Q&A – Ontario Kenyans meet with Heri Homes, KCB reps
Who are Heri Homes and what do they do?
Joram Mwangi, one of the four directors of Heri Homes and Development Partner Susan Saiyiorri, have an Ontario itinerary that should afford them maximum access to Kenyans in the Greater Toronto Area (GTA) and London.
Swahili speakers know Heri to mean “preferred” or “better” but in the case of Heri Homes the word is an acronym for the company’s core values of Honesty, Excellency, Respect, and Integrity.
The company is headquartered in Nairobi, Kenya and has a North American office in New Jersey, USA, where Saiyiorri is based.
Wakenya Canada wanted to help prospective investors understand the company and what better way than a Q & A with Director Mwangi and Saiyiorri.
Wakenya Canada: Mr Mwangi, could you describe Heri Homes?
Heri Homes Properties Ltd is a company that develops bungalows, town houses and apartments in areas where there is high rental income.
Wakenya Canada: There are numerous real estate companies here in North America and in Kenya. Why should Diaspora Kenyans invest in property through Heri Homes?
Mwangi: What makes us attractive as a partner is that we employ a business model that involves developing homes through the use of a low risk finance strategy whereby part of capital is raised through owners’ equity, development partners and through presale of homes as opposed to debt. That means we don’t add any profit margin and bank loan interest to our customers making our homes cheaper by almost half the regular cost.
Wakenya Canada: Can you explain how that works?
Mwangi: Our customers whom we refer to as development partners pay a small deposit and we break ground. They then pay the balance in installments during the construction period. At half-way point of the construction, the property value has gone up and our customers can resell for profit if they so wish. They also have the option to wait till completion for even more gains.
Wakenya Canada: How do you determine that a project will be profitable for buyers/investors?
Mwangi: Before embarking on any project, a company called Premier Financial Consultants (PFC) carries out a feasibility study to determine if the return on investment and payback period is good. If approved, we then split the project into two – Heri buys half of total units to later sell at a profit while the other half is sold to our development partners.
Wakenya Canada: Could you explain further using an example how this business model works?
Heri Homes Development Partner Susan Saiyiorri explains: As stated earlier, when PFC approves a project, for example to build 100 units each priced at Ksh 2.6m at cost, the project is then split into two. Fifty (50) units are sold at cost to development partners to generate cash flow to start construction. The other 50 are left for Heri to sell at a profit. Let’s say for instance that a unit cost before ground breaking is KSh 2.6m, after ground breaking, the cost increases to Ksh 3.5m. Mid construction the price goes to Ksh 4.5m and at completion the unit will cost Ksh 5.2m. So a development partner can buy off plan and sell mid or at completion for profit.
Saiyiorri continues: The main difference between us and other companies is that they borrow long-term loans to develop properties that attract interest. Thereafter they need to add their profit margin and sell to home buyers a completed house at Ksh 5.2m. Many people will go to bank for 10 – 20 years mortgage that may attract almost Ksh 4m in interest, making a house similarly priced at Ksh 2.6m house to cost over Ksh 9.2m.
Come meet with Mwangi and Saiyiorri in both Toronto and London Ontario and learn more/get your questions answered.
~Wakenya Canada
