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16 Pages«<13141516>
Low End Housing: High Risk, High Return
obiero
#281 Posted : Saturday, June 30, 2018 12:11:09 PM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
wukan wrote:
MugundaMan wrote:

Of course this is a no-brainer, I was in fact very tempted to go this route because
1. Returns are higher
2. Need for parking and other costly amenities is next to zero
3. Cost of building is cheaper because you can go for the cheapest of the cheap finishings and may not even need to plaster your machine cut walls
4. Economies of scale given low fixed costs compared to returns.
5. Extra income from running businesses at the ground floor

But the reasons why I rejected this route

1. Slummification of entire neighbourhoods (and cities) starts with these buildings. Look at Umoja. Note exactly a great place to raise kids and live a decent life. Some of those apartments are like modern day tombs! Kenyans deserve better. This is why I laud Uhuru's low cost housing agenda. Quality subsidised homes for all.
2. Headaches to the landlord galore. general security issues, Tenant to tenant crime may be rife, eviction problems, blocked drains due to tenants pouring all sorts of plastics and things into the drains, vandalism and constant repairs are no joke. It is as management intensive as it gets and my life is too short to spend all my hours managing all these problems.
3. Cap gains are much lower per annum for these types of structures. What you gain in cash flows you lose big time in cap gains compared to say a guy who buys a 1/4 acre in a leafy area and builds a huge maisonette on it.

Bottom line, I would take decent 2br and 3 br flats, as well as 4+ br maisonettes any day over 1br blocks of flats despite the cash flows. Kenyans, seriously ask yourselves, do we want the whole country to look like this (below). If we are not careful, bila planning, that is the direction we are headed in.



Applause Applause Applause Applause

High risk! High return! Investing in the low end housing space is not for everyone!
COOP 5,500; KCB 2,500; KQ 95,000
wukan
#282 Posted : Saturday, June 30, 2018 12:27:46 PM
Rank: Member


Joined: 11/13/2015
Posts: 867
obiero wrote:
Photos will be shared here of besitters in New York and Beijing! Smaller living spaces are the trend going into the future. Execution of the project is what matters. Umoja failed because of lack of coordination by GoK which could easily happen to the Big Four housing agenda.. Look at Marish, Ungem, Ofafa, Baha..


It is really smaller shared space with shared amenities. There is a sophistication that is coming up with younger renters. You need to give them quality 21st century lifestyle. I have seen Qwetu doing well with the student hostels on jogoo road. You just can't do the old fashioned bed sitters.

Low end renters are just a nightmare. If you look at Marish, Ofafa, Baha etc. despite the low rents those neighborhoods have never turned out well. Instead they keep sinking into more decay
obiero
#283 Posted : Saturday, June 30, 2018 12:38:39 PM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
wukan wrote:
obiero wrote:
Photos will be shared here of besitters in New York and Beijing! Smaller living spaces are the trend going into the future. Execution of the project is what matters. Umoja failed because of lack of coordination by GoK which could easily happen to the Big Four housing agenda.. Look at Marish, Ungem, Ofafa, Baha..


It is really smaller shared space with shared amenities. There is a sophistication that is coming up with younger renters. You need to give them quality 21st century lifestyle. I have seen Qwetu doing well with the student hostels on jogoo road. You just can't do the old fashioned bed sitters.

Low end renters are just a nightmare. If you look at Marish, Ofafa, Baha etc. despite the low rents those neighborhoods have never turned out well. Instead they keep sinking into more decay

Exactly! Smaller spaces and definitely highrise. Bungalows are going to the history books! Even Lavington is getting highrise buildings
COOP 5,500; KCB 2,500; KQ 95,000
MugundaMan
#284 Posted : Saturday, June 30, 2018 6:08:22 PM
Rank: Veteran


Joined: 1/8/2018
Posts: 930
Location: Future Dustbowl Citizen
obiero wrote:


Ngong Road is littered with the studio highrise apartments. Tembea Kenya! http://www.suraya.co.ke/?property=the-lynx-royal

https://www.the-star.co....rent-in-ngong-road.html


ha ha ha ha ha! Please don't mention Suraya, my broda! There is a reason why the pictures hapo are off-plan renders and no actual apartments. 95% of Suraya projects have either never broken ground, are stalled or completely dead in the water.Those lynx things have not gone beyond foundation for well over 7 years! The other bedsitters are usually a small number of units in complexes of 2br, 3br or 4br apartments! Usually some squeezed attic or DSQ advertised as a bedsitter!

