- Add new comment
- 512 views
I am assuming that you have a 50 by 100 piece of land in Kitengela or wherever else you want to build rental houses. I am also assuming that the said land has a good title deed, that it is not a grabbed public school land.
If it is clean land and you have identified that you need to build rentals, then set aside the next three to five years for a roller-coaster ride that is building in Jamhuri. It will be the most tasking undertaking you will have done in your life.
So get yourself a good support system and tough shock absorbers. For it is not a walk in the park to complete a building project.
First things first. Get yourself a good and reputable architect. This person will be your best friend during the entire project. Number two, get for yourself a good project manager, and keep away from your dear brother or your sister. You will thank me later.
If you cannot be at home to meet one on one with professionals before you begin your building project, then trust your people on the ground and bag for yourself the faith of a Beduin.
You must meet with the professionals that will be responsible for your project and exchange ideas. Also, you will get to know what you are getting yourself into. I know of guys who collapse at the end of a building project due to the physical and emotional toll it takes on the investor.
After sitting with the architect and going through your vision. The three of you, including the project manager must visit the land in question. Come with the map of the area where you are intending to build.
Make sure that if it is an undeveloped area, that you are sure that you have identified your plot. Ama hujasikia watu wanajenga ploti za wenyewe?
The visit to the site with the architect is so important. He will see how the land is oriented, where the roads are, the type of soil, and so on.
It is also at that time you will get to know the exact measurements of your plot. The architect will have come with the Futi Kamba to take measurements.
The architect will go back to his office and come up with the drawings. Depending on the number of floors, be ready with over Ksh 60,000 for the architect. That figure is on the lowest side.
After the architect does his thing, he will forward the drawings to a structural engineer, this one will come up with all the structural drawings. This includes the type and size of chumas that will be needed for the entire building.
Some investors get this structural drawing and decide that chuma size 16 is expensive and substitute them with size 12. If you do this, you will only blame yourself when at fourth floor, the whole house comes tumbling down, killing your fundis, and the beginning of your miserable life after that.
The structural engineer will also get his cut of kedo 40-60 thou. He is a professional, so don’t start cursing.
The next step is taking the two drawings to a Quantity Surveyor. This guy will go to the ground and do some complicated mathematics and come up with what they call Bill of Quantities. It is good guestimate of the cost of the whole project, itemized. The booklet he produces will set you like 20-50K back.
Your Architect will have connections with the Structural Engineer and Quantity Surveyor, some of them operate in the same office. Therefore, your bill will come at once.
Having ensured that all the documents you have are signed and stamped by the three professionals, you will begin visiting government and county offices.
Now, this is the time you will are likely to lose it. When you read and hear that there is inept, bureaucratic, and corrupt system in Jamhuri, you will come face to face with this demons in the said offices.
I do not remember how many government offices you will visit to get the necessary stamps and approvals. They are so many and in different places depending on your county.
Suffice to say, you will visit the County offices, lands offices, Public Health offices, NEMA offices, NCA offices. In each of them, you will pay this and that. You will get receipts on some payments, and in others, do not ask for one. Ni chai ya wazee.
Your architect and project manager will know which offices to visit and how much it is likely to cost and how long it will take for this stage to end.
However, the whole exercise of getting the right approvals and stamps may set you back up to 250K. Na bado hujaanza kujenga!
After you get all the approvals and stamps, the most challenging and financially demanding phase of your life begins.
Take it easy. Rome was not built in a day. Do not yell at people because a whole Ksh 1.5 million has been buried underground in the foundation. Do not fret when fundis make a blunder and whole walls are ordered brought down by the architect.
Do not miss a heartbeat when you realize that $100,000.00 later, your structure is far, far from complete.
