Factors affecting volatility of returns in real estate investment in free area estate, Nakuru Municipality, Kenya
Munyi, Catherine Njeri
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Real Estate investment is not the path to easy riches, but it provides a path to wealth creation that is surprisingly available to middle and upper income investors. It is path that is both available and largely unused. This study therefore sought to investigate the factors influencing volatility of financial returns in the real estate investment in Free Area estate of Nakuru Municipality. The objectives of the study were; to establish the relationship between the duration of holding real property and returns of real estate investment, to determine the effect of cost of funds on the returns of real estate investment, to find out the effect of type of property on the returns of real estate investment, and to establish the effect of the volume of units on the returns of real estate investment. The study was carried out in Free Area estate. The study was carried out using descriptive survey research design. The study population comprised of real estate investors and real estate agents. The researcher used simple random sampling method for real estate investors, and census sampling method for the real estate agents. The researcher first secured an introductory letter from Kenyatta University to carry out the study. The letter was used to apply for permission to carry out the study in the county through Nakuru County Commissioner. The Researcher used questionnaires to collect data from the investors and interview schedules on the real estate agents. Before the actual data collection a pilot study was conducted on the questionnaires and the interview schedule, which involved Test Retest method in an interval of 2 weeks. Their results were then compared and their correlation coefficient calculated to be significant at a Crowbatch alpha coefficient of 0.8. Quantitative data was analyzed using SPSS whereby the responses were tallied and summarized in frequency distribution tables using percentages. Qualitative data was analyzed using inferential statistics and the results were presented using graphs. The researcher found out that volatility of returns in real estate investment in Free Area estate is affected by duration of holding real property, cost of funds, type of property, and the volume of units. The researcher suggests that mortgage firms should increase their financial base to be able to handle more real estate investors' financial requirements, lower their interest rates, while financial institutions should relax their requirements for real estate investors to qualify for financing. Municipalities' planners on their part should provide detailed information to investors who wish to invest in their areas.