Wazua
»
SME
»
Office
»
Exorbitant Goodwill Fee for Shops/Stalls Nairobi
Rank: Member Joined: 8/25/2010 Posts: 283 Location: Nairobi
|
As a realtor, the goodwill fee that property owners charge are ridiculously high. Goodwill by definition is an intangible, salable asset in this case (fee) arising from the reputation of a business and its relations with its customers, distinct from the value of its stock and other tangible assets. This is usually charged separate from the monthly rental fee. A stall for instance along moi avenue, a few steps from Book Point Ltd has a goodwill fee of Ksh2M. If you do the math on profitability how will this business make profit or better yet to break even. The space we are talking about is approximately less than 100sqf. The business ought to make Ksh200,000 per day nett to recoup that cost in 10months. I dont know how this businesses do it as most of them are phones, computer accessories and Mpesa dealers. www.propertyzote.com the ultimate ‘one stop online shop’ of choice connecting more people with more properties at the click of a button
|
|
|
Rank: Member Joined: 3/17/2011 Posts: 112
|
I remember Early last year i was enquiring about a stall in Tom Mboya Next to Tuskeys,They were asking for a goodwill of 1 Million. After a Few days the stall was occupied and the guy was selling Torches,Key holders,Small radios,Padlocks things that are normally hawked around the streets and this was mind boggling
|
|
|
Rank: Member Joined: 7/21/2010 Posts: 249 Location: nairobi
|
propertyzote wrote:As a realtor, the goodwill fee that property owners charge are ridiculously high.
Goodwill by definition is an intangible, salable asset in this case (fee) arising from the reputation of a business and its relations with its customers, distinct from the value of its stock and other tangible assets. This is usually charged separate from the monthly rental fee.
A stall for instance along moi avenue, a few steps from Book Point Ltd has a goodwill fee of Ksh2M. If you do the math on profitability how will this business make profit or better yet to break even. The space we are talking about is approximately less than 100sqf. The business ought to make Ksh200,000 per day nett to recoup that cost in 10months. I dont know how this businesses do it as most of them are phones, computer accessories and Mpesa dealers.
Goodwill is refundable / transferable its thus not an expence.... use rent,salary,bills, consumables, etc to compute your expected daily sales.... also remember most businesses take at least 1yr to break even......  ..desire to succeed is always fighting with fear of failure..
|
|
|
Rank: Member Joined: 9/21/2006 Posts: 422 Location: Nairobi
|
This goodwill business has been takes out of proportion. Why would someone charge even a cent as goodwill on an office space that has never been occupied, for example this new building called aghro house which is asking for rent and goodwill at the same time. The space has never been occupied b4 hence no business has ever been done in the space and obviously there has never been any customer, makes me wonder what "goodwill" is being sold.
|
|
|
Rank: Veteran Joined: 4/16/2010 Posts: 906 Location: Nairobi
|
@propertyzote a lot of small businesses are set up by rich people with the primary motive being to get their idle relatives out of unemployment, not necessarily to reap super profits. There was even a Wazuan who recently posted a thread asking what business he could set up for his idle cousin. Such a fellow may be tempted to do go the extra mile to get the relative out of poverty.
With unemployment rates being so high in Africa, you see a lot of these types of businesses around.
|
|
|
Rank: Member Joined: 10/14/2011 Posts: 661
|
maina20 wrote:propertyzote wrote:As a realtor, the goodwill fee that property owners charge are ridiculously high.
Goodwill by definition is an intangible, salable asset in this case (fee) arising from the reputation of a business and its relations with its customers, distinct from the value of its stock and other tangible assets. This is usually charged separate from the monthly rental fee.
A stall for instance along moi avenue, a few steps from Book Point Ltd has a goodwill fee of Ksh2M. If you do the math on profitability how will this business make profit or better yet to break even. The space we are talking about is approximately less than 100sqf. The business ought to make Ksh200,000 per day nett to recoup that cost in 10months. I dont know how this businesses do it as most of them are phones, computer accessories and Mpesa dealers.
Goodwill is refundable / transferable its thus not an expence.... use rent,salary,bills, consumables, etc to compute your expected daily sales.... also remember most businesses take at least 1yr to break even...... When leaving, the landlord will tell you to sell your business and recover your goodwill and hence are stuck to getting the landload a tenant otherwise you lose. Recently found some new shops –just finished in O. Rongai renting at Kes 25k & goodwill of Kes 250-300k, within a week there were all gone.
|
|
|
Rank: Veteran Joined: 11/2/2006 Posts: 1,206 Location: Nairobi
|
@propertyzote True,goodwill is sometimes crazy. But the way I'd put it is this....some of the shops in Moi Avenue make money due to LOCATION & nothing else.Especially those selling movies,phones,cameras,clothes etc. I know a group of young men who make sales of 50K per day on that street.That is 1.5M/Month gross sales.Net profit would be around 21% of gross sales=320K/Month ie it would take 6months to repay goodwill.After that...you make CRAZY profits. Formally employed people often live their employers' dream & forget about their own.
|
|
|
Rank: Veteran Joined: 2/2/2012 Posts: 1,134 Location: Nairobi
|
I think this goodwill scam is slowly dying. I have seen adverts for "stall to let" on two shops clearly stating "NO GOODWILL". One is on Moktar Daddah Street.... I'm trying to remember where I saw the other one [I'm not searching for a stall so I did not need to make a mental note]
|
|
|
Rank: Elder Joined: 7/21/2010 Posts: 6,194 Location: nairobi
|
Goodwill is there becoz of shortage of supply and will remain until there is over supply.its not refundable by landlords unless on special agreement,most of it is eaten by agents without owners knowledge or owner gets peanuts of it...its mostly upon you to hunt for a tenant to compensate you pap before leaving. "Don't let the fear of losing be greater than the excitement of winning."
|
|
|
Rank: Member Joined: 8/25/2010 Posts: 283 Location: Nairobi
|
bird_man wrote:@propertyzote True,goodwill is sometimes crazy.
But the way I'd put it is this....some of the shops in Moi Avenue make money due to LOCATION & nothing else.Especially those selling movies,phones,cameras,clothes etc.
I know a group of young men who make sales of 50K per day on that street.That is 1.5M/Month gross sales.Net profit would be around 21% of gross sales=320K/Month ie it would take 6months to repay goodwill.After that...you make CRAZY profits. Its really sad, this goodwill value is not justified for some shops and locations. A shop on Mama Ngina or the CBD or even river road may be acceptable..Ksh200,000- Ksh1M goodwill i believe is fine. A new building like agro house has no business at all charging goodwill. Should an office space at Transnational House 5th floor really charge goodwill. On the point that its refundable....you as a tenant will be forced to hang around longer till you get a new tenant totally annoying and may take forever.Most probaly you may forsake or settle for a lower amount. @Kenyanlyrics that may be true but how many of them are set up by the rich..very few. Lately you have seen conversion on most business on ground floor to stalls and exhibitions. A place for instance which used to do first food in moi avenue. Say 2000sqf. Subdivided and repartitioned for stalls each of 100sqf. Lets say 2 shops on street facing fetch each 1M goodwill, the other 13 shops(minus 500 sqf for pass ways) 500k each on goodwill. This guy pockets a clean 8M+ not to mention the monthly rent collections. www.propertyzote.com the ultimate ‘one stop online shop’ of choice connecting more people with more properties at the click of a button
|
|
|
Wazua
»
SME
»
Office
»
Exorbitant Goodwill Fee for Shops/Stalls Nairobi
Forum Jump
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.
|