Low Cost Houses Business Plan

8/13/2019 Low Cost Houses Business Plan

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LOW COST HOUSES DEVELOPMENT FINANCE PROPOSAL`` What ought to be, can be , with the will to make it so Jim Rouse

BUSINESS DESCRIPTION

Business Name: Roadmast enterprises

Business address: Po Box 567 00600, Ngara road, Nairobi

Physical address: OJijo plaza, Ojijo road, Parklands. Off plums lane

South wing, 2 floor, suite B4

Telephone/fax: 3740525/7 Cell. 0721246595/0726993316

Email contact: [email protected]

Alternative Email [email protected]
mailto:[email protected]:[email protected]:[email protected]


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Date of registration: 13thSeptember 2004

Registration No: 401438

PIN Number: p 051198790R

VAT Number: 01695765

Names of partners : John Kimani Njoroge ID No. 9236933

: Judy Wachera Robi ID No. 10894001

: Felistas Wangari Waweru ID. No. 3114393

Ownership Structure

: Roadmast enterprises is a

registered partnership business.

Business ownership is as follows John Kimani

90%, Judy wachera 5%, Felistas Wangari 5%

Contact person : John kimani


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Loan purpose/Amount: Purchase of land and construction of

70(seventy) low cost 3 bedroom bungalows

with all basic amenities in Juja area, about 3

kms off the Nairobi Thika highway. Jomo

Kenyatta University of agriculture (jkuat) isheadquartered in Juja. Juja town is 25Kms

from Nairobi city centre and about 15 kms

from Thika town. Our estimated total cost is

Kshs 225,722,028 millions.(approx. US$

2,508,026) We intend to purchase10 acres of

land and subdivide it into 70 pieces each

measuring about 1/8 of an acre to implant

each bungalow in its own compound. Weexpect to sell each house at below Kshs5,

500,000(five millions five hundreds

thousands only).Approx. USD 62000.

Summarised cost Breakdown:Kshs 2,287,155.00 per bungalow*70 units

Total Kshs 160,100,850

Civil works:sewers, driveways, borehole, drainage,

Perimeter fencing, lighting, Individual compound walling,

Trees and plants, Kshs 25,858,304

Land costs ; kshs 34,000,000 @ kshs 3400,000 per acre.

Consultancy fees and miscellaneous costs Kshs 5,762,874

Total cost can be financed in phases monthly or quarterly

Over a period of One year.

:


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EXECUTIVE SUMMARY

Problem statement Opportunity to fill a need

Decent shelter is a basic human right and millions of people in Kenya who fall under the low to middle

level income brackets do not have a house that they can call their own. Most of them are either in

formal employment or in Small scale businesses. The high price of land to construct a home and the high

cost of finance/mortgage has greatly contributed to this situation. A recent survey released by the

World Bank and the Central bank of Kenya indicates that only 8% of Kenyans can qualify for mortgage

finance and they also end up paying for long periods of up to 15 or 20 years. Government statistics

indicate that the country experiences a shortage of over 200000 units annually because the annual

production of 40000 units is way below the market demand. Rents prices have also been on the rise

and its making home ownership to be a better option for many working Kenyans. The countrys

population is projected to hit 60,000,000 by year 2030 and more than 50% of that number will live in

the urban areas therefore creating a huge demand for housing. The architectural association of Kenya

in their current report predicts that the country needs to produce 6,000,000 housing units in the next20 years if the current shortage of about 200,000 units per year is to be overcome. This will mean

producing 300000 units per year for the next 20 years.

With improving economic conditions and the growing middle class the emerging population needs

housing. In the absence of affordable, formal housing solutions, many double up in family homes, rental

houses and informal accommodation. This creates an opportunity for investors/ developers. This

population has a purchasing power to which they can respond. In Kenya, most property developers

believe that in the near future ``middle and low cost residential areas will drive demand as the

emerging middle class moves to own homes. Most will be looking for affordable houses in the range

of USD 20000 to 40000. African Business November 2008

As urbanization puts significant pressure on housing markets, property markets offer a tale of

encouraging growth. Housing supply is constrained in the affordable market as many private developers

target the more lucrative upper middle and high end markets with houses in the range of Kshs 9000,000.

There is however a major challenge of affordability among other issues. For instance a report released

by the Central bank in November 2010 indicates that the average loan size given by mortgage lenders

was kshs 4.4millions by mid 2010.The average loan size of new mortgages has now shot to kshs 6million

indicating the rising cost of acquiring a house. In total the loan portfolio by mid 2010 was kshs 62

billions. The findings are that most people who qualify for mortgage earn over kshs 120,000 per

month. Our housing product would be explicitly targeted at the income profiles of the majority in the

society. At the moment access to finance is constrained by restrictive eligibility criteria, high interest

rates, cost of inputs such as building materials and land prices assuming a speculative angle,

conservative terms and the fact that mortgage generally targets high priced housing limits access

further. High levels of unemployment and informal unemployment coupled with high levels of job

insecurity are also factors as traditional forms of mortgage require predictable and verifiable income

as lending criteria.This scenario indicates that low income earners have increasingly been squeezed out

of the homes market by high costs. The conclusion is that the growth on mortgage loans has not


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translated into broad home ownership by the majority of Kenyans. This indicates that there is a critical

need for housing micro finance to complement conventional financing methods.