By the way do not get me wrong, I am not saying bedsitters are a bad idea. They are excellent in terms of cash flows for sure. As you say investing in them is not for everybody. I am one of those for whom it is not my cup of tea. Maisonettes, Bungalows and 2br+ flats in upcoming middle class or higher areas make more long term economic sense to me for way lesser headache.
"The best investment on earth is earth" **Target 1000**
obiero
#285 Posted : Wednesday, September 19, 2018 7:03:25 AM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
Employees to take a hard knock on the payslip. The government has come back for the funds to cater for its big four dream https://www.businessdail...766296-98nwoo/index.html
COOP 5,500; KCB 2,500; KQ 95,000
Angelica _ann
#286 Posted : Wednesday, September 19, 2018 8:36:04 AM
Rank: Elder


Joined: 12/7/2012
Posts: 9,529
[quote=obiero]Employees to take a hard knock on the payslip. The government has come back for the funds to cater for its big four dream https://www.businessdail...66296-98nwoo/index.html[/quote]

Kulipa ushuru ni kujitegemea Applause Applause Applause
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
obiero
#287 Posted : Wednesday, September 19, 2018 8:42:33 AM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
Angelica _ann wrote:
obiero wrote:
Employees to take a hard knock on the payslip. The government has come back for the funds to cater for its big four dream https://www.businessdail...66296-98nwoo/index.html


Kulipa ushuru ni kujitegemea Applause Applause Applause

Shindwe.. This plan is saddening. Now they say that the cash stands to be refunded after 15 years incase one doesn't secure a house.. Liars https://www.businessdail...766040-7k7i5g/index.html
COOP 5,500; KCB 2,500; KQ 95,000
obiero
#288 Posted : Sunday, October 21, 2018 11:31:37 AM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
obiero wrote:
Angelica _ann wrote:
obiero wrote:
Employees to take a hard knock on the payslip. The government has come back for the funds to cater for its big four dream https://www.businessdail...66296-98nwoo/index.html


Kulipa ushuru ni kujitegemea Applause Applause Applause

Shindwe.. This plan is saddening. Now they say that the cash stands to be refunded after 15 years incase one doesn't secure a house.. Liars https://www.businessdail...66040-7k7i5g/index.html

Really waiting to see my county implementation plan.. There could be money to be made here https://www.businessdail...15100-5ju5fbz/index.html
COOP 5,500; KCB 2,500; KQ 95,000
obiero
#289 Posted : Friday, November 09, 2018 7:27:58 AM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
Month two of additional rental income confirmed albeit low due to the rural setting. Those nasty rumors on bedsitters are untrue, demand does exist at the low end
COOP 5,500; KCB 2,500; KQ 95,000
MugundaMan
#290 Posted : Friday, November 09, 2018 8:17:12 AM
Rank: Veteran


Joined: 1/8/2018
Posts: 930
Location: Future Dustbowl Citizen
obiero wrote:
Month two of additional rental income confirmed albeit low due to the rural setting. Those nasty rumors on bedsitters are untrue, demand does exist at the low end


Nobody has ever disputed low end bedsitters (5k to 15k) are cash cows. The big joke is ati luxury bedsitters on Kirinyaga rd for 40-50k a month. No one in their right mind except perhaps backpacker kaburus would be interested in such.
"The best investment on earth is earth" **Target 1000**
obiero
#291 Posted : Friday, November 09, 2018 8:37:14 AM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
obiero wrote:
wukan wrote:
MugundaMan wrote:

Of course this is a no-brainer, I was in fact very tempted to go this route because
1. Returns are higher
2. Need for parking and other costly amenities is next to zero
3. Cost of building is cheaper because you can go for the cheapest of the cheap finishings and may not even need to plaster your machine cut walls
4. Economies of scale given low fixed costs compared to returns.
5. Extra income from running businesses at the ground floor

But the reasons why I rejected this route

1. Slummification of entire neighbourhoods (and cities) starts with these buildings. Look at Umoja. Note exactly a great place to raise kids and live a decent life. Some of those apartments are like modern day tombs! Kenyans deserve better. This is why I laud Uhuru's low cost housing agenda. Quality subsidised homes for all.
2. Headaches to the landlord galore. general security issues, Tenant to tenant crime may be rife, eviction problems, blocked drains due to tenants pouring all sorts of plastics and things into the drains, vandalism and constant repairs are no joke. It is as management intensive as it gets and my life is too short to spend all my hours managing all these problems.
3. Cap gains are much lower per annum for these types of structures. What you gain in cash flows you lose big time in cap gains compared to say a guy who buys a 1/4 acre in a leafy area and builds a huge maisonette on it.

Bottom line, I would take decent 2br and 3 br flats, as well as 4+ br maisonettes any day over 1br blocks of flats despite the cash flows. Kenyans, seriously ask yourselves, do we want the whole country to look like this (below). If we are not careful, bila planning, that is the direction we are headed in.



Applause Applause Applause Applause

High risk! High return! Investing in the low end housing space is not for everyone!

