable soil conditions can and the climatic conditions can also play their part in influencing development.

2. Topography

This can also influence building costs. Whilst elevation and views (particularly as development moves up a hill) are generally considered desirable, it comes at a premium. Generally, the cost of building on steep slopes is greater than that of building on level sites.

As home builder, it is important that you choose a suitable location before commencing planning any further.

Contact us at info@stroikagroup.org with your inquiries today.