Should you build a flat or buy bungalows? Here’s the cost and what to do

Cost of Building Flats in Kenya: This feature was published as borrowed. While it does not reflect the position of Bizna Kenya, we would love to hear your feedback on it:

BY JACON ALIET ONDIEK: You are a Kenyan living in Nairobi. You have an 8 to 5 job. You make about 180,000 KShs per month. Net. You have two or three kids with your spouse. Or you don’t but have a lifestyle that pretty much chews up that 180K by the end of the month. Ok, maybe with some little change. Of course you invest some of it. You are smart.

Now, if you grew up in Eastlands, like myself, the first idea that comes to mind is, why not put up a flat, say Umoja or Rongai and collect rent from tenants? Well, that’s not a bad idea. But you will need at least an 8th of an acre or a quarter.

Cost of building flats in Kenya

If it’s located within 500m from the main road that will require 4 to 8M KShs. And then if you are considering two bedroom apartments, as you should, putting them up will cost you about 30 Million KShs. So, you are already overspending but let’s say you manage somehow to navigate the hardware sellers using fake tape measures to measure the Y12 iron rods, foremen stealing bags of cement and mealy-mouthed brokers at ministry of lands and fake contractors.

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

You succeed in putting up 12 to 15 two bedroom apartments. They will fetch you about 15-20,000 KShs per month depending on your location, your finish, plinth area, security of that area, proximity to main road etc. You will need a caretaker to watch over the tenants and an agent to collect your rent. These two guys will set you back about 20-30K per month. This is not factoring in the cost of vacant apartments because you will definitely have guys moving in and out and you will have to look for tenants.

So your income will fluctuate. Plus, you will encounter difficult tenants who don’t pay regularly, who will take off with rent arrears, who will practically vandalize your house and if you are not keen on tenants who are moving out, you will spend on paintwork and repairs before other new tenants can come in. I have more than one friend who, after having a rough experience with a crazy tenant, decided to repair the house and leave it vacant. He said the rent was not worth the damage the guy had inflicted on his house. At any rate, if you can manage the headache, you should be able to get 100-180K KShs per month. And remember to pay your land rates.

Of course, putting up an apartment in Langatta or Kileleshwa is another ballgame. Cost of building flats in Kenya in these areas will shoot up and we will be talking more than Sh. 70 Million. Hence the Rongai, or Kitengela or Mlolongo example.

Alright.

Why not buy three houses of Sh. 10M each?

With the high cost of building flats in Kenya, you may want to consider buying. Sh. 10 million houses you will get in Eastlands or along Mombasa road – though I frankly think some of those ‘developers’ are delusional when you see the houses on sale versus the price they are asking for – or if you get a good deal, say from National Housing Corporation (fat chance) or someone retiring and leaving a town house to go to a quiet village life. Anyways, in business, you can’t count on luck or fantasize about getting ‘good’ deals. At any rate, these will fetch you 30k max so at best you get 90K per month. Think about that. Or maybe you buy smaller ones of 8M per house fetching 25K pm and you get 100Kper month.

And Apartments in Kileleshwa or Westlands?

Apartments in these areas costing 30-35 million KShs can fetch between 120-150K per month. Or you can buy two Sh. 15 million houses fetching 60-75K rent per month. Because of the features they have, which I mention below, and their location – clean, relatively quiet and leafy, less crowded, better security, proximity to CBD, less matatus, more spacious and so on, they can fetch better rent. Most apartments have features like water play zone for kids, heated infinity design pool, water cascade enhancing the facade Indoor and outdoor gym arena, spa with premium selected brands, lounge spaces, banquet halls for parties, a service apartment or guest house for guests, mini theater, separate elevator from basement to 1st floor levels for security purpose and security with CCTV and access control and car reader barrier. Borehole, 24 Hour backup generator, landscaped Law.