There is a block of flats in Donholm that is for sale and the agent is asking for Kshs 40.0 million. The rental income is indicated to be Kshs 406,000 but independent checkings reveal that the rental income is Kshs 350,000. What would be the best price for this property? The property features are as follows:

Rent No. b/r Total
3 br 1 ensuite 22000 8 176000
3br flat 18000 4 72000
2br flat 17000 4 68000
1br flat 14000 5 70000
bedsitter 10000 2 20000
Total 23 406000


My estimation is that this property should go for Kshs 32m for a return of about 12% pa on net basis. Your comments will be most welcome.

am neither a valuewer nor real estate professional. My experience,assuming the flat is structurally sound and in good state of maintance,I will value it at Khs 52.5 million,assuming a rent of Ksh 350,000 pm and a return of 8%. Any amount less than Ksh 52.5m,do not hesitate.

Happiness is not a right - except for children. You won't be happy if you think too much. The search of happiness is one cause os sorrow.

If the prospective rent is 406,000/=,then the rule of thumb is that the real value of the property is 40.6M.

However,if the rent is 350,000/=,then the property value is 35.0M.

But if the prospective rent is 406,000/= but the actual rent is 350,000/= then the property value is 40.6M.

Caution:- Before u enter into any agreement or transfer,u may need to check the small matter of the land lease and land rates. If the lease is about to expire then the value of the property is further reduces. Meanwhile all the outstanding statutary land rates arrears if any should taken into account.


NIKIPATA NALA-NIKIKOSA NALALA

@All,

Thanks for all the comments. The property is 8 years old and there might be some liabilities,however,these shall be taken care of during due diligence. I am trying to compare this property with one in South B,one year old,whose actual rent is Kshs461K. This property is being sold for Kshs46 million. The Donholm property has actual rental income of Kshs 350K and any increment must be done within the law.

The rule of the thumb in real estate is that the venture should be able to recoup in 8-12 years based on its current income. So it would a yes for me.

Patience Pays in Guaranteed Checks

who controls the area ... ;)

The number of bedrooms mixture is a nightmare,you never want to mix sitters,one,two,three bedrooms flats ...

For 40m,you can do better!

Looks like I am behind. Bedsitters in Donholm are going for 10k?. I thot South B Bedsitters go for 8k.


Be greedy when others are fearful,be fearful when others are greedy.

while Pablo may not be upto date there is a point about the projected rentals. Is it achievable in this area?

1 br @ 14,000 ??? i dont think so.

@ Starr,



My angle of reason is based on the demand for 3br ensuite in the area? It would make more sense to have more 2B/r and 1 b/r than 3 the 3b/r ones as the renatl incomes would even be higher. I have verified this from the property in South B with mainly 2b/r,1b/r and bedsitters whose actual total rental income is Kshs 461K.

@starr / @evolve,






Normal 0


First,07/08 election violence and it's effect on housing cannot be ignored,if you've got your ears to the ground,you'll see / hear major adjustments in the housing market as a result of that violence,others are still trying to recover... my second point was,the flats are a combination of 3bd ensuit,3bd,2bd,1bd & sitters ... which combines singles,married and families living,my experience is that all three have differing lifestyles/needs that are not necessarily compatible ... ask yourself,would a family man with wife and kids want to be living next to a bachelor whose lifestyle is radically different... During our research Dec/March we found many flats of such a mixture with very low occupancy rate because families kept on moving out. Some familymen had issues going to work and leaving wife next to a bachelor bent on warming up to wife ;( ... due to differing needs /lifestyles of family / bachelor ... its not a good idea to have a mixed housing like in the case of these flats ... I hope that helps ;)

@evolve,can you edit out that blank space in your first posting ... ;)