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You can be a LANDLORD

A few years ago, there was a company that was tendering to transport university students from Nairobi to Machakos daily to attend classes. They had an interesting concept. While their competitors were looking for a 1 year contract, they wanted a 5 year contract after which  they would surrender those buses to the university. I thought this was a clever way of ensuring continued business for 5 years and disposing the buses off without incurring loses.

Several universities are now agreeing to a lease arrangement with developers. Since the universities are constrained in cash, they offer their land to an investor who builds hostels, operates them for a pre determined duration, then transfers them back to the university. They call it, build –operate-transfer. This makes both parties happy.

Some friends of mine have taken this concept up and are now leasing some land off Ngong road in Nairobi. They plan on doing low cost housing to let for the 10 year term of the lease. They will be paying a monthly rental fee to the owner. On the last year of the lease, they will not pay any rent. This will be the cost that the landlord will pay to have the structures in place once the lease is over.

The law allows a lesee to register a lease against the lessor’s land. This means that the landlord will not be able to transact with his land without the consent of the lesee.

After the 8 years, my friend will have saved enough to buy a small parcel of land to build permanent rental units or to lease a bigger parcel to put up more units.

Who said you can’t be a landlord?

Kariùki Wawerù

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