Solution

The time is always right to do what is right. Martin Luther King Jr.

Our proposal is about constructing decent and affordable homes targeted at the vast majority of Kenyan

families currently living in rented houses due to the high cost of houses on sale by private developers

and the very slow pace of such housing provision by government related bodies such as the National

Housing Corporation and local authorities. More than 80% of new houses constructed are for the high

and upper middle income earner segments, despite the fact that 83% of the total housing demand is

for the low and lower middle income groups. The majority of salaried and small scale business people

are looking for houses in the range of Kshs 3,000,000 to 5,000,000.Our 3 bedroom bungalows are

aimed at meeting that need. We are of the opinion that any household with either individual or

combined income of kshs 50 000 and above can afford to own this houses if they acquire some loan

even without going the mortgage route. At the moment it is clear that the housing finance market has

not moved downstream which explains the undeveloped medium to low income housing market

whoseneeds are yet to be met. Other laudable efforts by the government include the waiver of VAT for

private developers who construct houses for the low income earners in line with regulations set out

under legal notice No. 115, 2008 and the assignment of retirement benefits for mortgages as per legal

notice No. 85 of 2008.

ManagementWhile our main business activities for the last six years has been provision of private transport and hotel

bookings in the tourism industry, we have acquired some real estate development experience through

construction of a several low cost rental houses in Juja and Kitengela. In addition as we diversify fully to

real estate through the proposed project, we have assembled a formidable team of qualified

professionals and suppliers with wide experience to work with us in executing this project and others

that we shall undertake in the medium and long term future. Our qualified team of architects,

architectural assistants, land surveyors, quantity surveyors, site engineer/ contractor, lawyers,

draftsmen, site foremen and skilled workersare all equal to the task ahead.

Market size and share expectationCensus results from the Central bureau of statistics indicate that only less than 5% of Kenyas urban

population lives in government owned houses. This means that all the others are catered for by the

private sector. On average less than 20% of those urban dwellers live in their own houses either

developed through own resources or bought through mortgage. This indicates that more than 70% of

Kenyans urban households live in rented houses including those in the middle incomebrackets. We

can therefore confidently state that there is a big and ready market if affordable homes are developed

targeting this segment(s) of the market that to a great extent is untapped. At the moment the supply of


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housing stocks per annum is less than 15% of the annual shortfall.The UN Habitat observed recently

that over 70% of Kenyas active population is excluded from the formal housing finance market with

only about 14000 home loans given in a nation of 39,000,000 people. Most of the property developers

and financiers seem to have adopted a` market skimming strategy` where they target the `cream of

the market first because the profits are high and the volume is low. This situation has actually led to the

poor people being pushed to informal settlements as the middle class moves to houses previously

meant for the low income earners.

Financing in phases.Our need for finance is to help us acquire the first 10 acres of land that we have identified in Juja and

begin the construction of 70 units of Three (3) bedroomseach with all the main services like electricity,

water, paved passages, perimeter fencing, appropriate trees and plants in each individual compound,

good access roads etc. We intend to subdivide the land into 1/8s of an acre to implant each bungalow so

that every household will have an individual title to their property. This we believe will help some of the

prospective buyers use the property as collateral for loans in Savings and credit societies, Microfinance firms, Micro loans in banks, employer funded housing schemes, retirement benefits schemes

or others sources to acquire the much needed property.This approach can assist many prospective

home buyers who might not otherwise qualify for a mortgage loan. Our financiers will have a lien not

only on the land but also on the buildings. Our plan is to build and market the homes widely within our

target market and our financiers will release the documents for each unit on full completion of payment

either financed or from own resources. Because the houses will be affordably priced we do believe they

will sell fast and enable us to quickly repay the full loan and interest at the earliest. Our prayer is that

we shall get the loan in phases as the project progresses and the value of collateral improves.

Meanwhile we shall be marketing the homes so that interested buyers can also start making

commitments in terms of deposits or start making arrangements to obtain finance from other sources.

We shall ensure we recommend our customers to the right people in the financial services sector as way

of supporting them obtain finance to pay for the homes.

Home its the centre of our daily lives. Its the place for family and friends. Its

where we are safe from the worries of the world. Home is where we relax in comfort.

A place to call home is what most of us wish for and work towards, but for many is

simply a dream. Given a chance, most people will do everything in their power to

make the dream of owning a home come true. The dream of owning a new home can

come through the kind of affordable housing solution we intend to offer.


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CORE VALUES

To achieve our vision we shall incorporate principle centered professionalism, high ethical

standards and innovative business practices and systems. Our number one value is

honesty, integrity and fairnessin dealing with all our stakeholders.

MISSION STATEMENT

To achieve a strong market presence in the efficient provision of quality and

affordable shelter and enhance the communities in which we will operate through

good citizenship and social responsibility. To maintain excellent relationships with

our different stakeholders

OUR MOTTO

`Affordable homes for the people

OUR VISION

A safe and healthy home for every person

KEY SUCCESS FACTORS

Safe and quality housing at affordable prices. Open communication between us and customers to ensure the highest level of customer

satisfaction and long lasting reputation.