I know readers will share their experiences below about what they have gone through when building in Kenya. Tusaidiane jameni…
By Mzee Moja
Comments
"..... $100 000K later, your structure is far, far from complete" And at this juncture u haven't yet factored in the cost of the land which, by all possibilities, is exorbitant, to put it mildly. It is imperative that a would-be real-estate developer in Kenya carry out a thorough cost benefit analysis (CBA) so as to see whether they gona absorb ALL the challenges and shocks involved, financial and other. It is especially critical at this time when KRA is gearing to go for the jugular of all property owners (the proposed taxes are way too high for a developing economy like ours). I worked in construction for quite a while (mjengo) and woe unto anyone who thinks they can escape sly contractors, even the most reputable and reliable ones, will be in for a rude shock although many never get to know they were conned. These contractors make a killing in materials procurement as well as in using cheaper materials e.g the use of Y12 steel in place of Y16 or manipulating sand and cement mixture for the mortar and plaster. It's so hard and challenging even for someone stationed in Kenya leave alone a diaspora rat.
Further, and more importantly, real estate has stolen the show in Jamhuri owing to those folks who either already had land or bought earlier on before the land prices skyrocketed to where they are now. The tune these fortune makers sang was so sweet it continues to lure hapless individuals who think they gona make a fortune too. My best advice: PLEASE do the math, comprehensively, otherwise real estate development is not for the faint-hearted. Many have literally succumbed and been buried. I know of one guy in 2012
@Nyange Nyange - Given all the above headaches, why not invest your money in the NSE which, in the very long term (sometimes even short-term), has far much better returns than real estate? I don't know much about other parts of the country but today, buying land and constructing rentals in Nairobi is a very very expensive affair. Not even the average diaspora man or woman can easily afford. Actually, if you look at value for price, you are far much better off buying a rental or even your own house in these United States save for the property taxes every year (but generally far better security than in Jamhuri where, once you manage to put up some rentals, you become a marked man or woman, a sonko to be harassed and even killed depending on the circumstances)
The NSE and other similar financial investment tools give you the ability to build what is called "stealth wealth" Basically, unless you tell somebody, nobody can easily know your worth just by looking at you. You can also access your money very easily coz liquidity in this market is very high. This is not the case with real estate where you can put your property on sale and have it sit for months or even years.
Further, Kenyans' obsession with land is wierd. I see many folks buying a piece of land, say for 3M, then letting it stay idle for another 3 - 5 years as they raise funds to do the construction. Why not invest the money in the markets where you may end up doubling it, or even trip[ling it inspite of the possibilities of loss? There are many many more who have bought land to simply speculate. While land prices generally appreciate over time, they will NOT do this forever. As more folks detach themselves from land in a modernizing economy, the rate of appreciation slows down at which point other investments become more viable.
Mlachake, I agree with you that real estate is a huge pain in the butt. And As Nyange has said, not for the fainthearted. However, since antiquity, the king of all investmets is land. Get a piece of land, any time anywhere. Land is so cool. You sometimes do not have to do anything else after buying land, before you know it, the price is many times more than you bought it.
Trading in stocks is a good way of accumulating stealth wealth, as you rightly put, but haven't you aslo heard of Nyaga Stockbrokers who folded and left many with burned fingers? Stock business is as risky as any other business. You can make it or not.
True, real estate is capital intensive. However, once you build a nice apartment bulding, even though it might take a decade before you re coup your investment, the returns will be for ever. Your yet to be born grand children will enjoy what Guka built many years later.
Of course all other issues put in constant, clean land will remain king of investments. And don't be afraid that you will be a marked man due to an apartment house in Thindigua, there are many genuine estate agents in the land, plus MPesa that is just God send for Kenyans. Believe you me, none of my several tenants even know of my existance. I am in the shadows as my estate agent takes care of business.
Totally agree there Kiko. A lot of people are afraid maybe because they hear horror stories about others being conned or have had bad experiences when they have used their relatives to buy land or build. But my experience has not been all that negative and I do my mjengo srowry srowry. Cost wise it's daunting but it gives me a sense of purpose. NSE or even NYSE has it's downs too just like the Nyaga Stockbroker experience, so buying shares is not necessarily the safest investment.
But I am also a believer in diversification and for that reason I am of the opinion that one should be invested in a variety of things; some stocks (whether in majuu or jamburi), farming, 401K or have some form of pension or other retirement benefit, own your home in majuu, a rental or two in majuu, a biz if you are up to it and update your skills.
