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Riverside or Madaraka estate rental property!
Seles83
#1 Posted : Monday, February 07, 2011 3:33:46 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Fellas,

I am totally confused on which property to go for:

Madaraka NHC Apartments:
2Bdr 5.5 million- rental income 25-30k
3Bdr 7.25 million- rental income 35-40k
Estimated Completion Date: Dec 2011

Riverside Drive (Riverside Pointe)
-2bdr 9.95m- rental income 60-70k
Estimated Competion date: June 2012

Although madaraka house have low effective rental yield i assume the area has less vacancy rate as compared to 60k to 70k apartment which has got 7% rental yield.

- Please advice on which property you would go for...and your reasons for short term or long terms positions..

Thanks mates!!

More monies, more problems...
njamba
#2 Posted : Monday, February 07, 2011 7:31:07 AM
Rank: Member

Joined: 1/30/2007
Posts: 16
Forgive me for hijacking your thread. I also looked at those houses but decided to wait when i read about this story

http://www.businessdaily.../-/15ijaa2/-/index.html

What effect do wazua members think the move by nhc to use low cost blocks will have on the prices of brick and mortar houses? The businessdaily article claims the cost of building may reduce by up to 40% with the new technology
Seles83
#3 Posted : Monday, February 07, 2011 7:40:17 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Thanks for posting the link...@Njamba whats your take on my dilemma...
More monies, more problems...
Seles83
#4 Posted : Monday, February 07, 2011 8:54:09 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Guys surely above 100 views with no comments...
More monies, more problems...
Wa_ithaka
#5 Posted : Monday, February 07, 2011 8:59:37 AM
Rank: Veteran

Joined: 1/7/2010
Posts: 1,279
Location: nbi
Won't bother with the 3bdr in Madarak. You pay an additional 2m for 120k maximum extra annual income.
The riverside deal is tempting if you have the cash.
The Governor of Nyeri - 2017
Seles83
#6 Posted : Monday, February 07, 2011 9:05:13 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Wa_ithaka wrote:
Won't bother with the 3bdr in Madarak. You pay an additional 2m for 120k maximum extra annual income.
The riverside deal is tempting if you have the cash.


The only problem with riverside the occupancy rate may not be very high..
More monies, more problems...
Wa_ithaka
#7 Posted : Monday, February 07, 2011 9:07:28 AM
Rank: Veteran

Joined: 1/7/2010
Posts: 1,279
Location: nbi
Seles-ou are buying one flat not 100s. You can find a tenant.

Otherwise go for the Madaraka flat. Mind you, rent doesn't go up as fast in Madaraka as it would at riverside
The Governor of Nyeri - 2017
Papa Investor
#8 Posted : Monday, February 07, 2011 9:10:32 AM
Rank: New-farer

Joined: 6/3/2010
Posts: 96
As you said...its a balance between assured but lower yield and riskier but higher yield...Madaraka is excellently located...but the rents in the area have been depressed because of water issues and the old flats which are an eyesore..if they do manage the above 2 issues...rent for 3 bed can be as high as 40-50k (look how much new properties in Nrb west and South B rent out for)....just remember the higher the rent the higher the probability of encountering vacancies 10% of the time which will lower your effective rental yields...
bwenyenye
#9 Posted : Monday, February 07, 2011 9:22:27 AM
Rank: Elder

Joined: 5/24/2007
Posts: 1,805
@ Sales83

What you have is a good problem. However, think like an invester as far as returns are concerned. I would look at it this way

a) I'm I looking to buy the property as an investment or home?( Do I want to move into the house in future?
If for home, look at the environment, schools , job etc
IF for rent, then

1) If you can get the 9.9M house, then you should be able to get 2 5.5 M houses for rental ( forget the 3 bed). So the real comparable costs and returns would be 60-70K Vs 2*(25-30K). This is as far as rental income goes. Generally, the working class will pay more for houses near their work places to avoid Jams that are now endemic. This tells me that very soon, there will be an upward pressure on rental houses in Mada.

2) The element of capital gains also kicks in and it is more likey that you would get higher returns on capital on lower cost houses than on higher cost houses. In this way , you are then able to offload one house to clear the other in a very short time especially in new housing.( also note that Mada rents have been depressed due to the attachment to CCN and NHC battles. The new houses will be a different ballgame all together.

3) HassConsult did a survery ( last week) that indicated that high cost apartments have had the biggest hit on rental returns stagnation due to the high numbers provided.

I believe you get my drift!
I Think Therefore I Am
Seles83
#10 Posted : Monday, February 07, 2011 9:35:37 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Thanks guys for your advice...i believe the NHC houses will drive up the rents prices in madaraka area and also change the face of the area.

I am out of the country at the moment, so the investment will be purely rental..@bwenyenye i think your idea of 2 apartments for 5.5million makes alot of sense.

Will contact NHC to see whether they will address the water shortage problem and etc...
More monies, more problems...
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