To continue expanding the number of housing units while increasing the level of profits for ourbusiness.

Good looking homes, spacious rooms and with separate green compounds for each family. Paved driveways and an ambience that provides emotional comfort for the buyers.

GOALS/OBJECTIVES

1. To offer innovative, affordable and market driven housing2. To achieve a sustainable financial base


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85%

15%

Annual Deficit

Annual Supply

3. To reach a level where we can build more than 500 low cost family houses annuallyin the next two to three years.

4. To achieve a good corporate image and visibility in the public domain5.

Use of appropriate technology to increase supply of quality affordable housingstocks in a sustainable manner

6. To achieve continues improvement through clients feedback7. Monitor supplies performance for quality and timely deliveries8. To achieve mutual client loyalty and satisfaction9. Involve our staff members/stakeholders to enable their capabilities to be utilized to

improve quality and reduce costs.

10. To work with other industry players in lobbying for further housing incentives.MARKET NEEDS

Decent shelter is a basic human right and millions of people in Kenya who fall under the low to middle

level income brackets do not own a house that the can call their own. Most of them are either in formal

employment or in Small scale businesses. The high price of land to construct a home and the high cost of

finance/mortgage has greatly contributed to this situation. A recent survey released by the World Bank

and the Central bank of Kenya indicates that only 8% of Kenyans can qualify for mortgage financeand

they also end up paying for long periods of up to 15 to 20 years. In most cases on completion of the

mortgage they will have paid about 3 times of the original price.

Housing demand and supply annually

People also pool resources to buy land in order to subdivide and allocate to individual members.

This can help people acquire land cheaply as a starting point to owning a house. This route

though advantageous has also led to such groups experiencing management problems and

uncontrolleddevelopmentwhere individual members build whatever type of structure they can

afford without regard to the environment in aspects like drainage, passage ways, litter/waste disposal,

trees, natural lighting and the general beauty of an area.In other cases people keep saving for long

periods before they accumulate enough money to buy a plot of land and build a home due to their low

purchasing power. Before that happens they will have paid rent over a very long period of time and in

most cases their entire working life. In the course of our survey we saw many fenced plots and stalled


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construction of homes some going for several years which represents dead investment because it

means their owners are still paying rent elsewhere or would be earning an income from those

investments had the projects been completed. If such people had bought ready houses they would be

saving money from rent or at least earning rental income. Many low to middle income earners spend

over 7 years trying to complete a home.

SOCIAL RESPONSIBILITY AND ENVIRONMENTAL CONSERVATION

Doing many units together at one place also enables us to participate in the neighboring communities

welfare activities such as environmental conservation, tree planting, improvement of roads, cleanliness,

educational standards, security, health awareness campaigns, youth affairs. As a socially responsible

organization we will also continue our relationship with other charity organizations that we have worked

with in the past such as Hope for teenage mothers at Mukuru slums in Nairobi which helps young

mothers escape poverty and drugs by training them in life skills and Don Orione centre in Kandara

(Muranga) which caters for mentally handicapped children. Suffice it to say that there are enough

opportunities to serve for those who are willing.

We appreciate the importance of living in a healthy green environment as opposed to a concrete

jungle. We therefore wish to not only provide houses but also plant the appropriate type of trees and

plants with the help and advise of professional landscapers and Kenya forestry research institute (Kefri)

providing the seedlings. This will ensure we provide those who buy our houses with a wholesome living

environment.

EMPLOYMENT

Construction of low cost housing units is by nature a labor intensive exercise. We therefore expect to

hire many skilled and semi skilled workers directly on a daily basis. The jobs for most semi skilledworker will directly benefit the youth particularly those communities neighboring our projects.

Women from the community around will also be given an opportunity to cook on site and sell food to

the large number of workers hence deriving an income for themselves and their families Others jobs

are also created indirectly by the suppliers of raw materials, food for the workers, professionals like

architects, draftsmen, building technicians, project managers/consultants Quantity surveyors, marketers

etc. The usage of machines will be kept at the bare minimum only in situations that are unavoidable. Its

important to note that we intend to replicate the low cost housing model to other parts of the larger

Nairobi metropolitan area in other towns like Machakos and Naivasha on completion of the first phase.

We can therefore continue providing employment on a fairly regular basis to those who work with us

directly and indirectly.

TRANSPARENCY

We will relate with all our stakeholders with utmost integrity by ensuring we carry out all our operations

regarding this project (and any others in the future) in the most transparent manner. We strongly


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other unsecured loans are also available in the market both to those in formal employment and

business.

Factors and Figures

Urban home ownership 16%

Households and living in rental homes 77%

New homes targeting high and upper middle

income earners

80%

Public sector housing provision 5%

Private sector housing provision 95%

Some banks are also offering 100% mortgage hence eliminating the need for deposits. Such buyers can

also live in those houses in order to stop paying rent elsewhere and concentrate on repaying their loans.

They can also rent out the houses to earn some rental income which can also help in the repayments. To

ensure affordability of the houses, costs at every stage have been considered particularly aspects

concerning land costs, building materials and other costs. The whole team of suppliers has been made

aware of the low cost housing strategy that they need to buy into so that they can work with us. We are

also aware of the real costs of the items on the ground and will therefore be in a position to ensure

strict cost control. We will also only work with suppliers who do not display cartel like behaviors in the

industry.

