Dan Okwiri
Penning my journal. Our sunset years of life are the most dicey time of our lives if unplanned. Africans unlike Europeans believe in physical assets rather financial instruments. We invest in tangible, or real things. Spend many years acquiring swathes of land, rentals as cushion towards our retirement.
The hard truth is these tangible assets may not give you cash flow. Land may not be immediately salable at fair price when you fall sick. Tenants can be dodgy, hold you hostage, and your rentals unoccupied for months searching a more reliable one. A cacophony of conundrum.
You can’t eat property until you flog it. Some may even talk about capital gains, as land values rise, but hard truth, the dither is capital gains won’t put daily food on your table either.
Plain & simple, so that you live without pimple, what you need in retirement is a stream of hard cash.
Let me wash you with a story about a man who was a bosom chum, intelligent & savvy. He built wealth but didn’t build an income stream. There’s a big difference in the two.
I worked with the dude the 25 years was in KQ. Quirky relationships, we matched instant chum in plum despite his Kikuyu & my Luo blood that politics in mistrust.
Let me baptize him Kamau for this write for confidentiality. An industrious chap, early bird he had head start, bequeathed free ancestral in Nairobi’s catchment area, he begun constructing a 4-storied flat when most folk from my fellow Nyanza wiggled at Garden Square to Super Mazembe in the 80s.
Over the years lived frugally, painstakingly built 18 units, in all theoretically fetching him a rental of Kes 20,000 each, totaling Kes 360,000 month on paper.
His late wife Wanjiku often told me that Kikuyu men live poor so that they can die wealthy. She always wetted poignant sad. A wise Muranga Kiriaini woman, I would live to understand what Wanjiku meant after 20 years since she belated. I will tell you why? Give you my mathematics of it, so if numbers ain’t your coffee this won’t be toffee. If you can put your calc near, this write may make your moon in big spoon. Would be happy if those reading are young, for they have time as their side chick.
Truth is a bitter pill, most of the time at least 6 units of the 18 were empty. No investment has no running costs. There were expenses too. 10% tax, agent rental collection fee 5%, repairs. Kamau true income whittled down to Kes 180,000 a month, which summed to Kes 2,160,000 yearly.
Crestfallen, Kamau had spent a whacking Kes 40 million constructing his apartments. His yearly income at Kes 2,160,00, a 5.4 % return on investment. Have not even factored the value of the land, for if you did so it’s 3%.
When KQ became rocky in 2017, Kamau was 55 years at the time. KQ wasn’t the same apple, disillusioned & frazzled of his work as an engineer in aircraft line maintenance, Kamau jumped ship. The constant losses of KQ peeved him. He needed to safeguard his retirement golden eggs when he could get paid.
Most of the colleagues that he had joined with at KQ like Wuod Baba had left, he felt forlorn. He did bitter to me how management in KQ were folks that were not from the industry, suspicious of loooking incompetent, sidelined the old guards.
My advice to him, opportunities outside are galore. He had done better than most, a great career, lan apartment block and a retirement package in waiting.
Unlike him Wuod Baba had retired young in my mid 40s in 2010 after differences with the KQ CEO on the direction KQ was taking. Considered a bad egg, many of my colleagues including members of my Luo community shunned my calls on my departure. Naturally wary that would bequeath them the same misfortune. Kamau though is one man who stood with me, my hat off to him. We would keep in touch even in my retirement.
Kamau bagged a retirement lump-sum of Kes 10 million. Kamau invested Kes 8 million of his benefits in clearing the loan balance of his apartment mortgage, and the balance of Kes 2 million a hardware startup in Kangemi.
In 2019, there was a property boom in Wangige. Lady lucky is a rare damsel, embraced Kamau in bear hug. His neighbor offered him a whale of cash, Kes 70 million in quid for the property. The offer a Godsend, my guess it’s cause the apartments sits on half an acre land, he was compensating him for wealth.
Kamau gave Wuod Baba a call & asked my take, he knew mine is always unsalted, without interest or prejudice. Being a man from the lakeside he trusted it more than his own blood, for I had no gain & not his grain to lie to him.
“My brother, if I were you, would take the money even if naked and run. Cream it & blaze it’s dividend touring in Migori, catching up in our old days. Your kids have left nest, no longer your pest. With your Wambui now late & in permanent rest, let me introduce you a curvy Atieno, she will keep you rocking zany & bobbing young in zest. Too much frill doesn’t kill a man. Never know, I might now make your best man or in-law too.”
He sounded pensive, the land he had built the apartments on was ancestral. Kamau was sentimental & attached to it in filly. In true silly, he turned the offer down. The true Kikuyu in him, he loved his “migunda” & was reluctant to let it go. Noticing he had copped out, I plated him with the butter of foregone opportunity cost for lost.
“Let me recant my brother, you retired in 2015 that’s 5 years after I did so in 2010. Have observed that what kills lots of retirees is the dry up of perpetual cash flow they once enjoyed whilst salaried. Kamau as senior KQ engineer, you churned Kes 300,000 replenished monthly. That’s should not be lost on you.
