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A guide to mortgage investing highlights options such as mortgage backed securities, SACCO funds, private partnerships, seller financing and REITs, and advises investors to work with regulated institutions and diversify to manage risks.
If you’re keen on real estate investing, you don’t need to own property to benefit. Here are legitimate ways to earn from mortgages in Kenya:
You can earn interest by investing in mortgage-backed bonds issued via banks or the Kenya Mortgage Refinance Company (KMRC), which pools funds to support home loans. As a wholesale financier regulated by the Central Bank (CBK), KMRC strengthens liquidity and affordability in housing finance.
Some SACCOs, such as Stima Sacco, offer mortgage funding at competitive interest rates under the KMRC refinancing programme. These allow members to invest capital that is then used to extend home loans at subsidised rates.
REITs pool investor funds to buy income-generating real estate or development projects, distributing returns through dividends and capital appreciation.
Kenya introduced REITs in 2013 and they are strictly regulated by the Capital Markets Authority (CMA).
Income-REITs focus on rental revenue. Regulations require at least 80–90% of earnings to be distributed to investors, and they enjoy certain tax exemptions.
Units offer liquidity since they trade on the Nairobi Securities Exchange (NSE).
You can invest via digital platforms like Vuka, which lets you start with as little as Ksh 5,000, offering exposure to REIT units with targeted returns of ~7–10% per annum.
High-net-worth individuals or groups can finance mortgage notes via private partnerships, acting as direct lenders. These carry higher risk but potentially higher yields. This route is less common and best approached with legal guidance and proper due diligence.
In scenarios where you’re also selling property, you may act as a lender—financing the sale yourself. The buyer makes payments over time, giving you returns from interest. This option requires clear, legally binding agreements and safeguards.
|
Factor |
Importance |
|---|---|
|
Regulation |
Always invest through CMA or CBK-regulated institutions to ensure legal protections. |
|
Diversification |
Spread your capital across multiple investment types (e.g., combine REITs with mortgage bonds) to manage risk. |
|
Yield vs. Risk |
Understand the balance—higher yields often come with greater risk or less liquidity. |
|
Due Diligence |
Evaluate interest rates, property valuations, borrower creditworthiness, and investment terms. |
|
Professional Advice |
Consult financial or legal experts before committing large sums. |
|
Investment Route |
Minimum & Accessibility |
Expected Returns |
|---|---|---|
|
Mortgage-Backed Bonds (KMRC) |
Institutions only |
Regular interest income |
|
SACCO Mortgage Funds |
SACCO members |
Competitive loan yield |
|
REITs via CMA platforms (e.g., Vuka) |
From Ksh 5,000 |
7–10% annual income/returns |
|
Private Mortgage Notes |
High capital required |
Higher but riskier returns |
|
Seller Financing |
As seller |
Direct interest payments |
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