Leasing of land:Let the money/land work for you

Business
1

Hi y’all,
Katika pilka pilka zangu Za kusurvive na hii jua nimepata some finance 101 which I can share tusaidiane.
Recently the GOK ammended the laws of leasing of land in Kenya, protecting the lesee and the lessor .A lot of people are embracing the idea.
True not all of us can landlords but we can agree real billionaires of the world have a big share in real estate. There’s nothing stopping you too.
1)Commercial leasing
This is common in busy areas like towns/ along highways .So let’s say you have a half an acre of land on a prime area. You don’t have funds to develop but interested in long term investments. You can lease this land to corporates like supermarkets, petrol stations.
For instance naivas leased a piece of land of same size at a price of 30 million for 25 yrs, this ensures hakuna kulala njaa .And the land value goes up.

2)leasing for residential purposes
So if you have a 100 by 100/80 plot lying idle and you don’t have funods to develop it. You can lease.

Breakdown of a 100 by 80 piece,leased for 15 yrs .Houses put up are 36 bedsitters

Lessor gets
You get rent of 50,000 per month this is paid in full for the initial year = 600,000

An increment of 10% of the principal after 5 yrs .
A grace period of 1yr is given for the houses to be put up
Year 2 - Year 6 : 50,000 125= 3,000,000 paid quartely
Year 7- Year 12 : 55,000125= 3,300,000
Year 13-Year 16. : 60,000124=2,880,000
Totals [COLOR=rgb(209, 72, 65)][SIZE=5]9,780,000[/SIZE] = 600,000+3,000,000 + 3,300,000+2,880,000
2 yrs rent free given to the lessee to recover the investment. So total yrs are 18 .
The biggest pro the put up houses remain on the land forever:):stuck_out_tongue:

The lesee gets:
Approx Expenses for a floor of 36 spacious bedsitters.
Cost per bedsitter 200,000 *36 = 7,200,000
Sewer: 250,000 (ya backdoor 150,000)
Miscellaneous like water, electricity, gate etc : 200,000
Lawyer fee :30,000
Initial investment =7,680,000
Approx 8,000,000 or higher coz of the N. C. A , broker commissions and county council fees + rent first yr: 600,000
Total :8,600,000

Income if on average 34 houses are occupied .
341210,000 per yr 4,080,000
minus rent for 15 yrs = 3,480,000*15
52,200,000
Rent free for two yrs :4,080,000 *2 = 8,160,000
Total revenue : [COLOR=rgb(209, 72, 65)]60,360,000:):slight_smile:
So R.O.I is done by the 3rd year.

Hope I have simplified it well, however one needs a good lawyer, right brokers .And due diligence especially on the leesee .If by 10 yrs you get good money you can add 2 or more floors ,good for you.
The maths is not exact but you get the pic, Miaka inakimbia some yrs back a group of young cyton Investors took a lease, hate employment waliwacha.
So if one has good credit or prime land lying around, it’s worth the risk.

2

200,000 for a bedsitter unaweza rent for 10000,?hio labda ujenge za 5000

3

Najua it’s on the lower side ,depending on the ground. But unaweza pata 280,000 going to 400,000 if a slab is to be erected. Kama unataka another floor
Hii ilikuwa a rough idea:cool:

4

Tumaini Supermarket in Rongai has a similar deal with the landlord. I don’t know the duration but at the end of the the lease. Mwenye land ataachwa na shamba + nyumba.
Only clause is that they will retain their letting agent status

5

Kenyan somalis pia , and a lot of bank big shots since they can get loans at lower rates.

6

so umekuwa broker wa tulease?will it end well kwa wenye kulease juu hawafwati procedure juu wako after hio easy money,niliona wengine walilease hapo ndwaru road ,mwenye kulease chini akajenga chini za mawe na juu za mabati na wenye kulease walikuwa na zao za mabati za kurent,so SAA hii wanangangania wapangaji,hizo lease zitaokoa tenants sana

7

Eti TUlease? … Uko na madh:rolleyes:arau the lessor hakufanya homework. They would have agreed the type of houses to be built.
Siku hizi watu wanunui shamba Sana I know, utafute 20 million Za plot na 10 million ya kujenga utoe wapi labda magavanas

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This works well only if mwenye kujenga get’s their paperwork and finances in order. Hivo atajiweka kuwa the letting agent for the duration of the contract.
Owner kazi yake nikurushiwa doh kwa account…

9

kawangware wamejaza ghorofa za mabati,sielewi how watarecover pesa yao

10

Mbisha

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Imagine kuingia office ya @spear ukimwambia uko na land unataka kulease

Ata kiti hutapewa.

Ataitisha pics za kusafisha mecho.

Kama haiko kwa lami on a major road in a developed area Atakwambia utoke

12

unajua ukilease legally kabisa lazima uwe unalipa serikali income tax mkiwa both,kuepukana na hiyo ni kwenda kwa wakili kuandikania agreement not worth the paper it is written on na kwenda nyumbani,na ujue wenye kupatiana mashamba ni peasants,

13

Sampesa is that you?

14

So?

@Purple story ya identity za watu tulisema ni anonymous.

Pea huyu 1st class ticket to Siberia

15

True…

Mmmh Kweli unapinga hii story, mambo ya peasant ni case by case. If a client has a 2 acre plot subdivided in 8 plots.
Hate awe no 100 million he can’t develop the whole place. What’s wrong with leasing 2 plots

16

Tiga wana…unless Sam pesa changed when I knew him he was not legit and this is legit.

17

Ungwaro unajua waliaanza kitambo in some places Za Mabati haziitikishwi. However if you have the muscle, you can bring in containers, fabricate them for business purposes.
The catch is the lessor ataumia since the owner will go with the containers.

18

nyumba ni mingi sana,najua mmoja alijenga 160 units za bedsitters, one bedroom na singles na ame drill borehole na only 30 ziko na watu lakini bahati take plot ni yake

19

True huko ni wapi…Neighbor mwingine amejenga 131 units lakini zimejaa though he has free Wi-Fi, good security n the main. road is near

20

U have done good working breaking down the costs, however, the assumptions must have come first, and the mitigating measures against.