Yes kiko kashamba ni lazima juu the way kenya is going n it won't stop kama hauna
kamchanga in years to come u cannot afford it just the way Americans says how they cannot afford to
own a hse juu hawana majors all the jobs they have cannot sustain it.Every business is a risk,stock n shares
go dwn all the time n sometimes up.Some of the family members r good others r pumpkins.Not all yr
brothers n sisters r bad,make use of the one who wants u to suceed juuhauwezi kosa mmoja.Kama hauna
just buy a ready made hse,already buld,u mite end up paying more but at least u got kakitu n u can rent it too.
Before u know it Ur done paying it off but wasee make sure uko Na kanyumba Hata kama ni
kajiado,Nakuru,athi river the places which r not that up.If u watched southafrica Africans being told to leave
u will make sure uko Na tuploti or kahouse juu who knows usa or that diaspora u leave what can happen kesho.
There Mayb no chaos but u may loose yr job,divorce or u may just get tired of doing matripples n paying bills,n
this things can make yr life miserable but Kama uko Na kasomethings jamhuri to make u going,u can defenetly pack.
Its good to have a forum where diaspora can share their experiences on investing at home. I'm in the process of preparing to construct a commercial building and I can assure you current conditions to get the provisional building permit are discouraging interms of cost and uncertainity of the processing time and requirements. Unfortunately these new conditions by NCA and county govts seem to add cost without providing tangible benefits to developers/investors. So after paying so much and being subjected to so much bureacratic processes to get a green light to invest in a construction there is no assurance of a better quality product from the industry and especially well trained, professiional contractors, quality assurance monitoring, better & cheap materials or project execution methods
Is there one sure way to investing? For me diversifying is the way to go... shares, plots, fixed deposits et al....none of them are fluctuation-free, but one can hardly go wrong with land, so far, but the future might prove otherwise. With the money markets, the Mumias, Uchumi examples are depressing but for banks; Equity, KCB for example, and companies like Nation, Breweries, Centum and Safaricom now, there has been good money made. When it comes to owning a house, building is the sure way to go unless one does have some extra chums to pay that interest hooked on mortgages/loans. I guess we can only share ideas.....but not any one way is right...or wrong....so I think.
Line up the following news items:
a) The article that describes a "hoplessly dysfunctional" Kenyan government - a characterization repeatedly displayed over the last 50yrs and by the substance of Mzee Moja's article,
b) The current xenophobic attacks on immigrants in South Africa (which is basically a reprise of Kenya's own PEV-2007 - whose root causes have yet to be fully addressed/mitigated thus can recur at ANY time),
c) News of the hundreds of migrants willing to risk their lives for a "better life" by crossing the Mediterranean Sea,
d) The recent onslaught of videos depicting police brutality against Black men here in the US not to mention the oftentimes harsh reality of live in these United States - for ALL,
against this piece by Mzee Moja and my take is this:
Do what's in your best interest wherever you are most comfortable doing it so long as it - whatever you choose to do - is fair, ethical and moral (all relative terms especially in Kenya).
The only person or thing you have to answer to is YOUR conscience (assuming you have one) and to your G/god (assuming you believe in one).
@Fafanua: Now that u hv asked about a sure investment, I'll try n share with you wat I and a few friends are doing. A couple yrs ago, I made an interesting observation concerning the fast changing economic landscape in Kenya. Like Okonkwo, I had been away for too long for when I travelled to Kenya after 4 long yrs absence everything had changed. Prices of commodities, especially foodstuffs, had gone through the roof. Coincidentally, folks everywhere, from Kiambu to Kapsabet, from Uasin Gishu to Kajiado, from Marsabit to Voi, were slicing and dicing their farmlands for real estate.This continues unabated to this day contributing a huge deal to the escalating food prices. So we bought farmland coz folks will always go hungry and the land on which they can grow food is reducing at a very fast rate. With farmland in a country whose population is growing like crazy, you can never go wrong, unless a California-like drought drags on for a decade or more
I also know of some Diaspora who have very successiful dairy and chicken farms in the Rift Valley. My friend has a vibrant mid-level college in his hometown managed by good professionals on the ground. These thiongs are possible.