You have mentioned to me your hardware business has collapsed. It’s was simple, you ventured into a business you didn’t understand, & that excursion pimpled you septic regret of Kes 2 million.
You no longer have the Kes 300,000 monthly salary but your apartments stream income of Kes 180,000 monthly. That already means you have downgraded up your lifestyle by Kes 120,000 monthly from the time you left work.
Every one’s goal whilst employed should aim to pay himself his last salary in perpetuity until he dies. Without that retirement is a blood thirsty guillotine in waiting.
Now my brother you have 13 years left if the good Lord in the heavens lives you 70 years. Now to know what value your property is worth for you, establish the value of the stream of money it will give you for the next13 years. That’s your time frame. Have assumed you have already provided for your kids inheritance.
If you live past that, you are on bonus. At your current income stream Kes 180,000 X 12 months X 13 years, your property will fruit you an income of Kes 28,080,000.
Now to get the value of what Kes 28 million is worth in today money, you need to discount it to the best alternative safe investment in today money. The Uhuru government is relentlessly building Infrastructure, the CBK selling bonds @ 12% per annum. It’s a long term 14 year bond, subject to no tax, & it works well with your time span.
Don’t always do business with individuals do it with the government too. They can’t fail to pay, they are the printers of cash. Banks are making over 20% returns in high velocity to lending to the government.
Kamau your are blessed that your ancestral land in Kiambu county neighbors Nairobi city, that drizzles it with added value. Your land in Wangige is worth a rocking Kes 30 million & counting. Makes you wealth but doesn’t rake you income. The apartment construction cost was Kes 40 million. The apartments real value is the cash flow it generates and not what it actually cost you to build.
The Kes 28 million is worth equivalent of Kes 6.4 million of an infrastructure bond @ 12%. Now I would want you to imagine the difference if you took Kes 70 million and put in the bond. It would earn you Kes 8.4 million in the first year alone. If you decided to reinvest it every year back into bonds, you will get Kes 305 million income in hard cash over the next 13 years.
The gist of it, you need to make your money work for you to generate a cash flow that isn’t mist. There are many aged people in Kenya sitting on solid wealth that might as well be solid waste, for it plates no cash flow.
My outré, it’s because we all have the “migunda disease”. I have heard of many land billionaires and real estate ones too but many of them hardly have cash. If tragedy hits, they caught in it pants down in nil gown.
The Luo girl will hook you up to on a light note, wants to live large. You will need real cash to maintain her. Am afraid at your current state you won’t unless you unlock it.”
Kamau did not respond to my pitch for him to sell his Wangige property. Ditched my proposal, his silence spoke volumes. I abandoned poking him with my hyperbole. Knowing he loved fish, invited him to Migori for a one week holiday. He showed up with one Njeri.
Reveled them in Tanzania, he splashed in fizzy Kilimanjaro lager. I noticed him frivolously let loose in Migori Gilly Hotel mellifluous to the Luo ohangla that electrified him perky. He became the man I knew over 25 years ago. It would be our last peach Melba, the gods were spawning us our last rendezvous. Never would we meet again.
Wuod Baba never heard from Kamau for 3 years, till early September 2022 just after elections. His debonair baritone throaty voice had turned to meek shrill. Wasn’t his pepping self.
Dewing angsty, he wetted Wuod Baba with news that drizzled in sad. Vicissitudes had pelted him.
“Wuod Baba in April this year my kidneys gave in. Needed a transplant. The venture required Kes 5 million. Had to sell my apartments in a jiffy, had postponed my transplant for a year due to financial constraints, it made my health condition worse. Didn’t get fair value, my neighbor knowing am hard pressed knuckled me down & offered me Kes 40 million. I regret everyday not following your advice. Realized was a wealthy man without cash flow is a man running naked in retirement.”
Wuod Baba received poignant news that my chum was called by the gods last week. Angsty, wondered in many ways how tragic this life, he was a bloke I looked upto. He almost did everything right in life, but mix his portfolio of investments.
Am not saying don’t buy plots, houses but if you do, ask if you have liquidity? Think mix grill, that’s how you’ll enjoy your retirement barbecue.
Retirement is hard spell. You got to plan and investing it to something that will sustain you. Have you ever wondered why few whites own plots, building and tangibles. They instead invest in financial instruments that gives them cash. Things that make their money work for them. That’s why whites live longer.
Give a thought to what have said, & if you’re young & time is on your side, this is handy in candy. And if you find this trash, you may read it when into your retirement. Looking back, there are many things I would have done completely differently.
At that point you will truth to it, that Cash is King and Wealth happens to be his Queen and yet often disagree to sleep in the same bed!
#okwiri my journal, my thoughts, my walk
This post was created with our nice and easy submission form. Create your post!
Did this story move you? Every gift goes directly to Dan Okwiri — writers on Muwado earn from reader appreciation, not algorithms. Even $1 makes a difference.
Muwado weekly chart
Get Africa’s top 10 stories every Thursday
No account needed — just your email.
Want to follow Dan Okwiri and get notified every time they publish?
Create a free Muwado account →