Notesale: Turn your study into money

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CHAPTER ONE
1
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Rental real estate shall be properties in which I the
owner will be receiving payment from tenants for use or occupation of the property
...
The business involve purchasing of land, construction of
rental houses and renting them to earn income
...
1 VISION AND MISSION STATEMENT
1
...
1 Vision Statement
To be the most competitive service provider in real estate rental development
1
...
2 Mission Statement
To provide quality and affordable rental houses
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2 ADRESS AND LOGO
1
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1 Business Name
The name of the business shall be JOMUGI FLATS
...
This is a real estate rental property development
...
The
units will balance safety, cutting edge features, and a positive atmosphere for all tenants
...
Rentals are
projected to be substantial in year one growing moderately by year three
...
2
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The precise location of the flats on the site is as shown on
the map shown on the next page
...
2
...
com
Website infor@ githoro
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3 FORM OF BUSINESS OWNERSHIP
The business is sole proprietorship
...
There is no
partnership with anyone else what so ever
...
Sometimes the individual uses his own name as the
name of the business
...
g
...
It is easy for one to identify with the name of the business and anyone taking
over the business in the same form will be personally liable for any and all debts and liabilities of
the business
...
It is easy
to register the business unlike the long procedure involved for a corporation, a Limited Liability
Company or "LLC", and the partnership
1
...
Once the plot is purchased, construction of buildings for rent
commences
...
Jomugi flats will
provide high-quality, comfortable rental units in Kayole Embakasi central
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5 PRODUCT
JOMUGI FLATS offer state-of-the-art living conditions reflective of the rapid advancements in
technology and a growing need for quality housing
...
Unlike many other realty companies that are solely concerned with turning profits,
our primary objective at Jomugi Flats is to maintain the highest level of customer satisfaction
that is achievable
...
Jomugi Flats
maintains competitive market prices, while working toward expanding the number of units
owned, and increasing total profits earned
...
Just as customer satisfaction is
an intricate part of Jomugi flats success, so is employee satisfaction
...

Initial focus will be to buy and develop existing Plots
...

Housing units will predominantly be located in the Co operative Bank neighborhood targeting
both Bank staffs and other professionals
...

The products will be rental buildings
...
5
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The environment will be secure and provided with a car park for two vehicles per family
...

The building will also provided with fire equipments and trained security guards
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6 JUSTIFICATION OF THE OPPORTUNITY
This business is in real demand in Nairobi particularly in this region where there is adequate
means of transport , near the airport and industrial area
...

The current rural urban migration and the population growth rate has brought about serious
demand for rental houses
...


4

The business initial investment is high but it does not require very high operation capital like
most businesses
...
The payment of water and electricity bills is the responsibility of the tenant and
where there is damage as a result of the carelessness of the tenant, the tenant is required to repair
and or the landlord does the repair and recover the expenses from the deposit of the tenant
...
The city has become the
economic hub of Kenya and every one want to be in it whether working or doing business
...

The demand will even grow more as the current population growth continues
...
That implies
that there is need for more houses as the population grows, if the current tread is maintained
...
7 INDUSTRY ANALYSIS
Real estate development, or property development and related business, is a multifaceted
business, encompassing activities that range from the renovation of existing buildings to the
purchase of raw land and the sale of improved land or parcels to others
...
Developers buy land,
finance real estate deals, build or have builders build projects, create, imagine, control and
orchestrate the process of development from the beginning to end
...

Typically, developers purchase a tract of land, determine the marketing of the property, develop
the building program and design, obtain the necessary public approval and financing, build the
structure, and lease, manage, and ultimately sell it
...
In the City and Country Planning
context in Kenya, 'development' is defined in the City and Country Planning act
...
7
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At one extreme, a large
company might include many services, from architecture to engineering
...

Assembling a team of professionals to address the environmental, economic, physical and
political issues inherent in a complex development project is critical
...

The development process requires skills of many professionals: architects, landscape architects,
civil engineers and site planners to address project design; market consultants to determine
demand and a project's economics; attorneys to handle agreements and government approvals;
environmental consultants and soils engineers to analyze a site's physical limitations and
environmental impacts; surveyors and title companies to provide legal descriptions of a property;
and lenders to provide financing
...

After subdivision is complete, the developer usually markets the land to a home builder or other
end user, for such uses as a warehouse or shopping center
...
Under the building code No
...

A person who intends to erect a building or materially change the use of a building or part of a
building shall furnish the county authority in the manner provided above
...
Building code number 5 (c)
...
The process is long
...

