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.