2. MARKET PLAN

It always seems impossible until its done. Nelson Mandela

Besides construction of quality and affordable homes the marketing function will be a very crucial part

of our operation for this project and others that we shall undertake in the medium and long term future

because there is a clear need for low cost housing in the country. Ours is the first step towards meeting

that need by providing home ownership benefits that will enhance our customers lifestyleparticularly

when we put into consideration the fact that housing is one of the most important expenses in an

individuals life. We intend to maintain an extensive marketing campaign that will ensure maximum

visibility for the business in its targeted market. An overview of the marketing strategies and objectivesare as follows.

Developing a strong online presence by acquiring accounts for major online real estate portals

Implementing a local campaignwith the businesses targeted market via the use of fliers, Newspaper,

radio adverts and word of mouth.


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Establish relationshipswith other real estate brokers / agents within the targeted market.

Marketing objectives

Our main marketing objective will be to create awarenessand interestabout the homes within

our target market as away of achieving wide and fast market penetrationand achieve sales. We

will also aim at achieving consumer loyaltyby only concentrating our resources and efforts in

the particular market segment. We will achieve this through increased information flow to the

Savings and credit society members, Retirement benefits scheme managers, investment

groups, Micro finance institutions, Chamas and the general public. We intend to talk to the

officials of those organizations directly so that they can facilitate meetings with the members

whom we will motivate to purchase the homes by selling them the benefits of home ownership

acquired when through this particular project. We will also seek their assistance in convincing

others such as relatives, colleagues and friends to buy the units as a way of increasing sales. We

know that by building a loyal group of customerswe can establish a good database and

customer profiles to rely on even in our similar projects in the future. We will also talk directly

employees of different organizations whom we know such as banks who not only meet many

clients but who also need to buy homes for themselves in some cases taking advantage of

employer sponsored housing schemes.

CLIENT PROFILE

Our potential customers are in the low to middle income range that need homes but cannot afford veryexpensive houses. Most of them are looking for homes in the range of Kshs 3000,000 to below kshs

5000,000.Their home ownership decisions will therefore be based on price, quality and availability of

amenities. Since most of them are in the age bracket of 25 to 50 and still in employment or running

small scale businesses affordability and convenience of buying a ready housewill be important factors to

consider because of their family and work oriented lifestyles. Their disposable income is limited to

moderate and would require installments to raise a deposit for a house as they organize their finances

to pay the bulk of the balance either through an affordable Sacco or bank loan. Their urban lifestyles will

require them to live near towns with good access roads, schools, banks, entertainment facilities,

transport facilities etc. Many of them will be attracted by the falling lending rates across the board and

avoidance of the stresses involved in building their own homes. They also respond to offers for

discounts and other promotions like the 100% mortgage financing offer by unveiled by Stanbicrecently.

Most of them will be first time owners and others who may want home upgrades from semi permanent

/ incomplete houses or crowded apartments. Our survey indicates most of them prefer to live in 3

bedroom homes with own compound for the sake of privacy in the family as opposed to apartments.


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Market shareThe desire for people to own a home is implanted in every individuals heart and it has always been

common wisdom that given a chance one should always buy a home instead of renting but the answer

to when and how you should buy depends on how much you have. Recent industry surveys by the

World Bank, Central bank of Kenya, Stanbic investments and leading mortgage lenders all indicate a

trend of increased level of interest in people owning homes as opposed to renting.Investment in real

estate grew to kshs 61 billions over a period of 5 years. Real estate being a strong asset class has

produced consistent earnings and is inflation proof unlike the stock market whose returns fluctuate. The

industry is however under exploited particularly in the lower ends of the pyramid where the lower to

middle income earners are the majority in the country. The scramble for this industry has seen 32 banks

reporting data on mortgage portfolios in the last one year. This is an indication of the industry being in

the high growth high market share stage.The reported high margins and cash flow needs to be directed

at further growth in the industry particularly in the lower end where the market share is big and ready

as most developers have only targeted the cream of the market. More than 80% of urban dwellers are

still in rented and informal settlements. Recent data obtained from the homes expo in Nairobi shows

that over 83% of the demand for homes is in the low income and lower middle income earners.

Potential competitors``We can never be certain about the future, we must be constantly alert to changes in the market place

and respond to them

Any high growth market is likely to attract competitors. Most of the competition however is at the

moment constrained in the high priced houses where most developers have focused on and in someareas produced overcapacity. In the lower end of the market however the demand is still quite high and

would require government intervention to provide attractive incentives to private sector operators who

wish to develop homes on a large scale basis to meet the huge demand. Already various attempts by the

government have been seen in some areas such as the civil servants housing scheme where apartments

developed are being sold in the range of Kshs 4500,000. Other attempts include the waiver of VAT

(value added tax) to private developers who produce more than 20 low cost units retailing at between

USD 20000 to 40000. The effect of the changes in the Sacco act where they will be allowed to invest in

other areas besides lending to members has yet to be seen. With time new construction technologies

will also enter the low end of the market and claim a piece of the cake as well. Its therefore crucial for

us to keep our ears to the ground and to continually carry out a competitor analysis so that we respondappropriately.

