I have a relative who used to be a civil servant.She bought a plot in kiambu huko mashinani and put up 10 single room units at 1.5M.No quantity surveyor or engineer was used.Just kawaida fundis. The work was done only over the weekends in order to avoid Kanjo guys. She charges 3k for each unit.
3000 ×10=30k per month.
Her units are rarely empty and they pay on time coz the guys who pay 3k in mashinani are not the same guys who live in such units hapa nairobi.For you to live in a single room in nairobi means that uko chini sana kimaisha. Mashinani its a different kind of tenant who can never lack the 3k.
That’s a return of 18% p.a
Do you think investing in rental units targeted at the lower income earners (ie.not expensive/luxurious units) outside nairobi is the way to go based on the above scenario.
I think so but I’m not a fan of tiny microprojects because they don’t make business sense (topic for another day). Kuna siku nilifanya hesabu ya kujenga bedsitters huku greater Nairobi area, and compared with kujenga pale hometown ocha, nikaona ROI ya ocha ikiwa significantly better. Land in Nairobi and its environs is very expensive and that affects the ROI negatively. Frankly, if I was to build bedsitters I would go and build in my hometown for the significantly better ROI.
Nice stuff. As long as the structural integrity of units Iko poa, then it is a good biz.
Pesa zake anarudisha in five years. Worderful returns for such capital
That relative was retrenched. However, life went on as usual for her and they have never lacked. I do not know why whenever developung rental units is mentioned, people usually picture magorofa/flats.Their mind tells them that it is next to impossible to own such.Look at the flats coming up in Ruaka for instance.
If one can just downscale their expectations and go for what they can actually afford then they would be much better.
Now imagine having 3 or 4 such developments.Thats over 100k income monthly without gorofa/slab which is expensive.
I personally don’t like small projects. However, I respect other people’s decisions. At the end of the day ukienda bank hutaulizwa rent imetoka project aina gani. Just do whatever puts cash in your pocket.
Tu bedsitters na tu single rooms its real investment my friend pascal aliuza shuttle zake mbili zilikua zikibeba western na akaamua kujenga rentals the bizz is so good return pia iko juu ako na bedsitters 60 uko eldoret
I forgot to add that the plot was bought at 500k. Building the 10 single rooms plus 3 toilets which double up as bathroom coz they are spacious was 1.5M.
Total investment was 2M.
×100%
That is my own way of calculating percentage return based on capital/ Total amount invested.
Not ROI.
The yearly rental yield (360k) is 18% of the full amount invested (2M)