Monday, January 18, 2021
  • Bizna Club
  • Directory
  • SME Awards
  • YEA Awards
  • Login
Bizna Kenya
  • SME
  • AGRIBUSINESS
  • SAVINGS & INVESTMENT
  • AUTO
  • REAL ESTATE
  • NEWS
  • EDUCATION
  • HEALTH
  • TECH
No Result
View All Result
  • SME
  • AGRIBUSINESS
  • SAVINGS & INVESTMENT
  • AUTO
  • REAL ESTATE
  • NEWS
  • EDUCATION
  • HEALTH
  • TECH
No Result
View All Result
Bizna Kenya
No Result
View All Result

Home » REAL ESTATE » To make money from rentals, build bedsitters upcountry

To make money from rentals, build bedsitters upcountry

by Bizna Reporter
22nd July 2020
in REAL ESTATE
Reading Time: 5min read
A A
Building Bedsitters in Kenya
299
VIEWS
Share on FacebookShare on Twitter

Building Bedsitters in Kenya: This post was written and published by David ‘Kyrgitt’ Kiprono: Property market in Kenya is grossly over valued. A run down property in Loresho could cost you Sh. 85M yet the same amount can afford you premium property twice it’s size in a bigger economy like Cape Town or Ohio.

I once inquired of property prices in Ruaka. A quarter of an acre was going for 70M. It makes absolute nonsense to me. Why? Because it encourages tiny subdivision of land which in turn creates a zoning nightmare. It discourages better land use. Just like the cost of energy, property prices should encourage development for better chances at revving up the economy.

Also, young people are getting stuck on loans trying to buy and develop properties in such an untenable and risky situation such that a slight turn of fortunes such as a Covid pandemic land them on auctioneers’ lists.

Let’s do a flipside on property development for a second.

You buy a quarter of an acre at Ruaka at 70M. You develop the same with a four storey 2 bedroom apartments block. Each floor has 4 houses. You rent out the same apartments at 30K each. (I don’t know Ruaka rental rates but this is just estimation). The entire project earns you 480k before taxes and bills.

ReadAlso

Kenyan woman who built parents house in 2012 finally builds her mansion

NMS to construct 62,000 rent or buy houses in Eastlands

Octagon and National Bank Partners With Costa Homes to Enhance Safety of Buyers of Affordable Housing

Cytonn selling Kilimani land after Sh. 21 billion building dream collapses

So, cost of property 70M
Cost of developing the apartment complex 20M

Then you have to wait for many months to fill it up with tenants… months of which financiers still enumerate for repayments.

So the flats cost about 90M from purchase to development for a paltry 480K return on investment.

How to build a three bedroom house with Sh. 800,000

How many years will you repay your cost of development?

Let’s forget expensive Ruaka. Let’s calculate the cost of the same in Kitengela. That’s more practical right?

A 50 x 100 plot in Kitengela goes for about 1.7M a piece.

To the clueless, 50×100 twice makes a quarter of an acre. 4 quarters have eight 50×100 plots thus, with this estimation, an acre here is 1.7m x 8 = 13.6M or thereabouts.

So, since construction costs only vary due to distance from source of materials, we shall estimate that building the same apartment block like the one in Ruaka will cost you 20M. If you add the property price for a quarter of an acre to build on your costs shall be in the ranges of 23.5M.

Kitengela may rent out the same apartments for 18K per flat. Let’s even use the same rate as Ruaka for the sake of argument. So your revenue before bills and taxes is 400K. (Even though the real estimates will be less than 300K per month before bills and taxes)

So if you borrowed a building finance of 30M to repay in 15 years, you’ll need to pay about 200k monthly consistently meaning your beautiful property shall stand tall as your ego but a road side carpenter could be earning all that without the stress.

If you borrowed the 50M to build on Ruaka assuming you raised the rest by yourself, you’d need to pay for more than 20years … Or else, as you’re aware, auctioneers’ and banks are bossom buddies.

But let’s assume you had all the capital in your bank savings account; would you invest it in a project that earns you less than 500K a month? Social media influencers make that without the stress.

Now, go back to your home towns. Please travel out of Nairobi and invest there.

Find a plot near the town center. A quarter acre could cost anywhere from 2M to as low as 300K.

Let’s buy it at 1.5M for this flipside post.

Build single self contained rooms that rent for 6K. ( This is the average revenue of a well built, neat , partitioned and self contained bed sitter anywhere)

Build the ground floor all round the plot. You’ll probably have about 10 well spaced rooms per row. If it’s by a road, build the front face about 5 spacious shops to rent out at 4k each.

Have a strong foundation that will anticipate three floors of the same as time goes by.

The ground floor and foundation costs you almost 5M to finish if you find a good economical fundi. The two extra floors will be cheaper and may cost you about 2M each which you only build when comfortable to proceed.

So, the ground floor shall cost you about 1.5M + 5M = 6.5M

The revenue of the shops is 20K.

The revenue of the bedsitters is 180k

Total revenue minus bills and taxes is 200K.

For an investment of 6.5M you earn a gross of 200K.

Unlike the apartments, low cost housing has no wait time. They fill up almost immediately because the bulk of the society live within reachable means. I mean, how many of you drive nice cars but live in SQs in the cities? Many.

Low cost housing is where the money is. However much you flip this script, the low cost housing wins.

Now, if you borrowed the money from a bank, to repay in 10 years the 6.5M, you’d only pay about 50K each month.