PRICING / Economies of scale benefits

The advantage of building many standard housing units together is that we can enjoy economies of scale

not only in the cost of land but also in building materials, surveying and subdivision, provision of

common security such as perimeter fencing, borehole /project water provision, electricity, insurance,


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Besides construction of quality and affordable housing units, marketing and publicity as well as good

public relations will be a key success factor for this project and others that we will undertake in the

medium and long term future. All our marketing activities will be directed at ensuring we capture and

retain a substantial share of our viable market segments. We will also keep in mind that real estate is a

long term business. To ensure we get the marketing right we will seek advice from a professional

marketing services firm. Property / homebuyer marketing is the most challenging portion of the

marketing strategy because of the essential elements to reaching this audience is that we must build a

brand affinity with the customer. This task will be accomplished within our broad marketing campaign

throughout the targeted market. We will also use an internet based strategy. This is very important as

many people seeking homes to purchase use the internet to conduct their preliminary searches. We will

also develop our online website besides maintaining a sizable amount of print and traditional advertising

methods within local markets to promote the homes that we are selling.

Some of the activities that we intend to carry out to aggressively market the product include targeting

savings and credit societies, investment groups, chamas, women groups, church groups, micro finance

organizations, insurance companies and retirement fund managers. The common denominator with thepeople associated with all this organizations is that they are all low to middle income earners and they

are all pooling resources to enable them achieve some financial goal in life such as owning a home,

establishing a business or educating their children.We will approach officials of these organizations and

will design an elaborate marketing plan that will run for about six months from the moment our

proposal is approved.

Savings and credits cooperativesThe aim of the meetings with the members of these organizations will be to sensitize them about our

project and give them an opportunity to buy homes as a priority without necessarily going themortgage route. We will strongly emphasize the benefit of home ownership. Saccos will be particularly

important because the cooperatives act is changing by July 2011and it will enable Saccos to invest in

other areas such as manufacturing, housing, Information communication technology and other areas.

Saccos have accumulated savings of more than kshs 200 billions in Kenya. We have every reason to

believe that most members of Saccos will allow their boards to invest in houses so that they can benefit

directly other than going for mortgages. We intend to talk to officials of about 20 Saccos to start with

especially those in Nairobi, Kajiado, Thika, Kiambu, Muranga, Nyeri, Embu, Meru and Machakos areas.

The reason we wish to target those areas is because we have contacts that can lead us to the officials

easily. Some the Saccos we will talk to and where we have contacts include Mhasibu, Muramati,

Mwalimu, Chai, Kenya police savings and credit, Safaricom investment cooperative, Metropolitanteachers Sacco, Stima Sacco among others.

Housing cooperativesIt is important to note that there are over 250 housing cooperatives in the country that specialize in

assisting their members with housing micro finance loans at lower interest rates payable in up to 72


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months. We will therefore work with their umbrella body National cooperatives housing union (NACHU)

which specializes in obtaining low cost funds from donors ,foundations and social investors at below

market rates to assist their members achieve their home ownership goals.

Launch /groundbreaking ceremonyOther marketing activities will include conducting a project launch/ground breaking ceremony at the

earliest opportunity such as the commencement of construction to give people an opportunity to see

the sites for themselves. We will invite the media and a few religious and community leaders in order to

give publicity to the project. Real estate agents will also be useful to us because the have good contacts

that may be useful to us in boosting sales and would be invited to such a launch ceremony together

officials of the saccos, mfis, investment groups etc

Advertising

Advertising is an activity that we must do particularly in the leading newspapers, radio, (includingvernacular stations) television and in some property magazines. Other advertisements would be placed

on notice boards in shopping malls, busy shopping centres and other convenient locations such asbusy

office blocks/ churches/schools/universities.We will discuss a way of distributing application forms

through one of the main supermarkets as a way of reaching more people conveniently. We will also

send distribute fliers through churches in Nairobi, Kiambu and Thika areas.

Internet MarketingInternet marketing has now become a quick, convenient and cost effective way of disseminating

information. We can upload photos of the houses which offer advertising space to customers especiallythose dealing in property categories. We will ensure we choose sights that are highly effective in getting

potential customers such as www property.co.ke,

www.noko.com,www.jambonewspot.com,www.misterseed.com

www.jabaliafrica.com,www.dashafrica.com,www.kdiconline.org,www.mwakilishi.com,

www.kenyareal.com among others. Other online social media such as face book will also be used. This

will help us to also reach many Kenyans in the Diaspora who are willing to invest in housing to assist

their families here or for their own use when they return home due to hardships in the foreign

countries.

