Real Estate ROI Calculator - Nairobi

Joseph Rutinu
Aug 2
2 min read

Updated: Aug 25

How to Calculate ROI on a Real Estate Deal - This is an area of interest for every developer, investor or buyer. we have compiled a simple guide for Kenyan Investors.

This guide simplifies how to calculate ROI on a real estate deal, especially in the Kenyan context — whether you're eyeing rental units, apartments, or land banking.

When buying property, don’t just ask “Is it beautiful?” Ask “Will it pay me back — and how soon?”

Understanding Return on Investment (ROI) is what separates emotional buyers from smart investors.

What Is ROI in Real Estate?

Real Estate ROI (Return on Investment) is a performance metric that shows how much profit or return you expect (or actually receive) from a real estate investment — expressed as a percentage of the cost.

It answers the key question:

“For every shilling I invest, how many do I get back?”

The Basic Real Estate ROI Formula

ROI (%) = (Net Annual Income / Total Investment Cost) x 100

Let’s break it down:

Net Annual Income: Total rent received per year minus annual expenses (like maintenance, property taxes, service charges, etc.)
Total Investment Cost: Purchase price + legal fees + renovation + furnishings, etc.

Real Estate ROI: Rental Income - Example – 2 Bedroom at KES 12M

Purchase Price: KES 12,000,000 (This is real case study of On-going project by Gesi Properties' - Sultana Residency)

Annual Rental Income Estimate:

Let’s assume competitive market rent at KES 100,000/month (On the lower side)
KES 100,000 x 12 months = KES 1,200,000 annually

Estimated Annual Expenses:

Most of the expenses are catered for by the tenants, i.e. Maintenance & Service Charges. Tenants are also charged property management fees, and minor repairs if they make any breakages. Thus, very minimal costs by the investor.

Total Expenses: KES 50,000 Annually (Est.)

Net Annual Income (Rental)

KES 1,200,000 – KES 50,000 = KES 1,150,000

ROI Formula: Calculating Rental Income

ROI = (Net Income ÷ Property Cost) x 100

ROI = (1,150,000 ÷ 12,000,000) x 100 = 9.5% (Minimum) - This can go up to 18%.

✅ Verdict: A 9.5% Rental Yields annually on a high-end 2-bedroom apartment in Parklands Nairobi offers stable, long-term growth — plus appreciation value in the future.

Indeed, you’re investing in monthly returns and legacy wealth.

What’s a “Good” ROI in Kenya's Real Estate?

In Kenya, 6–10% ROI is considered reasonable for residential rentals in satellite towns. Luxury or CBD areas may offer lower percentage returns but higher capital appreciation.

For comparison:

Bank fixed deposit: ~2–4% p.a.
Money market fund: ~9–11% p.a. (before inflation)
Stocks (if active): Highly variable, but volatile

So, a 6–10% rental ROI + capital gains = a powerful long-term asset.

Pro Tips for Maximizing ROI

Invest early in upcoming areas with infrastructure plans (e.g., View projects in parklands).
Go for 2- and 3-bedroom units — they're the sweet spot in Kenya’s rental market.
Buy during pre-launch or off-plan to lock in better prices.
Avoid emotional buying. Focus on numbers over aesthetics.
Partner with professionals for property management to reduce vacancy and stress.