Flats construction loans - advice

Elders with experience kindly advise on above. Have the land already and abit of cash, though not enough. Which banks are best to approach and current rates? want to do this probably next year as this year things look too volatile. Asanteni

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Each bank got its own shit that it’d like you to smell. Kama sio collateral lazima ikue Salo ipitie kwao, takes 20days for loan to be processed, you’re a high risk this and that, if I were you, whichever regulated Bank is willing to give me a loan, I’d go with it.

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You should start with your bank and then others… See which one works out well for you. Yaani… Shop around in person.

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From the little research I have done, the main banks have crappy requirements eg you have to use their panel of consultants for arch, engineers etc. also have to use their approved contractors plus shop for materials at approved hardwares. Some foreman I have been talking to tells me it’s because of kickbacks to bank officials. Will keep researching. Keep the tips coming folks

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Sure, the reasonable starting point. You get the best deal from your bank of 10yrs than hizi umeanza kutumia juzi (<3 yrs).

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Banks na malaya have one thing in common ,they like you when you have money , with land you are king let all give you their proposals take the best . kwa lugha ya kijiji hakuna lanye mzuri wote sawa umalize shuguli uende zako , treat banks the same. and when you fuck one start tunning another incase kukiumana you have an escape . i have hekaya but for another day.

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Banks charge different interest rates. So if I was in your position I would shop around (in person sio online) for the lowest rate and best terms first. Halafu fanya hesabu zako uone kama it makes sense to borrow at that best rate and terms. Usijipate umekopa only uchotwe 2 years after completing the project. Loans are good but you must be very good in math to borrow safely.

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Everyone tells me the first flat is the hardest one to put up and get financing. But from the second one, the banks will be looking for you. Kweli rongo

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That’s because the first one is already cashflowing so your account is healthier. Common sense.

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They aren’t crappy requirements, kuna sababu they have their preferred people

enda investment & mortage bank uwaelezee ii story.
watatuma acessors waone plot iko wapi, kama ni prime area wata access value ya plot, wachukue title deed mjenge flats kama joint venture, ikiisha tenants hulipa rent direct to their account alafu wanakurushia kitu from 20-35% depending on occupacy until wajilipe loan na interest.

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This is the kind of info I was looking for.

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Cartel country is the real reason. Chuma ya 1300 tononoka, unaambiwa ukanunue Kwa njoroge hardware at 1650. Same tononoka steel btw. Site visit ya regular engineer hua 5-7k, yet those on their panel ask for 12-15k a visit. I can get arch and eng drawings for under 100k, but the panel folks start mambo ya 3% of value of the property. See my point?

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Someone on Wazua did this analysis and found out that the best way to put up flats is to go for a 50:50 financing model where you make sure to have 50% of the construction costs and then borrow the remaining 50% from a bank.

However, kama ni mimi I wouldn’t just finance the construction from scratch. If you do this, the bank/financier will try to milk you dry by forcing you to use their architects, quantity surveyors, etc etc. You can avoid all this by taking the prior advice a little further. I’ll elaborate:

Let’s say your cost of construction is 30M. You want to make sure you have at least 15M minimum. At this point, don’t get any financing yet. Proceed like you would (with the 15M) if you were funding the whole project yourself. Get professionals to do stuff like site evaluation, architectural drawings etc etc and then start the construction until you exhaust the 15M. At that point, I’m assuming you’ll already have let’s say half the units ready for move in OR the entire structure put up.

At that point, head over to the bank and apply for financing. It becomes easier for you because the bank can already see the ready structure so there won’t be any “Oh, you must use so and so architect etc etc” and the structure itself becomes the collateral for the loan! Not your paycheck or the title deed you swindled from your clueless brother etc.

Maliza construction and enjoy the fruits of your labor.

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upusu

structure haiwezi kuwa collateral kwani imejengwa kwa hewa, lazima title deed upeane kwa bank

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Of course but the idea is that the value of the land + structure is way higher. This was intuitive. Meffi

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Not your paycheck or the title deed you swindled from your clueless brother etc.

then stop typing like a moron

umbwaa

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Not cartel, this is how banks safeguard their investment. Their consultants report to them. Not colluding with you to cut corners so you can shave off a few thousand here and there halafu building ikuwe na wasiwasi

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I understand you do not have enough working capital to fund your project off the bat, and that’s why you sought elders’ opinions. But before you engage your lender ask yourself this one simple question, how will you repay the principal amount plus the interest, will you entirely rely on the profits? or your other sources of income? kama hesabu yako ni profits relax, use what you have, the economy is not doing well to allow first timers to take financial risk, instead do this, jenga floor moja, hio rent unapata jenga another floor pole pole tu, usiwe na haraka, that’s where people go wrong, its a long term investment jipatie five years za kujenga tu na ile pesa iko. Find someone who has managed to put up structures for rentals and let them advise you.

If you can, for now, avoid loans if it is your first time. Loan na first timers hazipelekanangi, unaeza lia saidi.

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Si wewe ulianza matatu na loan. Ama ilikuwa hekaya tuu.

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