Property websiteWe will create a website solely dedicated to the property business with webmail mail to disseminate

information to our potential customers. We will create virtual tours to enhance the appeal of the homes

and allow users imagine themselves living there. Photos will be available to download or print. Search

engines and web directories will also be crucial as a way of increasing traffic.
http://www.jabaliafrica.com%2Cwww.dashafrica.com/http://www.jabaliafrica.com%2Cwww.dashafrica.com/http://www.kdiconline.org/http://www.kdiconline.org/http://www.kdiconline.org/http://www.mwakilishi.com/http://www.mwakilishi.com/http://www.mwakilishi.com/http://www.kenyareal.com/http://www.kenyareal.com/http://www.kenyareal.com/http://www.mwakilishi.com/http://www.kdiconline.org/http://www.jabaliafrica.com%2Cwww.dashafrica.com/


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Banks and other finance related institutions.Some banks are seriously targeting investment groups, Chamas, small and medium enterprises (smes)

and other associations to bank with them. We will engage with the relevant officers to market the

houses to these groups by distributing pamphlets to the members. We will use the same strategy with

the microfinance institutions and insurance companies especially those dealing with retirements

benefits funds. Some of the banks and mfis we will approach include Equity bank, Family bank, KCB,

Chase bank, Cooperative bank, Family bank, K-Rep, Pawdep, Micro Africa, Jamii bora bank which gives

its members micro finance housing loans payable over long period of up to 20 years. We do believe that

these organizations touch the lives of our target market and are therefore most likely to assist them to

achieve their home ownership dreams as opposed to the more conventional mortgage route.

Media tours and interviewsWe will seek to network greatly with the media and to conduct a tour of the project(S) as it progress as a

way of creating publicity and corporate brand / image building. We will also seek interviews with the

media (electronic and print) to talk about the property industry in general as a way of brand building.

We will also write effective and compelling press releases regarding property to the media.

Networking and word of mouthWe shall use intense networking with business groups, friends, relatives, neighbors, business colleagues,

competitors, Investment groups, women groups and other property agents.

We will also compile a detailed inventory of property sellers and potential buyers to facilitate constant

communication flow as a way of seeking sales.

Yellow pagesDespite the advancement of technology as a means of communication, there are still people who use

this means of as a way of getting information and listing would help to generate some sales and market

the business.

Promotional activitiesSince our target market is wide we will use both the push and pull promotional strategies. By the push

strategy we shall offer commissions to property agents who eventually make a sale for each house.

Savings and credit societies, investment groups will also be given discounts as they can buy severalunits

together for their members. For individuals who wish to buy our homes we will give discounts to those

who express commitment by paying a deposit within a given timeframe. In each of those cases our

offers will not exceed 2.5% of the total cost of the house.


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Professionals and consultancy services offeredThe nature of construction is such that different professionals and organizations will be involved or

consulted in different ways and at different stages of the project. Some of the people we have consulted

or will be involved in this project include.

Site engineers/contractors Tobi contractors,2ndfloor, Parkside hotel building, Monrovia Street

Tel 020 614044/0722614044/0722315026

Contact person: Engineer Thomas Obiero

Email: [email protected]

Architectural assistants _ John GachokiPo box 1291 00100,Nairobi, Kenya

Tel. 0720 201656 Email: [email protected]

Lawyers Jusaruguru and company advocatesSummit house, 4thfloor, Suite 417

Mol Avenue street, Nairobi

Po box 3183 00100

Contact; Vincent Madoya Afanda Tel

057253380/0722521072/0724593347Email [email protected]

Quantity surveyors Francis Mwangi kiiruMinistry of public works

P o box 7515 00100 Nairobi

Tel 0722645966 Email: [email protected]

Building materials suppliers/Transporters (Multiple general merchants)Contact person: John Kinuthia 0722961891: P.O. Box 685 00232 Ruiru


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Property management company, Property World LimitedJetro chambers, 2nd floor, Mpaka road Westland.

Tel 4451290/1 Cell 0722858175. Contact: Mr. Kinyanjui, CEO

Accountants and auditors Njehia and associates, Certified public accountants ofKenya. PO Box 66848 00800 Nairobi. Bekim House 1stfloor, Westlands.Tel

0721530498.

BankersEquity bank limited, Westlands branch

Tel 4454261-3 Cell 0718185950

Contact person. Mary Mugwanja .Branch manager

Co operative Bank of Kenya, Stima plaza Branch

Tel 31881/79/78 Cell 0722202096/0721743348

Contact person Henry Mukuria Business development officer

Professional marketers Kenya forestry research institute (Kefri) For supply and advice of appropriate

types of trees and plants for greening of the project site(s)

PHASED LOAN DISBURSEMENT AND REPAYMENTS

Constructions projects are by nature done in phases with fairly good cost estimate for each phase of the

project. We will therefore request that the loan is also disbursed in phases with the first phase of 40%

being used to pay for the land and commencement of construction. This would be particularly crucial

because it also will help us to start marketing the houses and collecting deposits from potential buyers

as the actual construction progresses. Phased disbursement is also good for the financier because it

enables them an opportunity assess the usage of funds before releasing the next installment.

While we will apply to repay the whole loan plus interest in under 6 years, we will do everything possible

to complete the repayment within the shortest time possible and preferably in about three years.The

groups and individuals will be encouraged to pool resources or obtain finance from Saccos, Mfis and

banks. By doing so they can pay us for the units within short periods and obtain possession of the

houses to live in or rent out as a way of generating income. This way we can sell the houses quickly and

repay the loan to enable us move on to the next project.


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Organizational structure

The world is not moved only by the mighty shoves of the heroes, but also by the aggregate of the tiny

pushes of each honest worker Hellen Keller, American Author

KEY MANAGEMENT AND STAFF ROLES.Our short structure is aimed at ensuring effective and efficient management of the businesses affairs

through quick communication, decision making and cost savings.

