Real estate business

Real estate business

“Real estate investing, even on a small-scale, remains a tried and true means of building an individual’s cash flow and wealth” – Robert Kiyosaki, author of Rich Dad Poor Dad

4.1 Owning rental flats

Who owns the big cities? It is the owners of the buildings that together make that city. The recent research made in 2017 showed that many of the people who joined the million dollar club, from Kenya, came from real estate business. Take a scenario where you own a 7- floor flat. Each floor has 10 rooms on each side of the corridor.  So, a floor has 20 rooms. 7 floors have 140 rooms. If each room you rent a cheap KES. 3,500. It generates a total of KES.490, 000. This is not in one month. Annual revenue goes around KES. 5,880,000. If you are rich enough to have 5 of such flats, you will amass KES. 29, 400, 000 in one year, while sitting down

If you happen to get one flat, getting others is a matter of little time.

*** NOTE: In life, you just need to break-even. After that, wealth will be following you. Some ventures are easy to break-even/ enter while others require lump sum cash. ***

If you want to start this one, (better than venturing in agribusiness for some) a big question now comes, how will you own a plot/ build one? They belong to landlords. Yes, and you can be one. Everything in life has a strategy/ a formula to work it out. Remember, a person saving KES.300 a day to one day own a plot. Absolutely

Here’s how. After a couple of years, you will be able to have funds to buy a plot. How much does a plot cost? Starting from a staggering KES.70, 000 to millions Do not go for the million one, because that it is not costly depending on where it is, but because you don’t even have such huge amount of cash. If possible, find a friend to venture with. However in 2 years you must have save at least KES.100, 000, if saving KES.300 a day. So, you can buy a plot alone with this.

*** NOTE: I do not recommend buying an empty land/ plot with a loan, IF, you are about to quit your salaried job. You won’t be able to repay the loan because empty plot will not generate income ***

 The above NOTE is what makes this venture not be of choice for a slim-income earner, who is about to quit job. If the area is growing and more people are coming to stay there, maybe there is a college near, you can build hostels. Then, you can secure a loan, not to buy the plot, but to build. Then, you can negotiate with a bank on how you will service your loan slowly by slowly. It can be a 5-year loan so that your plot will not risk being auctioned. When things go well, lucky you, you are a full landlord like other men and women out there.

When you finish the loan, take another to buy new plot because you have already break-evened. You are a multi-millionaire now. Banks respect that and will never turn you down on a loan application.

The best suggestion here is to have a job while you build your plot. It does not have to be decent. The earlier job we discussed is still okay. This will make you not to be much dependent on the plot for you to eat. What if it does not get tenants on the first day of completion? Won’t you sleep hungry, yet, you are wealthy somewhere? You need a healthy cash-flow to cater for your needs as things straighten themselves. After all, you have a lot of time to spend.

*** CAUTION: Real estate should not be the first venture to enter not unless you are employed somewhere you are not quitting soon. Agribusiness among others can sustain you even if you quit the very first day, because you can borrow loan as we saw. As for real estate, it has two phases/ processes; buying a plot phase and building phase. It makes it more expensive.  ***

When you have goods returns from other hot ventures, enter into the lucrative real estate business. You won’t work under duress/ pressure. After all, you have amassed wealth to sustain you before this picks up. However, before even venturing in the property development arena, there are other areas where you can invest, still in the real estate industry because it is wide.

James, a daily farmer in Kiambu County, Kenya

CASE STUDY

James, a daily farmer in Kiambu County, Kenya

                In 2012, James was farming rabbits. He has several of them till a time when a disease attacked many and he almost lost all of them. The few he managed to save were sold and later he bought a calf. After grazing it for a year, it needed a bull. He contacted a nearby A.I. expert to render his cow AI services. After nine months, a calf. James was now a registered seller of milk to the nearby daily factory in 2014.

               After selling milk for a whole year, James had made his account relatively rich. He approached his bank for a loan and bought another cow, hybrid, that he could milk 35 liters. By this time, he was selling a total of about 50 liters. Guess what he was making?

-        1 liter = KES.35

-        50*35= KES.1, 750 a day.

-        1750*30= KES.52,500 a month

His two cows were consuming KES. 210 a day

-        1750-110= KES.1,540 (his profit)

-        1540*30= KES. 46,200 (monthly profit)

                After repaying that loan, in 2015, he took yet another, to add another cow. This time, he bought a higher grade that could give him 42 liters. So, in total, he was now selling about 92 liters.

-        1 liter = KES.38 (had increased)

-        92*38= KES.3,496 a day

-        3220*30= KES. 96,600 a month.

