Low-cost rental houses continue to be in demand. With a housing shortfall, you can take advantage of this.<\/p>\n\n\n\n
Driving a new vehicle every two years. Having 3 different offices in the city. A holiday every time schools close. This is the life we desire but do not have. Yet.<\/p>\n\n\n\n
And I know someone who has this and today, I will share the secret with you.<\/p>\n\n\n\n
I have a relative who is a good giver during our family gatherings. He is a form 4 leaver. Unlike us who have degrees. And it always seems he has bottomless pockets.<\/p>\n\n\n\n
Recently, I had a very fruitful interaction with him. His secret? Low-cost rentals.<\/p>\n\n\n\n
He walked me through how he makes his money and gave me his 3 million rule. And this is how he does it.<\/p>\n\n\n\n
1. He looks for a plot in an area where the plot is available for under 2M. You can find these in Joksa, Malaa, Kangundo, Kitengela or in the counties.<\/p>\n\n\n\n
2. He uses one million to build mabati structures, single units. The total he spends on both land and construction must be 3 million or under.<\/p>\n\n\n\n
3. At an average of Ksh 2,000 per mabati house, with 20 mabati houses, he will make a cool 40,000 per month. If you take away 5,000 per month to bills and potential vacancies, you will be left with a cool 35,000.<\/p>\n\n\n\n
4. And he repeats this a lot of times.<\/p>\n\n\n\n
Now, lets take what me and you would do.<\/p>\n\n\n\n
We would want to use the 2M to buy a plot. Great.<\/p>\n\n\n\n
We then go to the bank and take out a 10M loan to put up a 4-storey building. The bank makes us jump hoops, mortgage our relatives and every property we have before loaning<\/a> us the money. We then show our friends our new hustle. We are now the envy of our circle.<\/p>\n\n\n\n Once the loan lands in our account, we need to make a Ksh 130,000 payment per month for 25 years. And this is if we are lucky to get a mortgage at a negotiated price. Not market rate.<\/p>\n\n\n\n We put up the building, a bunch of classy one bedroom and bedsitters. By the time they are fully occupied, we have sold our vehicle to meet the monthly repayment.<\/p>\n\n\n\n Once the building is complete, we shall be lucky to have a new income of Ksh 100,000. Not with KRA sniffing in our backs. Not with the current economy. And what do we do?<\/p>\n\n\n\n We find an additional 30,000 as the income cannot match the monthly repayment. We do this for three years.<\/p>\n\n\n\n Ulcers start creeping in. Non-remitted tax increase. We raise the monthly rent to keep up. More tenants vacate. We sell another property<\/a>. The bank reports increased profits. We move children to a cheaper school. We get more miserable at work, but we cannot resign.<\/p>\n\n\n\n