John Kimani Managing partnerHe is the managing partner dedicated to running the business on a full time basis.

Overall in charge of the businesses and a signatory to all bank accounts Ensuring all operations of the business adhere to the organizations administrative policy Corporate relations with external contacts Hiring and general human resource administration Spear heading the businesses marketing function and overall business development Providing guidance on the organizations strategic direction

JUDY W. ROBI- Partner

Signatory to all bank accounts Chairing all meetings of the business in the absence of the Managing partner Representing the business to any external contact in the absence of the Managing partner Approving all payments to suppliers or other service providers and ensuring timely payments Scouting for new business opportunities and advising the other partners accordingly


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FELISTAS WANGARI WAWERU- Partner

Overall ground supervision on the proposed project Approving the quality and quantity of materials delivered and recommending payments Ensuring contracted services are conducted to the expected level of quality and in a timely

manner

Attending management meetings and providing updates on the projects progress Scouting for new sites that the business can invest in similar projects in the future

John Gachoki Construction/Site Manager

Overseeing all the construction work on site as it progresses in phases.

Attending all meetings scheduled with architects/ site engineers/ contractors

Ensuring the projects timelines and quality guidelines are adhered to.

Chairing the quality control committee on sites.

Checking and approving the quality and quantity of all building materials delivered on site.

Ensuring good property management of all sites.

Advising management on potential properties for prospective development.

John B K Nyaga Marketing and sales Manager

Implementing the firms marketing strategy.

Constant monitoring of consumer behavior in the property industry.

Analysing demand and supply of properties in the market with particular reference to

To our target segments.

Conducting competitor analysis/surveillance.

Planning and coordination of marketing activities like advertising, sales promotions.

Reaching out to all property dealers/agents to help in selling.

Obtaining customers feedback on quality and product improvements.


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Antony Njiru Finance ManagerOversee the preparation of all financial reports.

Liaising with our accountants and auditors in matters regarding preparation of reports

Implementing cash management strategies and developing financial strategies.

Summarizing and forecasting the firms financial position using balance sheets and income statements

Analysis of future earnings and expenses.

Advise on capital raising strategies.

Monitor and control of the flow of cash receipts and disbursement.

Catherine Mwangi Operations and Administration ManagerGeneral coordination and planning of all office activities.

Supervision of other office personnel

Procurement and planning of all office materials.

Ensuring excellence in customer service.

Anne Ruth Wangari Office assistantAttending to all telephone calls and answering initial customer queries.

Ensuring office cleanliness and excellent client service.

Booking appointments with clients and other stakeholders for the management.

Ensuring proper electronic and manual records management.

Recruitment, compensation and appraisal.Our commitment to staff will always be a priority and their welfare will be taken care of the best of our

ability. Competitive remuneration will be given to each staff member and annual review in line with the

rising cost of living and the financial health of the business. We believe by fairly compensating our staff

we will not only ensure loyalty to the business but also retention. Our recruitment policy will always be

on the basis of merit and no one will be discriminated. We shall mainly depend on referrals from

credible person known to us as the business grows. In future we will outsource that service to a

professional organization. Staff members will be appraised fairly with a view of identifying their main


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areas of strength and weaknesses need for training, promotion, job rotation or enlargement. Our desire

will always be to see a happy staff that will see the business as an extension of their family.

ORGANISATIONAL CHART

MANAGING PARTNER

SALES & MARKETING

MANAGER

CONSTRUCTION/SITE

MANAGER

OPERATIONS & ADMIN

MANAGER

PARTNER PARTNER

FINANCE MANAGER

OFFICE ASSISTANTFOREMAN/SUPERVISOR

JUNIOR STAFF

SALES EXECUTIVES


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here are many companies out there offering machines to mass produce compressed

earth bricks. We are studying these prospects for eco sustainable villages.

COMPRESSED EARTH BRICKS

LCH Machine Specifications

The LCH Stabilised Earth Brick (SEB) Machine is easily transported onto a

construction site and can immediately produce high quality, interlocking bricks made

from the local soil. By using the unique interlocking features, LCH machines allow

"dry construction", i.e. no mortar is required to hold the bricks together. Made from

soil treated with RoadPacker Ionic Soil Stabiliser products, the LCH Stabilised EarthBricks (SEB) can be used within a few days of production. The fast, reliable and easy

to handle, Stabilised Earth Brick machine, will allow for low cost construction of high

quality houses utilising unskilled labour.

The construction of a 50 square metre house requiring 5,000 soil/clay bricks, can be

achieved in two or three (2 or 3) days and will be of the highest standard. The home

will also be heat resistant, sound proof and completely stable. .

The LCH Stabilised Earth Brick Machine

Features:

Fully automatic or manual modes controlled by pressure switches with built in cut off switches.

Specially designed hydraulic cooling system.

All hydraulic components are industrial grade and rated for extreme industrial use.


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Retractable heavy duty sieve on hopper, filters out large rocks and foreign debris, and folds down for

easy transportation and reduced freight charges.

Engine mounted to the frame of the machine to allow for maximum vibration to keep soil moving at a

constant rate through the hopper.

Frame constructed of 10cm (4 inch) channel iron for extreme strength to weight ratio and rigidity.

