Bye Bye High Bank interest Rates. Invest in Real Estate by pooling resources and get more value for your money.

Bye Bye High Bank interest Rates. Invest in Real Estate by pooling resources and get more value for your money.

The current bank interest rates are in the range of 17% per annum.

Assuming an investment on a 1/8th acre plot for rental bedsitters, the cost will be as below.
1. cost of construction . kes 7.3m
2. cost of land. kes 3m

70% of Cost of Construction.

Banks can finance only the cost of construction to the tune of 70%. This brings the amount financed to kes 5,110,000.

Monthly bank repayment.

After raising personal savings of kes 3m to buy land and kes 2,100,000 as 30% of construction cost, the investor is still required to pay the bank a monthly payment of kes 88,000.

Rent collection.

This project can effectively collect kes 84,000 in monthly rent.

This means for the next 10 years, the bank will take all the rent.

This can be quite an uphill task considering the bank has only put in kes 5,110,000 out of the possible KES 10,300,000 total construction cost, roughly 50%.

For an individual to purchase the 3m land and put in 2m as 30% of construction cost then wait for 10 years for any financial gain is not an easy task.


For the exactly same project cost of kes 3m for land and kes 7.3m for construction, offers a solution whereby several investors are pooled together to become joint co investors into the whole project comprising of 12 bedsitters. See more details here

Joint Co Investor.

Each joint co investor will legally own 1 share out of the possible 12 shares. In addition to this, the 1 share will be translated to a particular bedsitter unit which the co investor can live in and collect rent from.

Comparison between Bank finance and Joint co investor finance.

The land plus construction costs kes 10.3m.
For the 12 co investors, each owning 1 bedsitter unit, this translates to 10.3m/12=kes 860,000.

After contribution of kes 860,000, the co investor will immediately start earning monthly rent of kes 7,000 on construction completion.

For the bank financed at 17% per annum interest, the investor will have to come up with kes 3m for land purchase and a further kes 2.1m for 30% construction cost.

The bank will bring in 5.1m as construction loan and will take kes 89,000 as monthly payment for 10 years. In other words, the investor will get nothing till after 10 years.

The total amount the investor will have put in is kes3m plus kes 2.1m =kes 5.1m

If he invested in the method of pooling resources, this would have translated into kes5.1m/kes860k= 6 shares.
These shares will earn 6 x kes 7,000=kes 42, 000 monthly.

For 10 years, this will be kes 42,000 x 12 x 10=kes 5.04m.

This represents a 10% per annum growth rate .

In this case, the investor who puts in kes 5.1m and borrows from the bank will get 0 revenue for the next 10 years while the investor who puts in the same amount and pools resources form other investors gets back the money he invested by the 10th year.

As the saying goes, a bird at hand is worth more than 10 in the forest.
The option of pooling resources will work better .


In the method of pooling resources in 12 unit shares per plot, it’s easier to spread your savings from 1 plot/area to another as your money comes in.


For example, in June 2013, you are able to raise the kes 860,000 for 1 share. 6 months later in December, you are able to raise another kes 860,000 for 1 share. This means you will t have to wait for all your shares to be in 1 project.
Every month, there will be a new opportunity to pool resources for the rental investment plan hence ease of personal finance planning.
There is no missing the bus.

Join Now.

To join into the Real Estate investment plan, read here for more info or email .

Francis Gichuhi Kamau, Architect.

Francis Gichuhi (692 Posts)

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


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