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guru me
#11 Posted : Sunday, December 30, 2012 9:48:41 PM
Rank: New-farer

Joined: 6/27/2011
Posts: 63
@Ngong one of the links posted by Far Car Dealer contains an article by a4architect and he breaks it down quite well. For ease of reference see below:

http://www.the-star.co.k...-eighth-acre-piece-land

The best bit of a lot of useful infor gotten so far.
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Ngong
#12 Posted : Sunday, December 30, 2012 10:45:56 PM
Rank: Veteran

Joined: 11/17/2012
Posts: 1,461
Location: Ngong Forest
FOLLOWING THE LINK ABOVE I GET
@guru hii info imefichwa?

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Fair_Car_Dealer
#13 Posted : Monday, December 31, 2012 12:35:46 AM
Rank: Member

Joined: 10/13/2009
Posts: 25
Location: Nairobi
Ngong:

Try either of the following methods to get to the article:

1. Click on the link below to go directly to the article:

http://www.the-star.co.k...-eighth-acre-piece-land


2. Go to the Star Website (www.the-star.co.ke) and enter the following phrase in the SEARCH Box on the top right corner

How to maximise rental income on an eighth-acre piece of land

The article you want is the 2nd one listed in the results page. It is dated 24 August 2011.

-Fair Car Dealer
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kazee
#14 Posted : Monday, December 31, 2012 8:52:36 AM
Rank: Member

Joined: 9/18/2006
Posts: 131
@guru. I will give you my 2 cents based on my past experience.
If you ever read an article young posted here sometimes back, the key to such a project is one: LOCATION
One other thing you need to appreciate is that despite the plot location, cost of construction will not vary much (slight variation maybe due to cost of materials transport to the various locations, labour may vary slightly but these are immaterial in the total project cost- land plus building)
If I for example take the locations you mentioned, if you buy a plot in ruiru, another in 44/45, Kitengela, or rongai I would tentatively think a 50*100 might cost 2m, 6m, 2m and 3m respectively. Add cost of construction for lets say 5 floors at 20m and you get a total cost of 22m, 26m, 22m and 23m for the various plots respectively.
The presents a difference of about 10-15% between the cheapest and most expensive in cost terms
On the other hand, if you squeeze 60 single room self contained units in each and the rents are 4k, 6k, 4k, 4k respectively, the total income would be 240k, 360k, 240k and 240k respectively. This presents a difference of about 50% in total income between the lowest and highest compared to about 15% of total cost. So dont be duped into saving by buying a cheap plot because you wont save much in total cost but your total income will be compromised greatly.
Again before you buy, ask the going rents in the neighbourhoods you are considering and do your maths to assess income.
Just my 2 cents...
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deadpoet
#15 Posted : Monday, December 31, 2012 9:43:04 AM
Rank: Member

Joined: 9/27/2006
Posts: 506
What about fire exit points? Are these being ignored?
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maina20
#16 Posted : Monday, December 31, 2012 10:00:12 AM
Rank: Member

Joined: 7/21/2010
Posts: 249
Location: nairobi
kazee wrote:
@guru. I will give you my 2 cents based on my past experience.
If you ever read an article young posted here sometimes back, the key to such a project is one: LOCATION
One other thing you need to appreciate is that despite the plot location, cost of construction will not vary much (slight variation maybe due to cost of materials transport to the various locations, labour may vary slightly but these are immaterial in the total project cost- land plus building)
If I for example take the locations you mentioned, if you buy a plot in ruiru, another in 44/45, Kitengela, or rongai I would tentatively think a 50*100 might cost 2m, 6m, 2m and 3m respectively. Add cost of construction for lets say 5 floors at 20m and you get a total cost of 22m, 26m, 22m and 23m for the various plots respectively.
The presents a difference of about 10-15% between the cheapest and most expensive in cost terms
On the other hand, if you squeeze 60 single room self contained units in each and the rents are 4k, 6k, 4k, 4k respectively, the total income would be 240k, 360k, 240k and 240k respectively. This presents a difference of about 50% in total income between the lowest and highest compared to about 15% of total cost. So dont be duped into saving by buying a cheap plot because you wont save much in total cost but your total income will be compromised greatly.
Again before you buy, ask the going rents in the neighbourhoods you are considering and do your maths to assess income.
Just my 2 cents...


Agreed, and thanks for insight!
..desire to succeed is always fighting with fear of failure..
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guru me
#17 Posted : Monday, December 31, 2012 8:53:26 PM
Rank: New-farer

Joined: 6/27/2011
Posts: 63
@Maina20. Thanks and noted.

Think theres quite a bit of very useful infor to evaluate the commercial property option. Thanks again to all for contributing.

Perhaps its worth sharing some additional infor I came across on option 3 (motel) that may be of benefit to others.

