Hi guys,please advise,I am considering to venture in real estate investment. I have acquired a 50*100 plot in uthiru near the highway and Equity Bank is will to lender me 5M for development. I am planning to build one-bedroom flats or single rooms and i have some savings which can cater for the first 10 months installments.My questions is;

Is this money enough to build houses which can net in enough income to finance the loan at the end of the 10 months period?

Is it advisable to build single rooms or one-bedroom flats?




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@ Morey
as Mr. Tea has pointed out,such a venture needs careful planning since it will lock up substantial capital. consider the following hypothetical development;
Considering your plot size of 50 by 100=roughly 16m by 33 m with a development within 60% ground coverage means you construct around 316.8 sq metres per floor. Assuming a conservative construction cost rate of Ksh.25,000 per sq metre(for modest finishes) then you need at least 7,920,000 to do one floor and around 16M for a one storeyed structure. etc.
consider/assume that a one bedroomed unit occupies around 36 sqm then with 316sqm you attain around 8 1BRunits per floor which could fetch anything between Ksh.4000 - 12000 depending on local factors e.g water supply,state of roads and most importantly SECURITY.These will make the difference between success and failure!
As regards financing banks would need approved plans plus Bill of Quantities from a QS. Another twist worth noting is that most banks lately insist that you raise and start construction with at least 30/40 % of the total project cost/capital before they advance you the balance.
way forward;
consider the amount you are ready to pump into the project(30% minimum) and calculate your probable ROI based on the above estimates including the cost of borrowing and hopefully you'll make an informed decision. When calculating the returns i.e rent work with the worst case scenario to avoid unrealistic expectations.

hope this helps you somewhat.

less is more for Architects only!!

@ Morey,sasa? If u don't mind telling me,how much did it cost u for that plot in uthiru? I've been shopping for a plot in this area also,kinoo & muthiga....how much cost and how close r u to tarmac? Thanx.

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