Return on Investment for Rent vs Sale in Kenya.
Real Estate investors can opt to invest in rental or sale properties.
Each of these has its own advantages and disadvantages.
Assured regular monthly income for a long time.
Lower cost of construction compared to projects for sale.
Ability to let kin inherit property.
Its harder for banks to finance projects for rent compared to projects for sale. Developer will need huge % of personal savings to construct.
Returns on Investment take many years . The market average is between 10 to 15 years.
Need for regular building maintenance and dealing with problematic tenants.
Shorter Return on Investment. The market average is between 20 to 30% ROI within 2 to 3 years.
Easy to obtain capital from banks and Joint Venture partners.
Less headaches from Nonexistent building maintenance issues and tenants.
Higher cost of construction so as to entice end buyers.
Joint Venture equity provider.
A JV equity provider can easily get a Return on Investment of between 100 to 300% within 2 to 3 years in the case of investment in property for sale.
Francis Gichuhi Kamau, Architect.