Its 3rd hand infor but gather there is a chap who has built a motel of about 30 self contained rooms outside Nairobi. Beauty of it was that since it was in a low popl. area land was relatively cheap and he did not have to build beyond one floor because of availability of land - significantly reducing his construction cost.

Total construction costs inclusive of land estimated at KShs20m.

Room rate per day 3k

Monthly running costs 50k

Conservatively, assuming 20% occupancy Monday through Thursday and 60% occupancy Friday, Saturday and Sunday that would translate to a weekly income of KShs 234,000 (60%*3*30*3000)+(20%*4*30*3000)and a monthly gross income of 936,000.

Based on above
Payback period: 1.78 years
Return on Investment: 56% p.a.

Upside (IMO): Very good ROI and payback period
Downside: Unpredictability of income, requires full time supervision hence time constraints

Based on preliminary investigations, sounds very enticing and to be honest almost too good to be true.

Again would appreciate anyone who can critique or add to the above for our collective benefit.
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Ngong
#18 Posted : Tuesday, January 01, 2013 2:42:18 PM
Rank: Veteran

Joined: 11/17/2012
Posts: 1,461
Location: Ngong Forest
Fair_Car_Dealer wrote:
Ngong:

Try either of the following methods to get to the article:

1. Click on the link below to go directly to the article:

http://www.the-star.co.k...-eighth-acre-piece-land


2. Go to the Star Website (www.the-star.co.ke) and enter the following phrase in the SEARCH Box on the top right corner

How to maximise rental income on an eighth-acre piece of land

The article you want is the 2nd one listed in the results page. It is dated 24 August 2011.

-Fair Car Dealer


smile Thanks!
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Ngong
#19 Posted : Tuesday, January 01, 2013 2:58:55 PM
Rank: Veteran

Joined: 11/17/2012
Posts: 1,461
Location: Ngong Forest
guru me wrote:
@Maina20. Thanks and noted.

Think theres quite a bit of very useful infor to evaluate the commercial property option. Thanks again to all for contributing.

Perhaps its worth sharing some additional infor I came across on option 3 (motel) that may be of benefit to others.

Its 3rd hand infor but gather there is a chap who has built a motel of about 30 self contained rooms outside Nairobi. Beauty of it was that since it was in a low popl. area land was relatively cheap and he did not have to build beyond one floor because of availability of land - significantly reducing his construction cost.

Total construction costs inclusive of land estimated at KShs20m.

Room rate per day 3k

Monthly running costs 50k

Conservatively, assuming 20% occupancy Monday through Thursday and 60% occupancy Friday, Saturday and Sunday that would translate to a weekly income of KShs 234,000 (60%*3*30*3000)+(20%*4*30*3000)and a monthly gross income of 936,000.

Based on above
Payback period: 1.78 years
Return on Investment: 56% p.a.

Upside (IMO): Very good ROI and payback period
Downside: Unpredictability of income, requires full time supervision hence time constraints

Based on preliminary investigations, sounds very enticing and to be honest almost too good to be true.

Again would appreciate anyone who can critique or add to the above for our collective benefit.


Nice idea,thought of the the same sometimes back but first,3000/day is on the higher side, My survey suggests 1000.
Second, when doing my survey I saw one come up on my route and unfortunately it never picked up and was immediately converted to residential.
Reason according to me is location next to the road and thus lack of privacy and maybe security and above all open car park.
Most of your clients and this is what matters don't require full day lodge and also not very godly.
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mibbz
#20 Posted : Tuesday, January 01, 2013 3:37:18 PM
Rank: Member

Joined: 2/18/2011
Posts: 448
guru me wrote:
Hi Wazuans,

Seeking advice on income properties. So far my research has led to the below options.

Option 1 (most viable IMHO)
Commercial development in lower income area such as Githurai 44/45, Kitengela, Rongai, Ruiru etc.

Cost of land varies with area with KSHs 2.5 m in Kitengela to about 7 in Githurai for a 50 by 100.
Construction costs estimated at about 15m to 20m for 4 floors.
Rental income ranges from 120k pm to 500k pm depending on who you talk to.

Capital gains on completion 50-150% (again depending on who you talk to) on valuation allowing you to unlock equity.

If anyone has pursued this option I would greatly appreciate validation or correction of the assumptions and any additional infor

Option 2 Rental property in upper middle class area such as Lavington
Estimated cost 15-25m for an apartment.
Rental income (per sellers claims) 120k pm unfurnished 250 k pm furnished.
Again would appreciate any further further input on this.

Option 3 motel of sorts/ bed n bfast in Nbo, outskirts or coast. Not much infor on this.

Objective: income should cover most if not all of loan repayments.

Thanks in advance to those who will contribute to our collective education.



hallo boss.only advise i can give,check out www.tofinarom.com i personally have not tried them out but i have no reason to doubt them.check out the capital gains expected on an apartment upon completion,now imagine if they were two or three......happy hunting
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