Owning property and especially rental property is a dream for many Kenyans. I would go ahead and describe it as the Kenyan Dream, you work hard at your job and business, save up your income, buy a plot and build some rentals on it with the goal of collecting income as your retirement plan. This idea sound almost too good to be true and that is because, it is not that straight forward.
Most people go into real estate without the understanding that real work begins after construction. This operational side of the business is what we call management and very few people are ever told the truth about it. Moreover, there are also additional costs that come with owning property in the form of time, resources and money. I thought it was a good idea for me to prepare a guide that reflects the truth about property ownership so that you can gauge if this is for you or not.
What are the ownership costs?
1. Taxes
The first thing that you will have to deal with immediately you start receiving rent is taxes. To be specific, Monthly Rental Income tax which is currently at 7.5% of the total rent you collect. This tax is often paid to KRA and it is one of those costs that very few Kenyans talk about yet it eats in to your monthly cash flow.
At the time of making this blog, there is a proposal under the Finance Bill 2026 to push MRI taxes to 10% of the monthly rent. I have a guide on what taxes you will be subjected to once you decide to go into real estate, I will link it down below for your perusal.
2. Payroll
The next expense people are made aware of is payroll which basically means salaries. Whether you decide to use an agent or a caretaker, the truth is that you will need some help in running the property. From cleaning the common areas, cutting hedges, repainting and washing a unit before a new tenant moves in, all of this will need you to pay someone.
A money-saving tactic that I can give you from experience is to have a local team that you pay only when work comes about. For example, you can have someone clean up the common areas for KES 500 a week. Same to cutting hedges and other menial tasks around the property.
3. Utilities costs
The next cost that shocks many property owners is on utilities. I know you are also probably wondering what utilities you will pay for after all, don’t tenants pay for their own water and electricity? One thing people forget is that common areas need lighting at night, your water pump, CCTV cameras must also be connected to electricity. They might seem small at first but they add up quite fast.
A friend of mine has some rental units in Kasarani, 4-floors and on a week he averages KES 2,000 – KES 3,000 in paying tokens for the common areas. There is also an additional KES 3,000 per month for water that has been used to clean the common space. Adding all these costs we arrive a KES 11,000 – KES 15,000 monthly as utility bills which eats into the rent collections.
4. Land Rates
Land rates are fees paid to the county government by the property owner regardless of whether the title deed is on Freehold or Leasehold. In simple words, it is the money you pay so that your county government can be able to maintain services such as roads, sewerage and the likes in your county of residence. Land rates are quite low compared to other costs, but we still must count them as expenses at the end of the day.
They are calculated in 2 ways, through a flat-rate structure or as a percentage (0.115%) of the property’s Unimproved Site Value (USV). The USV is the price of your property counted as if it were vacant. Rates are also based on the size of your property and below is a breakdown of the same. Below are some of the rates in Nairobi.
| Land Size | Fee (KSh) | Approximate Plot Size Equivalent |
| Up to 0.1 hectares | 2,560 | Up to ¼ acre (e.g., 50 × 100 ft) |
| 0.1 to 0.2 hectares | 3,200 | ¼ to ½ acre (e.g., 50 × 100 ft to 100 × 100 ft) |
| 0.2 to 0.4 hectares | 4,000 | ½ to 1 acre (e.g., 100 × 100 ft to 100 × 200 ft) |
| Over 0.4 hectares | 4,800 | Over 1 acre (larger than 100 × 200 ft) |
4. Maintenance Costs
The other cost is maintenance of the property. This particularly entails fixing broken fixtures in the rental units you constructed. Damages in a property could either be from tenant negligence or from wear and tear over long periods time. When the property is new, maintenance issues are not as prevalent, however, as the property ages, so does the need to change things like shower heads, taps and even electric conduits.
What I typically advice landlords and property owners is to first have a well detailed tenancy agreement where they go into detail on who bears the cost of fixes in the property. For example, you could agree with your tenants that if you gave them a unit with everything working well, then under no circumstance will you stomach the cost or repairs for something they broke. For expensive fixes like a broken toilet, you can agree to split the cost.
Another tactic to handle maintenance is to have several reliable and honest trades persons within the property’s immediate surroundings. This includes;
- Electricians
- Plumbers
- Welders
- Hardware person
Whenever something breaks, send them to inquire about the issue and when they have diagnosed the problem, you send them to a trusted hardware who invoice you. The trick is to ensure you are fully aware of what is going on and its costs to avoid getting conned. The reason I said that they should be near the surrounding is so that they can respond to emergency calls.
5. Time Costs
The biggest cost among all the ones we have mentioned up above is TIME. Yes, time is indeed money but it also includes your peace. As I began by mentioning, most people go into the rental business so that they can earn “passive income”, however, with time you slowly realize that there is nothing passive about collecting rent.
Whether you are handling defaults from tenants, chasing rents, responding to maintenance calls or dealing with a tenant-fight, all these demand your attention and time. It gets even worse if you are far away from the property and you have another day job. When all these becomes overwhelming, it might be time to get an agent to assist you with operations. We have a guide that will help you in selecting the best agent, I have linked it below.
