This is an argument that has been there since time in memorial.

Its all about your risk appetite.

Also without being too contraversial I can bet my A** that all those saying real estate is not worth it are likely to be below 35 or so and can only dream of Kshs. 10M. Those who have access to that type of cash am sure would jump to such an opportunity as GG has pointed out.

When I was younger I used to say why buy a house and pay an 85k mortguage while I could pay 30k for the same house and invest the rest in the stock exchange. By the way at that time my rented a 4br corner house with Sq in south C was being offered to me at 7M. Today its just unaffordable. Not only have i sank 6 yrs rent and did not buy stocks with the balance but also missed out on 8M capital gains. Mind you simmilar houses now rent for 60k.

So u choose.

im thinking of developing a four storied flat in Nyanza

im thinking of developing a four storied flat in Nyanza

WWGKD?

1. I would build the damn thing for 10m in a company name. The assumption here is that i had 10m in cash. I wouldn't get a bank loan @ 14%plus for such a project.

2. I would sell my car for 1.5m. I would then buy a company car for a similar amount and let the "employees/tenants" work to make the repayments. I would also get a post paid fuel card, and charge the company for any service, insurance etc.

3. If this is not yet 100k, I would find yet another way of expensing the income before KRA gets to it.

4. Every cent of the company money I spend, I invest (from my other income). It can be in the same company as "new capital from shareholders" or just in my personal CDS / savings account doesn't really matter as long as I DON'T spend it as well.

You can pay as low a tax as you are smart, just be careful to do it LEGALLY, consult a lawyer if u have to. KRA guys are not kind to smart people.

The Principal here is to spend and invest before you are taxed.

Companies pay taxes on profits (Income less expense), natural persons pay taxes on Gross Income. All tax systems are flawed this way.

The taxman will audit you but all you have to do is justify the expenses.

You can even buy airtime before paying taxes if u are smart enough.

Even booze for "clients"...

The only substantial amount of money i make in my own name is my salo which is taxed at source

a block of 2 bedroomed flats (8) in total (4 ground and 4 first floor) on an 8th plot of land..... my thinking..

@Wendz,

Lets make several assumptions here: first, one 2-bedroom unit will be about 70 square meters, so in total you are intending to build a total area of ( 70 square meters X 8 Units X 10.74 = 6010 square feet) lets also assume that they are not so excellently furnished so we adopt a construction rate of Kshs.2500 per square foot. This brings the total cost of construction (less the cost of land) to Kshs.2500 X 6010 square feet = 15 million!!

@Wendz, this is a rough estimate of constructing the units that you have mentioned above. Sasa add on top of that the cost of land, just estimate it at 5 million and you get 20 million value for your investment!!

However, depending with the location and nature of finishes, the income could be anywhere between 120k-150k per month!!