Notwithstanding paragraph (1) of this by-law, the county authority may, with the consent of the
applicant further extend the said period
...

No person shall occupy, use or permit the occupation of any building before a certificate of
completion has been issued by the council
...

1
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2 TECHNOLOGY AFFECTING THE INDUSTRY
Although the construction industry has been built around brick, mortar, steel and hard labor,
technology is playing a larger part in this field
...
“When one get in the business,
they get a roll of nickels, because pay phones were nickel-fed, and a pager
...
”
This also points to communication as the biggest change in recent years, especially with modern
Personal Digital Assistants such as the BlackBerry
...
PDAs are becoming more important as almost all house plans and

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engineering plans are done on Computer-Aided Design and Drafting systems, something that
really helps when doing commercial work in other markets
...
The construction companies started using these cameras, and
the image quality and reliability have steadily improved over time
...

Technology is affecting construction work in other ways, as the industry is taking advantage of
Global Positioning Systems in the field
...
“The man driving the tractor doesn’t have to read a stake in the
ground and then manually cut the dirt according to that stake anymore”
...
”
1
...
Once the
properties are developed, each unit will be wired with Internet access, state-of-the-art amenities
will be installed, and safety measures will be implemented ensuring a cutting edge, safe
environment
...
Future projects may include custom build outs
...
There will be banners
on the street to reach as many people as possible
...
First and second year will be focused on
purchasing plot and first block construction
...


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1
...
9
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I will run garbage business as the initial strategy
to raise the money
...
After the first
year I will make the land available purchased from the income of the garbage collection that go
to savings
...
9
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Then I will spend the second year building
the stability of the project by running the first building making earnings
...
I have not stopped doing the initial business as it is key to
my strategy of raising money
...
9
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After the eighth year and the loan is fully paid and
at the same time raised an equal amount that will enable build the second building, should be
able now to take another loan for the third building
...
9
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CHAPTER TWO
2
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Usually this category of people would look at
cost as they are not very rich people but they would also look for quality
...
The details of the
facilities in the building will have to be very well advertised
...
All the details must be well indicated in the
advertisement
...

One can also put the advertisements on the local newspaper
...
Advertisements are good as
there are people who mainly look for anything they desire in the papers and they equally
respond to the advertisement on the bill board
...

Quality will also be key as this business is very competitive
...

2
...

The objective is to make sure as many people get the information on what we are offering as
possible
...

It is very important that one is able to get long term and short term customers and as such one
must intend to have various categories of units such as one bed roomed and two bed roomed and
a few which are single rooms
...
Once the person see the reserve rooms they are convinced they are interested and
they are ready to engage in tenancy, they are advised to read the tenancy agreement and if they
agree with it they sign a copy
...
The open visit day for interested
customers can also encourage interested customers to see for themselves the facilities available
and hence make up their minds to become tenants
...

2
...
The largest segment that they
will service is Bank staffs in the area such as Commercial bank, Co operative bank etc
...
This segment is especially
attractive since most of the local rental properties that are geared toward Bank staffs are run
down, poor quality units
...
The last segment is School teachers
...


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2
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Sales

1st Qtr
2nd Qtr

The first quarter represent the competitor’s market share while the second quarter represents the
company share
...
4 COMPETATION
2
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1 Direct competitors are those people who come up with same kind of projects
...
They can have a dimension on the pricing
...
4
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The way to deal with that is to
invest in the security of the buildings to make any one in the building feel that out there , the
issue of security is one that one would have to commit extra cost, invest in plenty of storage of
water for domestic use, and also invest in sustainable energy that might be cost free for the

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tenants such as solar energy
...

2
...
3 Methods of promotion
There can be a method of officially opening the building
...
The day can be advertised in the local churches
and billboards along the street to make the day look a very exiting day
...
There will be questions and answers to give everyone available
the opportunity to see for themselves the advantage of the buildings that are not offered
anywhere else
...
5 Methods of advertisement
...
5
...

2
...
6
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Then I will make sure that the
price is maintained at a competitive nature
...

2
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6
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The buildings must be maintained to the required
standard to keep your tenants the reason to remain in the buildings
...
The buildings
are also fitted with prepaid electrical meters to enable the customer to control what they use
...
This will help me to extract the information that
they would otherwise not communicate
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8 DISTRIBUTION STATEGY
Buildings when they come up the most important thing would be to effectively advertise so that
potential tenants are able to know what we are offering so that they can be interested and come
for more enquirely and as a result they engage with a contract as tenants
...
0 ORGANISATION AND MANAGEMENT PLAN
3
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Initially the company will start with flats that offer single and double roomed units and
gradually the company can start to develop flats that offer single bed roomed units with kitchen
sitting room and toilet/bath room
...

