HOW TO EARN REAL ESTATE INCOME IN KENYA.

HOW TO EARN IN REAL ESTATE INCOME IN KENYA.

GOAL: TO EARN AT LEAST KES 200,000 PER MONTH IN REAL ESTATE INCOME

LAND: TO BE BOUGHT AROUND NAIROBI

OPTION 1.RENTAL FLATS.

To derive 200,000 in rental income monthly, this translates to 17 units assuming a rental income of KES 12,000 per month.

LAND
Areas such as Umoja, Ongata Rongai, Kitengela, Athi River, Kahawa Wendani, Zimmerman are best suited for this type of construction.
This is because these areas are cosmopolitan hence attracting a wider range of tenants from all over Kenya hence pushing the house rent/demand high.
This means that the house owner will enjoy close to 100% tenancy rate.

KITENGELA
http://nairobi.dealfish.co.ke/offer/kitengela-new-2-bedroomed-flats-1-bed-roomed-and-a-bed-sitter-IDGqi.html

UMOJA
http://property.nation.co.ke/listing/7320/Umoja_drvie_Inner_Core_Nairobi.html

ONGATA RONGAI
http://property.nation.co.ke/listing/2046/ONGATA_RONGAI._ONGATA_RONGAI_NAIROBI,_KENYA.html

KAHAWA WENDANI
http://nairobi.dealfish.co.ke/offer/apartment-to-let-in-kahawa-wendani-IDpNd.html

LAND COST

In these areas, land suitable for construction of flats costs an average of KES 1.5 to 2 million per 1/8th plot.
A 1/8th plot can hold a minimum of 4 units per floor for 5 levels, bringing the units to 20 in total.

ONGATA RONGAI
http://nairobi.dealfish.co.ke/offer/ongata-rongai-1-8-05-acre-plots-for-sale-from-165-million-for-an1-8th-IDUIP.html
http://wafaskenya.com/index.php?option=com_content&view=category&layout=blog&id=19&Itemid=26

KITENGELA
http://wazua.co.ke/forum.aspx?g=posts&t=13506
http://www.propertyunit.com/detail/1904/

UMOJA
http://nairobi.dealfish.co.ke/offer/3-prime-plots-at-nasra-gardens-estates-IDnmJ.html
http://www.mydeals.co.ke/house-3-0-0-0-61-kenya-property-for-sale-rent.html

KAHAWA WENDANI
http://nairobi.dealfish.co.ke/offer/kahawa-wendani-along-thika-superhighway-IDWpi.html
http://nairobi.dealfish.co.ke/offer/kahawa-wendani-1-4-acre-IDYrK.html
http://nairobi.dealfish.co.ke/offer/5min-walk-from-nakumat-express-kahawa-hot-land-IDCM0.html
http://www.wazua.co.ke/forum.aspx?g=posts&m=231317

CONSTRUCTION COSTS.
After land is purchased at a cost of KES 2,000,000 for 1/8th acres, construction then follows.
Construction of 17 units at an estimated cost of KES 25,000 per square meter will cost KES 25,500,000.
Add KES 2,000,000 for land to bring a total of KES 27,500,000.
To view other comparisons between bedsitter, one bed roomed units and low, middle or high cost finishes, click on the link below;
http://www.a4architect.com/2011/10/07/18th-land-development-for-one-bedroomed-and-bedsitter-flats-rental/

OPTION2. EARNINGS AS A DEVELOPER.

A 1/8th plot can be designed to deliver 2 bungalow units. Each bungalow unit will cost as below
http://www.a4architect.com/diamond-house-plan-cost/

Assuming only Phase 1[1 Bed roomed] of the Diamond House is constructed; this will cost KES 2.4m for 2 units on a 1/8th acre costing KES 1m in the above mentioned areas.
For individual residential units such as these, the land will be cheaper since it can be located a further distance away from the main road as opposed to land for flats which have to be close to the main road.

The total investment will be KES 1m plus KES 2.4m=KES3.4m.
This can be phase 1 of the investment which will then be followed by phase 2 and 3 to total KES 10.2m.

PROFIT FROM DEVELOPING THE DIAMOND HOUSE DESIGN.

The One bed roomed house can cost KES 2.5m in the market. This price range has virtually no competition hence the price will go higher till sufficient competition checks in.
Sale of phase 1 comprising of 2 units will give a profit of KES 5m –KES 3.4m =KES 1.6m. Total time taken for development is 3 months.
Therefore, the amount of money earned per month is KES 1.6m /3=KES 530,000 per month.
With an initial investment of KES 10.2m for phase 1,2 and 3, this amount can triple to KES 1.6m per month.
This profit is assured as long as there is demand for housing in Kenya.

CONCLUSION

There are many ways that developers can profit from construction apart from developing rental units which are costly to initially put up and have a long repayment period. Developers can now cash in on constructing houses for sale and make much more returns in a shorter time.

Higher profits come with higher risks and vice versa. After making the profits ads a developer, one can now develop lower risk rental units and enjoy rental income forever.

The time to make use of the current high demand for housing around Nairobi is now. Make use of the over 10 years of research put into the Diamond House design that reduces overall construction costs to enable you to generate good profit for yourself.

http://www.a4architect.com/diamond-house-plan-cost/

Architect Francis Gichuhi Kamau

info@a4architect.com

+254721410684

Francis Gichuhi (692 Posts)

Architect Francis Gichuhi . B.Arch. University of Nairobi. Registered Architect, Kenya. Member, Architectural Association of Kenya. Contacts. email info@a4architect.com. Telephone +254721410684


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  4 comments for “HOW TO EARN REAL ESTATE INCOME IN KENYA.

  1. September 9, 2013 at 10:08 am

    Good Morning Sir,

    I have 1/8 piece of land here at Machakos with 2 bed roomed bungalow and am contemplating of investing in apartments/ flats in the same land. the current rents rate for 2 bedroom bungalow is @10,000 to 15,000

    Sir, with your expertise knowledge, how much do I need to invest on 15 flats ?
    Thanks

    • September 9, 2013 at 10:17 am

      15 flats will cost 15 x kes 20,000 per m2 x 50m2=kes 15m
      ROI=5.5 Years.

  2. January 14, 2015 at 2:20 pm

    if i have an 1/8th in kitengela and need to build 5 floors G + 4 and need to have bedsitters, how many can i do per floor, i see normally in kitengela such flats, with between 8 -10units per floor (on each side of the floor with a space in between) rent ranges from 3,500 to 4,500/=

  3. bernard musumba
    March 6, 2015 at 9:40 pm

    when i will be ready to construct my house can i request for your advice(assistance) technically

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