All welds are double welded for superior strength and vibration resistance.

Brick molds are specially engineered for wear resistance.

Heavy duty hitch with 5cm (2 inch) ball and built in levelling jack.

12 volt D.C. electrical system.

Fully warranted free of defects in materials and workmanship (when maintained as per specifications

for one (1) year).

Specifications:

Brick size - 20cm x 20cm x 10cm (8 x 8 x 4 inches)

Production - 10 blocks per minute

Power - 80 hp John Deere diesel

Cooling system - Heavy duty radiator (Made for extreme heat)

Hydraulic pump - Vickers

Control valves - Rexroth or Vickers

Machine size - 4.72m x 2.04m x 2.31m (15'6" long x 67" wide x 76" high, 1 per 20 ft. container)

Weight - 2727kg (6000lbs)

Hydraulic Pressure - 1000kg/cm*2 to 1136 kg/cm*2 (2,200PSI to 2,500 PSI)

Hydraulic oil capacity - 55 US gallons

Hopper capacity - 1 cubic meter = 62 blocks


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Unskilled labour - 6 men

Skilled labour - 1 man

The mobile integrated roadworthy trailer allows the movement of the LCH Stabilised

Earth Brick Machine from one part of the construction site to another without major

disruption to the project.

LCH Stabilised Earth Brick Dry Stacking Block

SpecificationsMade

of:"Insitu" soil plus RoadPacker Clay Brick Stabiliser compressed at over 40 tons

Bricks: Length 20 cm x Width 20 cm x Height 10 cm

Weight: +/- 10 kg

MPA : > 8 mpa

To produce good quality bricks with LCH Stabilised Earth Brick technology, the

following procedures must be adhered to:

1. A soil that contains 15%> percentage of clay, must be used, pure sand will notwork. If inferior soil or clay is to be used, then a clayey material will have to be

imported and properly mixed with the insitu material

2. Mix the soil with the prescribed dosage of RoadPacker Clay Brick Stabiliser perm3 of material/soil.

3. Adjust the hydraulic pressure of the machine to the type of soil and moistureused.

4. Fill up the hopper with soil and the prepared RoadPacker Clay Brick Stabilisermix.


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5. Activate the LCH SEB Machine and begin stockpiling bricks as the are extrudedfrom the automated press.

6. The Stabilised Earth Bricksproduced are sostrong they can be

easily handled and

immediately stacked

for storage on the

building site.

Foundations

Good foundations have to be erected to give your building strong support. LCHCompacted Earth Brick can be used for these foundations.(0 .3 of a litre of

RoadPacker Clay Brick Stabiliser per m3 of material/soil is recommended for

foundations as a rule.)

In this instance only (foundations), the LCH Compacted Earth Brick will have to be

assembled with mortar and carefully aligned. The first row of LCH Compacted Earth

Bricks will give the essential vertical alignment for the other rows of bricks to be

placed on to.

Easy To Assemble

LCH Compacted Earth Bricks are firmly interlocked on the top, bottom and sides. A

wall built with LCH Compacted Earth Bricks is extremely strong and highly

isothermic. Each brick is perfectly extruded and all bricks are of the highest quality.

There is no available technology that will allow you to build as fast as with LCH

Compacted Earth Bricks at such a competitive price.

How To Build A Wall

Once the foundations are built to the proper standard, the bricks should be moved

close to the site for ease of handling, then start laying the first row of bricks. Check (


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with a spirit level ) that the bricks are perfectly flat, ( Note: Any angle on the first row

will throw out the vertical alignment of later rows ). The first row must be finalised

with proper attention to the levels, paying particular attention to the junctions. Once

the first row is completed, the walls will follow the set level and run true. Corners are

easy to make and in a short time the building will take shape. Walls for a 50 square

metre house are easily built in 1 or 2 days depending on the team's skill.

The LCH Compacted Earth Brick machine permits you to build using the insitu soil (

which is usually free ) and only 0.2 of a litre of RoadPacker Clay

Brick Stabiliser per m3 in the mix to achieve the most inexpensive,

strong and most attractive looking wall. This is why LCH Compacted

Earth Brick technology is the most cost-effective method of building

low cost housing, of the very highest standards.

Several Reasons Why This Technology Should Be Used.

LCH Compacted Earth Bricks allow you to use the most abundant raw material on earth, soil.

LCH Compacted Earth Bricks use only 0 .2 litres of RoadPacker Clay Brick Stabiliser per m3 to be mixed

with the soil to stabilise it.

LCH Compacted Earth Bricks being strong and highly compacted, are of the highest resistance

(>8mpa) and do not require the use of any reinforcing bars to build a completely strong durable

dwelling of up to 3 stories. (Except in Seismic Areas)

LCH Compacted Earth Bricks can be produced on the construction site, which negates the need for

transporting the bricks and thereby, reduces the risk of damaging the already "paid for" bricks.

LCH Compacted Earth Bricks utilise unskilled labour to manufacture the bricks, therefore,

employment is provided for local indigenous population and costs are kept at the lowest level.

LCH Compacted Earth Brick houses require a minimum of skilled labour to build. A professional


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Low Cost Houses Business Plan

Documents

Transcript of Low Cost Houses Business Plan