3
...
This will be after an advertisement is done in the local media and
interviews conducted for the agents that apply so as to get the best qualified agent
...
2
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Have run a rental business
for eight years continuously so far
...
This is documented
in the Nairobi fire department performance contract document of 2011-2012 performance
contract evaluation program
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2
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3
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3
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There will be one sales representative who is well trained and who must prove competence in
past assignment
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Experience
...
This will be evaluated during interview as part of the
requirement
...
The duty of the sale manager is to engage negotiations with
customers and thereafter take them through the tenancy agreement, help them to fill the required
form, issue invoice for payments to be deposited by the customer at the bank account and
allocate the room to the tenants once the payments has been deposited at the company bank
account
...

The marketing manager must be between the age of twenty five and thirty years
...
Getting this kind of a person shall be
through a competitive interview after an advertisement is done in the local media
...
3
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This is where all the money that has been deposited will be recorded, all the
money that authority has given for spending such as salaries and remuneration is also recoded
...

The age of the clerks must be over thirty years and below fifty years of age
...
This must have a proven experience and therefore it must be advertised and the
applicant interviewed
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3
...
This will engage the property management agent who will be
competitively sort and who will be running the besiness on the day to day basis
...

3
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1
OWNER/MD

Management agent

Financial mngr

Sales/mktg manager

Account clerk

Sales/mrktg representative

3
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Then there shall be
negotiations on the margin of income expected based on the current monthly income of the
business and an agreement will be reached where any income above the margin agreed on shall
earn a forty percent bonus to the property management
...
This is to enable the company to be facilitating
routine industrial training that relates to the industry and then the company recovers seventy five
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percent of the cost from the government
...
This is one program that enables companies to really improve on
business skills resulting in improvement in earning
...
5
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6 REMUNERATION AND INCENTIVES
The payments and remuneration shall be the responsibility of the management agent as the
contracted agent shall be responsible for their employees
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7 LICENSES, PERMITS AND BY-LAWS
The primary objectives of the owners and the managers of the business are to earn returns from
the business and follow the legal procedure in all the business processes
...
The management agent must also follow and comply with all
the laid down procedures
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When proper search is not done ,there comes
issues during plans approval because details relating to confirmation of bacon and the
infrastructure that provide services such as sewer, water, power lines etc
...
During the
construction phase, stage by stage approval is required from the local authority because it will
still raise issue during the inspection for the issuance of occupational certificate after the
completion of the building before occupation
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3
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1 Licenses and pin certificates
During the engagement of the management agency, it shall be verified if the agent has the
government license for operation
...

3
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2 The local authority require that the management have a business licence issued once every
year and must also have the property inspected once every year
...

3
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3 The property must also have a fire certificate which is the responsibility of the owner to
pay and even arrange for the inspection of the property once every year
...

3
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This services includes health and safety audits, fire
safety audit , accounts audits etc
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3
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1
ITEM

TYPE

OF SERVICE

NO

SUPPORT

PROVIDER

FEES

REMARKS

CHARGEABLE

SERVICES
1

Banking

Barclays bank

This will allow the business to

Moi

avenue

deposit the money, safeguard its

p
...
The bank
shall also provide the business with
loans for starting the business
...



...
o box

web sites
...
This facility
eliminates the need for the (ISPs)to
lease

their

own

international

circuits from which they have to
negotiates individually
...
This
can

only

insurance

be

catered

company
...
It will

ensure that

insurance services are done fairly in
conditions of mutual trust and
honesty under proper supervision
of law
...

4

Electricity

KENYA

This shall be needed to provide

POWER

power to the business so that it can

COMPANY

be operational
...
P
...


464 Thika

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CHAPTER FOUR
4
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This shall be achieved by purchasing plot in the area and develop medium
class houses and then rent them to people for payment of rent
...
The
development shall also start in a simple way but must conceder the fact the fact that the building
is intended to go to four floors
...

4
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When starting the business the most important thing would be how to get the initial capital and
purchasing, construction is a heavy investment
...
It will take about one year to be able to raise the initial capital
...
At the end of first year I will put up the first building
...
This will
pay the loan and during that time I will be saving
...