It is true @Mlachake...farming has taken up than ever before...I am a farmer too, lukewarm one though... dairy, which I really enjoy ...experimenting with goats too...meat and milk, which has aroused some interest lately... some indigenous veges.. I grew up in those areas with large farms and farming has always been in the family. I was interested in adding value to these products but I have run out of steam...I guess. Thanks for sharing. It is interesting to know what people are doing and what their experiences are.
That is a good question for Maggie Kimani, a former Diaspora who is now heading the Chase Bank Diaspora unit. Someone should rope her into this discussion.
Dear TeamI think the whole issue of Construction in the Past has been abused. Some financial institutiions like ABC Bank -Kenya, run by Ex Diasporas has perfected the art of Construction for people like us in the Diaspora. They will approve your loans if you need one, Assist you with a reputable and affordable Project Manager who will come on Board with Service providers like electrician, The QS, the Fundis etc and then make the Contractor sign ALL RISK INSURANCE at his cost to cover any eventuality should you building collapse or such things. It is actually a straight forward process. You are the investor MUST partcipate on Sampling ALL THE MATERIALS that will be used in your construction. An Independent QS will be instructed by the Bank to visit your site on each phase to ascetain the qulaity of the work. The project is done in phases and a approximate completion date when you will come to pick the Keys from the contractor and the Bank must be defined on paper. There are penalities to the contractor when completion date, alteration is witnessed. What i mean , it is the most straight fiorward process same as what builders do in Europe /Canada/USA.
So before you despair or get frustrated talk to ABC BANK -Kenya who seem to udnerstand our problems and needs well. They are currently undertaking massive projects for Kenyans in the Diaspora something you can witness for yourself and get live testimonies. You cant earn your cash so hard here and then loose it just like that when there are banks that can help you invest it wisely.
That is my opinion which should not make you think i support ABC bank but i have been there and i know it is happening.
Take risk. is all about risk
it took me 10 years thinking about all the negatives and never did anything back home. on my 3rd visit back home, i made up my mind and I bought few plots. Few years later the value was 400%. I sold few and used the money to build one.
I never regret that decision. but I regret I wasted 10 years just complaining how difficult it was or is.
I am on forward gear and not planning to slow down anytime soon.
best decision ever.
Wish to thank you Mzee moja and the rest for your advice on property development back in Jamhuri, the stealth wealth idea is a good advice too, and yes never use kin for bussiness undertaking, am still writhing in fury over using kin to do bussiness !
One of the reasons we all need to invest in a Sacco. The Kenya USA Diaspora Sacco was founded on such grounds!-The difficulty those in the diaspora are faced with in investing back home. Like one of us stated, we take too long whining and not making a move! Time wasted is never recovered! The train is on the move and you had better be on board! As for me and myself, I will invest my $$$ wisely- The Diaspora Sacco is way to go!
Kajuju,
Tell us more on the Diaspora Sacco and how far it has gone with its activities, progress made etc.
I discovered long ago that using family members as managers of your poject is the worst decision one can make. Your brothers, sisters and sometimes parents can screw you big time. The worst is that when they squander your hard earned cash, the only thing you can do is console yourself that the money is still within the family.
Having said that, the bureaucracy before one bulids a house is too much. That plus the accompanying costs kills the dream of many would be investors. But one has to give credit to the governmant; so many people re building sub standard houses causing death and loss of limb to tenants in future.
Thise who are building in Jamhuri know that the cost of building materials go up all the time. The sand, blocks, cement, steel etc. depends on where you are building plus the trustworthiness of your project manager. And do not listen to the funi who is ready to offer unsolicited advice of cutting corners. The cement, sand, kokoto ratio must be adhered to to the letter. The needed chumas must be used. No bargaining. And please give your tenants some amenities like free WIFI, a room for meetings (and possibly play ping pong), enough parking spots etc. Today's tenants are choosy.
All the best, fellow investors.