Three cows were consuming a total of KES.410

-        3496-410= KES.3,086 (his profit)

-        3486*30= KES.92,580 (monthly profit)

-        This amounts to KES.  1, 110, 960 a yearly profit

               With this he was no doubt able to repay his loan fully. He also admitted that he was adding other cows in his shed. And guess his age? A youth of 26

Agriculture is always a better venture, provided you know where you are venturing- do research.

“A form of protectionism should be enforced at a national level, at least on strategic areas such as agriculture” – Martin Marechal-Le-Pen, French politician

*** Agribusiness success tips ***

Ø  Put a working strategy. Decide where to venture.

Ø  Always grow. Keep increasing.

Ø  Save in banks. This will build your credit-worthiness.

Ø  Take a loan when you are investing. Make sure your investment pays well.

Agribusiness: Daily farming

Agribusiness

“The discovery of agriculture was the first big step towards a civilized life” – Arthur Keith, Scottish anatomist and anthropologist

Today, this is the most lucrative business in Kenya and Africa, besides technology and mining. There is always a ready market for agricultural products. These farm produce are even not enough as we, in Africa, have not been able to be food-secure. We have arable lands, good weather and climate (though lately changing due to climatic change, global warming etc.) but we also have perennial and seasonal rivers that can help practice irrigation.

Let us narrow down to two categories namely animal farming and crop farming.

a) Animal farming

This involves farming cattle like cows, goats, sheep, pigs, and poultry like chicken, ducks and others. There is also bee keeping, fish farming or aqua-culture among other animals.

i. Milk/ dairy farming

Of all animal ventures, I will always go for this. This has made youngsters earn hundreds of thousands if not yet millions. Milk is never enough to an extent that in Kenya, milk and milk products are imported to meet the all-high demand. There is ready market for milk in that buyers come near the farmers daily. The good thing is that you can choose whom to sell your milk to, from several of them. Having discussed much, what does it entail to make this business running? To answer this, answer the following questions first.

1. Where do I practice this? Do I have some piece of land to put a shed?

2. What is the best type of cow to survive there? Where will I get it?

3. How much will it cost? Any transport fee?

4. I need a cow house/ shed.  How much will it also cost to construct one?

5. This cow(s) will eat daily. What will it/ they eat? Hay, Coriander, Lausanne, Foliage, Fodder? What is its/their budget? Where will I get food?

With the above questions well answered, you have a rough budget/ capital to start. Don’t wait till you have enough money to invest. Since you have been saving in a bank, you can apply for a loan which they will readily give you. And when things turn out well and you are earning handsomely, increase your venture.

figure 1:  daily farming in Kenya

Simple math:

Two cows worth KES 100,000 each (if you bought adults) can give out 30 liters of milk daily, each. You sell 60 liters at a price of KES. 40, you are able to scoop KES. 2,400.

Let us say that each cow consumes KES.200, you are able to get KES 2000 a day. That is KES 60, 000 a month and 720,000 per year.

It is not a bad venture. Now keep growing. Add more cows because you can. Even if it is a loan, you are sure you can be able to service the loan and be left with money to use.  Within 2-3 years, you will be a multi-millionaire. You may hit it before your 30th birthday.

*** NOTE: Never stagnate, always improve, and always increase. This way, you will attain your goals faster. ***

ii. Beef and sheep farming

If you are not in the milk industry, venture here. We eat meet daily. Especially on festivities and holidays, like Easter and Christmas (for Christians), you can sell a sizeable bull at an awesome price of KES. 50,000- KES 85, 000, depending on its size. This one you have kept for 1 and a half years. Perhaps you had 5 bulls? You will pocket over KES. 250,000. Then, you can more small ones and repeat the procedure.

iii. Chicken/ poultry farming

This goes well when you first gain an order somewhere. Buy 1000 chicks worth KES.150 each.

*** NOTE: You will have to answer the same questions you had at the starting a milk or beef farming section. They include house, space, food, where to buy chicken among others. ***

With return rate of 95%, you will have 950 grown-up chicks. Layers normally take up to 6 months to start laying eggs. Now, suppose you have gained an order for eggs, and have a conversion rate of 70%, you will be collecting an average of 665 eggs daily. Sell at KES 8 each. This is because you enjoy economies of scale. You will make KES 5,320 daily. Suppose you give your chicken KES. 1,320 for food, you have pocketed KES. 4,000 a day, KES.120 000 a month, to be translated to KES 1,440,000, annual revenue

This works well if you have a ready market; an order somewhere. Many have become rich by poultry farming.

I have never had a chance to experience aqua-culture/ fish farming or bee keeping but what I hear makes me believe they are enticing too.

The biggest thing to do as I noted earlier is to do research. Do market research, how to farm/ keep your animal, what to feed them, their feeding habit, their housing structure, and their market among other things. With this, you are like a king or a queen. Start it small and grow; never stagnate. 
Next is crop farming. stay tuned!