Between the second and the eighth year, I will be building the business paying the loan, and
raising more revenue for the second building
...
At this point one should be able now to take another loan for the third building
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4
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4
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1 Operation/ production Capacity
There are times the building is not fully occupied and during that time there is no cost of running
the building because, electricity is a prepaid system where if there is no one occupying there is
no use of power
...
Ideally
management of rental buildings when there is no tenancy there is no spending
...
If there are three
blocks, the basic income is 80,000x3 = 240,000
...

Product Service Capacity Table
ITEM PRODUCT /SERVICE MAXIMUM LEVEL MINIMUM LEVEL REMARKS
1

Electricity

Cleared by tenant

Cleared by tenant

No extra charge

2

Water

Cleared by tenant

Cleared by tenant

No extra charge

3

Management agent

10% of income

10% of income

No extra charge

Total

80,000

8,000

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4
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2 OPERATION /PRODUCTION PLAN

Void

stairs
wash rooms

Rooms
Entrance

Above is the plan of the floors of the building
...
3 Operations/ Production strategies
The above is the original plan of the building as at the initial stages, and as stated above, the
building internal partitioning will change when the company is financially stable
...
This means the internal layout will change as we glow
...
3
...
Jomugi Flats fosters the ideals of the importance of tenant needs along with
healthy and understanding relationships and a professional commitment to satisfaction
...
There are banks such as co- operative bank,
Kenya commercial bank, Family bank Equity bank and a host of bank agents
...
The area dose have adequate transport means such as several private bus
companies , Taxis and a train service
...

4
...
2
We advertise in the local news paper to get management agents
...

4
...
3 Working hours/ Shifts Schedule
...
It is the responsibility of the management agent to organize their work
schedule to fit whatever circumstances
...
4 OPERATIONAL /PRODUCTION PROCESS
JOMUGI FLATS is a real estate rental business that is intended to offer quality houses for rental
and it is going to start as a simple housing block for single and double rooms for renting but
gradually it change to bedsitter, one bed roomed and two bedroom flats
...
The final stages the company will be providing
housing from the medium class to the high and might of the land rent
...
4
...

ITEM EXTERNAL FACTORS PRECAUTIONARY MEASURES
1

Electricity

Provide emergency generator

2

Water

Drill a bore hole and provide e reservoir
...


6

Disaster strike

Provide insurance cover for disaster
...
5 REGULATIONS AND OTHER COMPLIANCE
...
The
government requires all companies earning from rental business to pay taxes
...
In addition, rent on nonresidential buildings (Commercial) is taxable under section 5 & 6 of the VAT Act, Cap

476
...


Rates of Tax
Different rates of tax are applicable to individuals and
corporate entity depending on residence status
...
121,968
...
114,912
...
114,912
...
114,912
...
466,704
...
The
Legal notice number 59 2007 require that such buildings be inspected once in every twelve
months
...
A comprehensive fire safety audit
report is compiled and used for implementation of improvement that are recommended by the
auditor
...
This is also used to collect any infringement that may have been
highlighted in the report
...
5
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0 FINANCIAL PLANNING
Seven millions are needed to start up the project which includes the purchase price of the initial
plot , drawing and approval of plans and the actual development of the first block
...
1 Financial Plan Objectives
...
Once the plan is approved the
construction start
...
With that
amount we hit the ground rolling and at the end of the first twelve months the first block is ready
for occupation
...
2 PRE – OPERATIONAL EXPENSES
The pre – operational activities involve the search at the housing department on the authenticity
of the plot which takes about search fees is ksh 1000, bacon certificate ksh 5000, structural
drawing ksh30,000, application for approval at the county office ksh 30,000 transport and snacks
ksh10,000 all adds up to ksh 76,000
...
2
...

5
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The cost of electricity shall be the responsibility of the occupier, so the cost the owner will carry
is the cost of water bills, and the cost of the management agent
...
The water bill is about ksh 4,000 per month and that adds up to ksh 8,000
...

5
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1
EXPENSES

YEAR1

YEAR2

YEAR3

Management agent

48,000

48,000

48,000

Water bills

48,000

48,000

48,000

Total

96,000

96,000

96,000

Three years

288,000

If that is projected for the next three years 96000x3 = 288,000
...
4 ESTIMATION OF WORKING CAPITAL
In estimation of the required capital for the operation of the business for one year, once the first
block is ready for occupation, then the amount of money required to run the building is estimated
at ksh96,000 required for the management agent and the water bills
...
That implies that the 96,000 can be relied on as the projected cost of operation for three
years
...
4
...


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