10 Ways You Can Make Money from Land

A reader recently asked how he can make money out of land. So, how do people make business on land?

Land is one of the 4 primary factors of production along with capital, labour and enterprise. Land essentially embodies all the natural resources found on or in land. Land is owned on communal, family and individual tenures in Kenya. The problems is that not many youths are owners of land. The land belongs to our parents. And in Africa, we wait until they exit this world then we are left behind fighting for it because in most cases they leave it not having been subdivided. Again, most of our land is not properly adjudicated and titled and can’t be of much use as collateral for loans.

The question on how we can use land to make money becomes even more important if you consider that only 17% of Kenyan land is arable. Sadly, even that arable land has been divided and subdivided into unviable portions to accommodate the huge population. Tour Kisii Nyanza, Central and Mt. Kenya regions you will find people living in less than half acre plots and still running all their agriculture there. You may have read articles on how people are making money from a quarter acre but how much longer can that be viable? We therefore should explore alternative options of economic value especially to do with the 83% of land that is not readily arable.

Important to note, almost all business takes place on land. It’s only recently we have gone to the clouds with computing. However, the wares sold online will still be manufactured on land using some measure of natural resources.

Land can be a primary enabler for you to get the capital you need. Most lenders will be comfortable lending on the strength of a title deed. So using your title deed (or that of a guarantor), you can access the money you need to start or expand your businesses.

You have heard the mantra that the key to business success is; location, location, location. This means that the location of your land will determine a lot what kind of business you will do.

Some of the possible ways of making money off land are;

  1. Subdivide and Sell

Be warned: This is almost the quickest money making avenue in Kenya today. Due to the huge appetite for land in the growing urban places in Kenya, land owners are increasingly changing the designation and tenure of their land, subdividing and then selling it to people who are buying both for speculation and also for residential, industrial and commercial use. The problem is that land being finite, you will soon sell it off and remain with nothing to sell anymore. Question therefore is, what do people do with the money they obtain from selling land? Mostly not much beyond living ostentatious lives for some time.

     2. Speculation

The other possibility is instead of selling only your land, you can embark on buying land, holding (hoarding) it for some time and then selling it off for a higher value. This is turning out good returns for people because in the short run, land is appreciating a lot in Kenya. In the long run however, it is debatable how land appreciates especially for the final buyer who has to hold it over the long term.

     3. Brokering Land

There are people who have specialized in brokering land. They do not hold ownership of any land. All they do is look for buyers and sellers and then bring them together for a commission. While there is essentially nothing wrong with the trade, its main currency in most cases is dishonesty. It is easy to see more than one person claiming ownership of the same land which they were sold by a dishonest broker.

     4. Agribiz (Crop Production)

While people have traditionally practiced subsistence agriculture, commercial agriculture is picking up a lot. Just what kind of magic can you do if you had land and sufficient water? People are increasingly engaging in food crops, cash crops. From the simple vegetables to fruit farming. Agro forestry is also increasing from the small scale version of seedling production to growing trees for commercial harvesting in the future. If you tour the highland areas you will see many people growing trees for timber and poles. Here, you can do this businesses as an individual or partner with friends and family.

      5. Agribiz (Livestock Production)

We grew up in homes that had animals, but they were mostly as a representation of wealth and were not for sale unless in times of emergencies. Now it is common to find people rearing animals for the market. Again, all types of animals from fish, to goats, poultry and pigs.  Ever heard of an ostrich farm? The possibilities are endless. You can venture into this from scratch or buying smaller or emaciated animals and fattening them over a time to get them market ready. Again, you can do it solo or partner with others for the venture.

     6. Agribiz Management

Some people have sunk boreholes, done proper fencing and are leasing out the already developed farms to other farmers. You can manage such farms for people that would love to do farming but don’t have the time for the hands on part of the job. You may have heard of the companies where you buy your plot and then it comes with greenhouses which they will manage for you and you make money as a passive farmer. I have my doubts, but it is happening. So develop it and sell or lease it to passive farmer, manage it for them and you will make you money in the process.

      7. Other Non-agricultural Uses

There are people who own land with extractable resources e.g. sand, stones and other mineral resources. They make a lot of money from the extraction. Beyond extraction, other economic activities you can engage in are concrete and clay works by the roadsides including bricks tiles, cabro blocks, culverts fencing poles etc. Most of these are in great demand. Charcoal burning is another option but I wouldn’t advice on it due to its negative impact on the environment especially in areas where reforestation isn’t done.

     8. Leasing

You may have noticed that there are a few Kenyans that hold much more land than they presently need/use. Drive along any of our major roads and you will see those large tracts of land lying idle. On the contra, there are so many people who would really love to venture into agribusiness but they lack the land. It is possible that the land owners can make money by leasing out the excess land to be put to some productive use. In other countries, those who don’t already have land and would love to do farming have the possibility of leasing land even for a very long period. So if you have such land, how about leasing out to someone who can employ it.

     9. Water Venting

It is also possible to sink a borehole in your land and make money from selling the water. People sell the water either raw, straight from the borehole or, add value through purification and bottling. So many bottled water brands are coming up everywhere. The market is still big out there and you can do it. If you have the means, you can make a small dam, harvest water and then sell it off to the local water bodies or other large scale users. Is it also possible for the supper rich to make water bodies and generate electricity from their farms? Nowadays the KPLC can off-take even privately generated electricity.

     10. Real Estate

As a business, you can also venture into real estate whereby you develop houses for selling or letting. Rentals, lodgings, shops, go-downs, factories etc. Other innovations are coming up where people can buy stake into the homes as shares for what they can afford even if not the entire amounts.

My Take

In recent time, there has been a craze about Kenyans purchasing plots. Most guys think its smart investing in land since it appreciates in value. Sadly, even when saving groups (including ‘Chamas’, SACCOs and companies including those in insurance) mobilize sufficient resources, they almost always invest in land. Now, that is unproductive and lazy investments. It’s unproductive because if you consider the amount of money tied in plots versus the lost opportunities it embodies, in terms of jobs that would be created if it were invested in industry and the attendant multiplier effect, then it’s a net loss to the economy. Land and property development creates very few jobs despite taking up so much capital. The craze with land has starved entrepreneurship of the much needed capital. What if your ‘chama’ invested that 1M in a stake in a startup company? How much would it possibly value in 5 years? Funny that most of those investing in land have other businesses and ideas which they can’t raise money for. So for me, the rush towards land works against the growth of entrepreneurship and I wouldn’t advocate it.

Its complex, but we have to go in a different direction; open up and diversify the investment options in our economy. Someday soon we shall revisit this ….

There are endless other ways you can make money off land. Please feel free to share your ideas in the commend section below. Let’s all grow together…..

Any idea on what we can write next?…..

 

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2 thoughts on “10 Ways You Can Make Money from Land

  1. GROUP.NGAKIMU.GROUP PIN P051645942N.GREEN INTERACTIVE PIN 3533.KEY1.Indigenous,Exotic,Bamboo and fruit tree nursery.2.MINISTRY OF ENVIRONMENT AND NATURAL RESOURCES.3.UNDER;UPPERTANA,WRUA,IFAD,UNEP….hold the industry sector to creat job and expand environment string.Kindly Creat access to loan for ten thousand for marketing payable in fixed tree due government agreement date.

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