Money Management
November 11, 2024
EDITOR’S NOTE: This article is part of our Money254 Partner Series produced in partnership with Vuka, an investment club that allows Kenyans to invest in the Acorn Student Accommodation I-REIT.
It’s September 2022, and I have just celebrated my 34th birthday. Life seemed to be on an upswing. Two months before, I had just been promoted and gotten a decent pay rise.
As a Kenyan living in the UK, saving is my second language. I left home to come work as a nurse in the UK, even though my initial degree was in Procurement. After months of tarmacking, I realised that if I was to be of help to my widowed mother and my younger brother, I needed an outside-the-box solution. That is how I finally did a diploma in nursing and finally landed in the UK where I have been practising for ten years now.
Back to October 2022, and my younger brother was starting his university education in Nairobi. Unfortunately, he missed a slot at the university hostels and he had to seek accommodation outside.
Given the importance of his studies, I wanted my brother to stay as close to the university as possible. That is how he and my mother discovered the Qwetu Hostels. They were clean, beautiful from the outside, and when they gave me a video tour - it was the dream learning environment - everything was customised for a student.
After sending my brother his accommodation fees, I decided to do some background research on Qwetu. Who were the owners? Who managed them? How was their reputation among students? What amenities and security features did they offer? Were there any hidden costs? You know, the normal search you do after something has pricked your curiosity.
Turns out, there are close to 10 Qwetu hostels managed by the Acorn Student Accommodation Income Real Estate Investment Trust (ASA I-REIT) - Kenya’s premier I-REIT. They are in prime locations close to most universities in Nairobi. They include Qwetu USIU, Qwetu Parklands, Qwetu Karen, Qwetu Hurlingham, Qwetu Wilson View, among others.
I quickly discovered that ASA I-REITs operated the biggest brands in student accommodation in Kenya, with over ten properties in the Nairobi area and many under development—close to major university campuses.
My curiosity about ASA I-REITs was sparked, and I wanted to know more. This led me down a rabbit hole of research.
Read Also: Buying I-REITs in Kenya: All You Need to Know When Investing
In my research, I learned that I-REITs are investment vehicles that pool funds from multiple investors to invest in income-generating real estate assets.
Think of it this way. Buying land in the centre of Nairobi and constructing a high-rise building to rent out to hundreds of students can cost upwards of Ksh500 million. This is out of the reach of many people.
An I-REIT breaks this barrier. If 5,000 people with the same goal of investing in real estate pool their funds, each contributing Ksh100,000, a Ksh500 million property is suddenly within reach.
During my research, I quickly learned that I-REITs' operations are similar to those of a listed company that sells its shares on the Nairobi Securities Exchange (NSE) and distributes any future income to shareholders based on performance. In fact, some I-REITs are listed on the NSE.
Typically, a valuation is conducted to determine the total value of the I-REIT's assets. This value is then divided into smaller units, which investors can buy as shares of the entire property.
For example, if the assets managed by a particular I-REIT are worth Ksh2 billion, they can be divided into small units (shares) worth Ksh20 each. This means 100 million shares will be available for sale, each priced at Ksh20. If you invest Ksh200,000, you would own 10,000 shares.
I-REITs are managed by professionals licensed by the Capital Markets Authority (CMA), ensuring that the investments are handled with high expertise and oversight.
The rental income generated from these properties is then distributed to investors who own shares as dividends. This provides a regular income stream for investors. Additionally, as the properties appreciate in value over time, so does the value of the investors' share units.
One of the biggest motivations for going abroad was to get the capital to invest here in Kenya.
As I started to have some savings, I bought a piece of land upcountry where we built a decent house for my mother.
I wanted to diversify my portfolio by having some commercial plot in Nairobi where I could put up rentals. However, I had heard of horror stories from many of my Kenyan friends who had been scammed while building or even buying plots in urban areas.
I also did not have the kind of money that would be enough to employ a professional construction manager to manage construction. The idea of owning prime real estate in Nairobi without having to drain my savings was very appealing.
But what made me seriously consider investing in I-REITs? Here are a few key reasons:
Read Also: My New Year's Resolution Was to Buy Idle Land, Now I Just Became a Landlord
I was particularly keen on investing in the ASA I-REIT, so I started looking for ways to buy shares. This is when I stumbled upon the Vuka Investment Club.
The Vuka Investment Club is the gateway to investing in the already income-generating real estate properties under ASA I-REIT, like Qwetu and Qejani student hostels.
After further research, I decided to invest in I-REITs via Vuka.
Read Also: What I Learned Trying to Sell My Dad’s “Maguta Maguta” Plot for 2 Years
In January 2023, I decided to take the plunge and start investing. I signed up for Vuka, which is remarkably easy, even for someone like me who is in the diaspora.
Sign Up: I visited the Vuka website and shared my contact details to receive an email invitation.
Create an Account: I clicked the link in the invitation email and created an account on the Vuka Portal.
Complete KYC (Know Your Customer): I uploaded the required documents, including my ID, KRA PIN certificate, and a passport-size photograph.
Choose Your Subscription: Vuka offers five membership categories. I opted for the Gold membership, which covers investments between Ksh100,000 and Ksh200,000 per year and has a joining fee of Ksh499.
I plan to upgrade to Platinum next year, which covers investments from Ksh200,000 to Ksh500,000 per year. Vuka also offers a beginner category dubbed Silver, where you can invest up to Ksh100,000 as a lump sum or slowly via a Ksh5,000 monthly contribution.
Start Investing: Once the process was complete, I became a Vuka member and bought I-REIT units through the platform. As of today, I contribute about Ksh10,000 monthly to my Vuka account and, in the process, buy more ASA I-REIT shares.
Read Also: Why You Should Consider I-REITs in Your Investment Portfolio
The Vuka Investment Club gave me a chance to be a landlord even though I am thousands of miles from home. Every time I talk to my brother, we joke about how he is my tenant and how he needs to keep my property in a good condition.
On top of earning rental income through dividends, the value of my investment increases each time the property under the ASA I-REIT is valued. Just last month, the share increased from Ksh22.03 to Ksh22.21 following the release of HY 2024 results.
But, importantly, I'm glad that I have managed to diversify my portfolio with real estate, and my money is working for me. Investing in I-REITs has provided me with financial security and peace of mind, knowing I am building a solid foundation for my future.
As I continue to invest and learn more about the real estate market, I am excited about the possibilities that lie ahead. Would you like to join me on this journey? Get started with the Vuka Investment Club here.
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