Putting up a block of apartments costing Shs. 85m with rental yield of between 600k to 700k per month

I am in the process of getting final approvals for a block of 40 apartment units that will cost around 85m to build. Now, with 100% occupancy, the yield will be between 600k and 700k per month…

Does it make financial sense? Of course, I am doing it mainly for retirement income but even then, the ROI does not look too good… Far lower than Government bonds… But the land is there lying idle… I intend to borrow some cash from the bank but will utilize my savings to do most of the work…

What do you financial experts thing about this?

To recoup your 80M Building investment will take 11.8 Years at an assumed 600k net income per Month.

What is the value of the Land ?

Do have any certainty on how rentals in Kenya / Nairobi will be doing in about the next five years ?

With all due respect, have you considered going for a checkup ?

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with affordable housing coming i would go for another investment , but then Banks can only finance that so you are stuck with it.

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The cost of land… Not sure now but I spent 15m some years ago… in 2016… Of course I have taken the lowest figures but it could still fetch 800k on the maximum even now… I have som other rentals nearby and operate at 100% occupancy 95% of the time for the last 10 years and I have recouped my investment…Now I might have to go for checkup… That is the reason I have come here to ask for help… but before I do, expound further and help with some diffrerent opinion… Asante!

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Take the deal operate for like 3 to 4 yrs sell the thing na uondokee. do large scale farming and retire pole pole.

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Naeka cattle for beef and goats like 1000 zote naeka micro chip , ina niambia health condition for each animal , weight , disease etc , naeka drones zina graze iyo farm every 4months 10million worth of meat nauza KMC . na bank 5m nalipa expenses 3m , na baki na 2million ya kudunda mdau .Natupa underware natembea tu ivo mti inaza ingia anywhere mdau.

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That looks like science fiction.

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thinking outside the box , bro you want a retirement stress free, What fun is there paying for a loan for 11yrs unless you are crazy bro.

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No. The loan is mainly to reduce the cash flow issues and also to reduce taxes on income… I can build it cash but then the cash will be tied down there and I will pay more taxes… Interest on loan used during the development is tax deductible… so I am taking a loan to take advantage of this… Again, KRA fellows invade your project like wild dogs to extort you, especially if they find that you are consructing in cash… so, you need to rope in the bank to reduce their extortionary behaviour… But animals have higher returns but much higher risk… I will still do this once I am done with the construction…

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That must be some sizable ranch to accommodate all those animals how many hundreds of acres do you need assuming all feeds is from the farm

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Jenga. Very nice move. Even watoto na wajukuu will enjoy hiyo rental income. Real estate is king.

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Sure… But things have changed since I did my last rentl units… and ROI has been seriously eroded… However, this is not so much about ROI but stable source of income as I retire… BTW this affordable hosung thing is an interesting case study… not too sure how it will go…

I have no expertise on the issue. So, take my opinion with a grain of salt. I think it is smarter to buy an apartment building than to build. Most people who build have a pay back period of more than 10 years. That’s terrible.

Why would I build when I can buy the apartment block and recoup my money in 100 months or less?? Did I mention all the stress associated with building and the 2 or 3 years wasted building?? Meanwhile someone else has already spotted a building and completed the entire buying process in 6 months. He has a 2+ years headstart, minimal stress, and better ROI. Halafu cost overruns are a bitch. Ukipangia 80M utapata umespend like 10M more. Juzi kuna msee najua alikuwa anajenga he was pissed juu vile kulinyesha after wamechimba very deep foundation ikajaa maji. They wasted an entire month without working and paid for pumping water from that basement foundation.

I decided to leave building to builders mimi nanunua finished product preferably from a distressed first owner. Kuna nyumba nilibuy ilikuwa kwa shamba so I had to buy both the house and the land even though I wanted just the land. That’s how I became a landlord by default before selling that house to some teacher.

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You are wealthy already. What you now want to do is to spend some 85m to create generational wealth. Go for it kingman. It does not matter if you recoup it in your lifetime or not. I hope you have children

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@Yakut

If you have a spare 85 Million laying around you don’t want the headache of buildings , businesses or tender mercies of the KRA

Look for a well managed Investment Fund and be content with the hassle-free guaranteed earnings from your principal investment…

Sometimes , we just kill ourselves endlessly chasing the bag …:blush:

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The real stress free retirement ni kunijoin with my big bro Uhunye. My stock portfolio pays my rent. Dividends zikiingia zimetosha rent ya mwaka mzima. So, even though I am a tenant, my passive investments pay my rent. Its one of the best decisions I have ever made. Ningejifanya mjuaji nijenge ama ninunue nyumba I would have paid double the price I bought the shares for.

Even better, I don’t have to re-invest those dividends because the companies in my portfolio have a low payout ratio i.e hata wakilipa dividends wanabaki na more than 50% of the profits to expand the business.

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Those investment funds have higher returns but also have higher risks… if the fund managers go mad, what will you do? Of course I will also invest some in stocks/ shares, investment funds and Bonds at a later date…

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@Yakut
And what will become of your “investment” if some Shreholder , Hustler , Conman Prophet or his Cronies decide that your building is standing on “Riparian” Land on the Title Deed is Fake … ??? :rofl: :joy: :rofl: :hotsprings:

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I cannot dispute that risk but it is still much lower after thorough due diligence…

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Na nyinyi watu mko na pesa sana outside here

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