@mugundaman wukan disputed
COOP 5,500; KCB 2,500; KQ 95,000
wukan
#292 Posted : Friday, November 09, 2018 10:00:19 AM
Rank: Member


Joined: 11/13/2015
Posts: 867
@obiero I disputed the Githurai type bed-sitters those ones downgrade neighborhoods

This I like smile smile

Quote:
QWETU - PARKLANDS
Located close to Stima Plaza in Parklands, this development will join our Palma portfolio and provide 324 studios plus 7,200 sq.ft of convenience retail located on the Ground Floor. Amenities include lifts, generator, lounges, gym, WiFi, borehole water and CCTV. Opens in Quarter 4 of 2018.


obiero
#293 Posted : Friday, November 09, 2018 10:02:26 AM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
wukan wrote:
@obiero I disputed the Githurai type bed-sitters those ones downgrade neighborhoods

This I like smile smile

Quote:
QWETU - PARKLANDS
Located close to Stima Plaza in Parklands, this development will join our Palma portfolio and provide 324 studios plus 7,200 sq.ft of convenience retail located on the Ground Floor. Amenities include lifts, generator, lounges, gym, WiFi, borehole water and CCTV. Opens in Quarter 4 of 2018.



You almost crushed my spirit but Jesus gives strength smile
COOP 5,500; KCB 2,500; KQ 95,000
mungaits
#294 Posted : Monday, November 12, 2018 4:27:17 PM
Rank: Member


Joined: 9/20/2007
Posts: 242
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing
maka
#295 Posted : Monday, November 12, 2018 4:44:15 PM
Rank: Elder


Joined: 4/22/2010
Posts: 10,729
Location: Nairobi
mungaits wrote:
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing


21% return PA?

possunt quia posse videntur
Chaka
#296 Posted : Monday, November 12, 2018 5:52:25 PM
Rank: Veteran


Joined: 2/16/2007
Posts: 2,009
mungaits wrote:
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing

1.I wonder how the lease agreement looks like?
2.Does that construction cost include wiring(who applies for the power) and plumbing?
3.What if there are water issues at the location(borehole)?
obiero
#297 Posted : Monday, November 12, 2018 5:56:36 PM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
maka wrote:
mungaits wrote:
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing


21% return PA?


It must be mabati based for such a return. On a stone building with self contained amenities, expect maximum return of 3-8% p.a
COOP 5,500; KCB 2,500; KQ 95,000
tinker
#298 Posted : Monday, November 12, 2018 6:06:11 PM
Rank: Member


Joined: 11/15/2010
Posts: 263
Location: Nairobi
Chaka wrote:
mungaits wrote:
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing

1.I wonder how the lease agreement looks like?
2.Does that construction cost include wiring(who applies for the power) and plumbing?
3.What if there are water issues at the location(borehole)?


approx 200k - 300k each bedsitter?....kwani ni za Mabati, and if it is Mabati...who will pay 8k-12K ya Mabati?.
40 units on a 50x100 is not possible all on ground floor...unless ni Gorofa...which means you need ground floor slab and roofing on 1st floor which really pushes the cost of construction way-up.
....He who began a good work in you will carry it on to completion..
Muthawamunene
#299 Posted : Monday, November 12, 2018 6:09:24 PM
Rank: Member


Joined: 1/3/2011
Posts: 238
Location: Nairobi
obiero wrote:
maka wrote:
mungaits wrote:
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing


21% return PA?


It must be mabati based for such a return. On a stone building with self contained amenities, expect maximum return of 3-8% p.a



This I attest to. 8%, na hiyo ni kujaribu sana.
obiero
#300 Posted : Monday, November 12, 2018 6:19:27 PM
Rank: Elder


Joined: 6/23/2009
Posts: 10,658
Location: nairobi
Muthawamunene wrote:
obiero wrote:
maka wrote:
mungaits wrote:
Here is the current bedsitter development craze;

There is high demand for the bedsitters due to interest from students, newly employed people and slay queens! πŸ˜‚πŸ˜‚

- lease land (50x100) at 30k - 60k per month for a min of 17 years
- put up approx 40 units of bedsitters at approx 200k - 300k each (total cost 8m - 12m)
- rent out the units at 8k - 12k (total monthly income - 320k - 480k)
- recoup your costs in 3 - 4 yrs and enjoy your rent for 14 yrs

* very important LOCATION LOCATION LOCATION
( current hot locations; Waiyaki Way, kawangware, Dagoreti, kiambu etc)
* due to competition include WiFi, DSTV, small gym and secure parking (mostly for sponsors πŸ˜‚πŸ˜‚)

Pros
- you access a plot in a location that could be out of reach or unavailable for out right purchase
- you don’t tie your capital in purchase of land
- you get first priority to purchase the land if the owners want to sell the plot
- very simple and quick to put up (mostly without approvals)

Cons
- after the lease period expires you have to walk away and leave the development as it is

I know of guys/groups with numerous such set ups and raking in crazy amounts as rent every month

Happy investing


21% return PA?


It must be mabati based for such a return. On a stone building with self contained amenities, expect maximum return of 3-8% p.a



This I attest to. 8%, na hiyo ni kujaribu sana.

Kabisa. More commotion due to intense administration of a large number of restless youth but it's possible. You charge per student not per unit of housing.. One unit at KES 12,000 per student per semester. Maximum four students per bedsitter unit
COOP 5,500; KCB 2,500; KQ 95,000
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