On the same plot, you had made room for 2 more floors remember?. Each floor will still earn you 180k meaning if you build a floor every two years cos you’re slow, in 6 years you’re earning 560k. That’s 6.7M annually. For the two new floors, remember you now have access to cash to build at your pace without the drama of loans.

So, a landlord in Kitengela has a nice fancy apartment building and earns a paltry net of 200k . The bigger the apartment block the more money he has spent to build.

In this life, retire your ego, and try to think.

So if you’re already building apartment blocks for revenue using loans, quickly go and find cheap plots in small towns and it shall help you either repay your loans faster or make more money faster, whichever is your need.

The world is changing…. Let’s change how we do things otherwise in 10 years as you sink in debt, the smart ones will thrive. Building Bedsitters in Kenya.

ShareTweetSendShare

Related Posts

Win Consalvo
REAL ESTATE

Kenyan woman who built parents house in 2012 finally builds her mansion

by Bizna Reporter
15th January 2021
NMS Housing Project
REAL ESTATE

NMS to construct 62,000 rent or buy houses in Eastlands

by Bizna Reporter
14th January 2021
1-National Bank MD Paul Russo, Octagon Africa Group CEO Fred Waswa & Costa Homes MD Dr Constantine Mwadime during signing of partnership with Costa Homes to enhance safety of buyers of affordable housing project - Bizna Kenya
REAL ESTATE

Octagon and National Bank Partners With Costa Homes to Enhance Safety of Buyers of Affordable Housing

by Bizna Team
14th January 2021
Cytonn Project
REAL ESTATE

Cytonn selling Kilimani land after Sh. 21 billion building dream collapses

by Bizna Reporter
8th January 2021
Plots in Ruiru
REAL ESTATE

5 reasons why Ruiru can be ideal for your first home

by Bizna Reporter
8th January 2021
REAL ESTATE

3 bedroom house designs: See the top designs for you

by Bizna Reporter
7th January 2021
Construction Business Kenya
REAL ESTATE

How cooking for construction fundis can give you Sh. 3 million in two years

by Bizna Reporter
5th January 2021

Discussion about this post

Follow Us

  • 246k Fans
  • 350.5k Subscribers

Recommended

Breast Cancer Early Signs, All Symptoms, Stages, Diagnosis, Treatment

7 days ago
Nissan CVT transmission

Wokabi: Why Nissan CVT transmission fails and what to do about it

7 days ago
National Treasury Kenya

Kenya is broke, CS Ukur Yatani finally admits

3 days ago
KDF mass recruitment dates

KDF mass recruitment dates, vacancies, requirements and venues

6 days ago

Sectors

  • AGRIBUSINESS
    • Crops
    • Dairy
    • Livestock
      • Poultry
    • Rabbit
  • AUTO
  • Bizna Club
  • BIZNA SME AWARDS
  • CUSTOMERS VOICE
  • EDUCATION
  • FEATURED
    • TOURISM
  • HEALTH
  • KENYAN MEALS
  • Life Hacks
  • NEWS
    • Corporate
    • World
  • REAL ESTATE
  • SAVINGS & INVESTMENT
    • Insurance
    • Loans
  • SME
    • BIZNA BASICS
    • Digital marketing
      • Online Bizness
    • E-Commerce
    • Management
      • Career
    • Mentorship
    • PROFILES
  • Sponsored
  • TECH
No Result
View All Result

Highlights

You can now get your digital driving license in a day at Huduma Centres

Career profile of Kenya Airways CEO Allan Kilavuka

After Several Years of Marital Delay, my Sister Finally Found a Man to Settle Down With Him Once She Consulted Doctor Mugwenu

Man who quit teaching to preach, shelter orphans marks ministry’s 30yrs

Kenyan woman who built parents house in 2012 finally builds her mansion

Kenya is broke, CS Ukur Yatani finally admits

Trending

Buzeki Logistics
AUTO

Buzeki shows off new fleet of trucks, shrugs claim he is broke

by Bizna Reporter
18th January 2021

Buzeki Logistics: Less than six months ago, businessman and politician Zedekiah Bundotich Kiprop who is popularly known as...

After Marrying my Rich Husband, I Later on Realized That He Had Been Killing My Unborn Babies To Use It For His Money Rituals To Acquire More Wealth

After Marrying my Rich Husband, I Later on Realized That He Had Been Killing My Unborn Babies To Use It For His Money Rituals To Acquire More Wealth

18th January 2021
Highest paid news anchors and radio presenters

Highest paid news anchors and radio presenters in Kenya (Updated List)

17th January 2021
Digital Driving License

You can now get your digital driving license in a day at Huduma Centres

16th January 2021
Allan Kilavuka

Career profile of Kenya Airways CEO Allan Kilavuka

16th January 2021
  • Home
  • About Us
  • Our Profile
  • Privacy Policy
  • Contact Us

2020 Bizna Digital Services | All rights reserved.

No Result
View All Result
  • SME
  • AGRIBUSINESS
  • SAVINGS & INVESTMENT
  • AUTO
  • REAL ESTATE
  • NEWS
  • EDUCATION
  • HEALTH
  • TECH

2020 Bizna Digital Services | All rights reserved.

Welcome Back!

Sign In with Facebook
Sign In with Google
OR

Login to your account below

Forgotten Password?

Create New Account!

Sign Up with Facebook
Sign Up with Google
OR

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In