If you’ve ever wondered ‘how much does it cost to build rental houses in Kenya’ then you’re not alone.
Many prospective property owners grapple with this question as they consider the Kenyan real estate market.
The costs can vary greatly influenced by a number of key factors.
But what are these factors and how exactly do they affect the overall cost?
Cost Of Building Rental Houses In Kenya
Building rental properties in Kenya is both a profitable and capital intensive venture. The total cost of constructing rental residences can greatly vary.
The average cost of constructing rental units may round off to approximately KES 350000 for a bedsitter and around KES 650000 for a 1-bedroom unit. The expense is heavily dependent on various factors such as location materials used architectural and engineering fees among others.
Rental houses targeting different income classes also have different construction costs. For high income earners the cost is around KES 35000 per square meter while middle income earners can expect to spend KES 25000 per square meter.
For low income earners the price lowers to around KES 20000 per square meter.
Factors To Consider
When considering to build rental houses in Kenya there are several factors to keep in mind. Firstly location plays a significant role on the cost and profitability of your investment.
High demand areas like Runda and Karen tend to fetch higher returns but the initial investment is also bigger. Remote or rural areas may be cheaper investment options but the demand might be lower.
Another important thing to consider is the type of rental property you want to invest in. You may choose from commercial houses residential houses industrial property or even raw land.
All these types require different amounts of capital and yield varying returns.
Last but definitely not least are construction costs. Factors like the type of soil size of the house architectural fees and mechanical installations all have an impact on overall building costs.
It’s advisable to hire professional services for example consider a qualified architectural francis gichuhi kamau. Remember expenses like architectural fees which is 6% of total construction costs and quantity surveying fees being around 3% of the total cost are not to be overlooked.
Types Of Rental Houses
A large number of different rental houses exist in Kenya. Here is concise breakdown:
- 1-bedroom units: These houses are perfect for small families or individuals who prefer to live alone.
- 2-bedroom units: Ideal for medium-sized families or for those individuals who want an extra room for guests.
- 3-bedroom units: These cater to larger families who need more space.
- 4 bedroomed: Houses for big families or tenants who prefer extra space.
- Bedsitter units: Ideal for university students or people on a tight budget.
- Commercial houses: These are designed for businesses rather than for residential purposes.
- Industrial property: Designed for manufacturing and warehouse needs.
Acquiring Rental Houses
Having a rental property business in Kenya requires a significant investment both in time and capital.
Strategies to Acquire a Rental House
- Building: You can build rental properties from scratch to match your specifications.
- Buying: You can buy pre-built houses but these may require remodelling or repairs.
- Financing: Kenyans can acquire finance for the rental property business from banks Saccos chamas or from personal savings and investments.
Determining the Location
Location plays a crucial role in determining the profitability of your rental property business. Key factors to consider:
- Infrastructure and availability of utilities
- Distance to amenities like shops schools hospitals
- The building demand in that area
Cost Considerations
The total cost of acquiring rental houses involves several components:
| Cost Component | Description |
|---|---|
| Cost of land | The price is highly location-dependent varying from Ksh.80000 in Kangundo to Ksh.3.5 million in Ruaka. |
| Construction cost | Cost covers not only the building materials but also the contractor’s fee and overall supervision of the project. |
| Legal and professional fees | These include architectural quantity surveying and engineering fees. |
For a concrete example constructing 6 units on a 0.5 acre plot in Kiambu county the total cost will be around KES 9000000 including architectural fees estimated at KES 540000.
Starting A Rental Property Business
In Kenya the rental property business is a profitable venture with high demand and steadily increasing rental prices. As a long-term business it offers good returns and has the potential to accommodate future generations.
However starting a rental house business can be capital intensive especially in the developed areas like Karen and Runda. In such areas land value is high but the returns generally match the investment.
Acquiring the necessary startup capital is a critical first step. Potential sources of capital for your business can range from personal savings and investments soliciting loans from family friends or guarantors establishing agreements with financial institutions like banks or joining investment groups such as Saccos and Chamas.
It’s advisable to consider the right type of rental property to invest in. Options can range from commercial houses residential houses industrial property to raw land.
One of the most significant decisions is whether to build or buy rental properties. Both approaches have their merits and the decision ultimately rests with the investors their preferences budget constraints and overall business plan.
The cost of construction varies depending on the location type of house and size. For example a bedsitter unit will cost about Ksh 350000 while a 1-bedroom unit could cost upwards of Ksh 650000.
The profitability of the rental house business is also influenced by the number of units and location. On average Potential monthly income can reach up to Ksh 55000 for a 1-bedroom unit in high-demand areas.
A viable strategy in the rental property business in Kenya is starting small and expanding gradually. It allows to you manage and supervise the construction work learn from any mistakes and adjust your business plan as necessary.
Lastly it’s also worthy to note that the value of buildings in Kenya is constantly increasing which further boosts the merits of investing in this profitable venture.