Our Chama Has Bought 3 Plots, I Only Contribute Ksh3k Per Month

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What’s your biggest dream? Or is there something you’ve always wanted to achieve by the time you reach 30? Well, for me, it’s owning a piece of land in Nairobi, and if possible, several pieces of land. 

You see, I grew up in a rented house with my family. We had our share of struggles with rent payments, and our two-bedroom apartment, tucked away deep within Umoja, often felt too small to comfortably accommodate guests. The struggle of growing up in a crowded space is something many of us can relate to. 

But what truly left a lasting impression on me was our landlord, who owned multiple rental apartments and enjoyed a respected status in our community. People whispered about how wealthy he was, and right then, I knew I wanted to be like him when I grew up. That’s how my passion for real estate began.

However, real estate can be quite a capital-intensive venture. The cost of land in prime locations is ever-rising. One time, I started saving Ksh500,000 to purchase a plot in Kitengela, but after a year and having saved Ksh160,000, the cost of land in that area had gone up to Ksh800,000. 

My Fear of Chamas

Then, in January 2020, my friend Mike, whom I’ve known since high school and with whom I’ve navigated the ups and downs of Nairobi life, introduced me to an investment club he’s part of. In this club, members pool their funds to invest in property. 

I must admit, I was quite skeptical about the idea of saving money with others at first, fearing I might be “washed” as it is common in Nairobi. However, Mike told me that when they started, they were alive to some of the common problems that afflict chamas. 

To avoid this risk, they established strong bylaws including limiting their chama to only investments in real estate - members are not allowed to borrow from their savings under any circumstances. 

The chama is also registered as a limited liability company, with six members acting as directors. The money is kept in a company account where four members are signatories, they also carry out regular meetings to ensure accountability in how the funds are used. I was sold on this idea. 

Humble Beginnings

Mike and eight of his friends started the investment club right after campus in 2018. Their goal was to save enough money to buy and develop prime property which would otherwise take them a long time as individuals. 

Initially, they each contributed Ksh1,000 each per month. Their contributions came to about Ksh9,000 every month and Ksh108,000 per year. 

However, the plots they had their eye on cost at least Ksh 500,000. To speed up the process of reaching their goals, and considering they had started to grow their respective incomes, they decided to increase their monthly contributions to Ksh3,000 per person. From January 2019, their monthly contributions rose to Ksh27,000 per month and Ksh324,000 per year. 

By December 2019, they had saved Ksh432,000 when they found a prime piece of land being sold in Ruai for Ksh500,000. They agreed to raise an extra Ksh5,000 each but there was still a deficit. It was around this time that Mike mentioned that they were open to taking in one last member to raise the deficit. 

First Plot in Ruai

They had so far raised Ksh48,000 per person. However, to join, they needed the new member to match the Ksh48,000 and pay 15% goodwill - in appreciation of the work that the founding members had done, including catering for the company’s registration process. 

I paid Ksh55,200 and became a bonafide member. After I made the deposit, the chama’s contributions now stood at Ksh487,200 - leaving us with a deficit of only Ksh12,800. We topped up Ksh1,500 each and bought our first eighth-acre piece of land in Nairobi. 

To celebrate, we invited our family members and a few friends for a small party where we enjoyed nyama choma and assorted drinks. In January 2020, we started the savings journey once again. Our goal was to acquire another plot next to the one we already owned, with long-term plans of constructing rental apartments. 

The area was widely advertised and held great promise, with the potential for institutions to be built nearby, accessible water, and even the prospect of electricity. In short, it was a prime investment opportunity. 

Eyeing a Second Plot 

Remarkably,  even after the pandemic hit us in March 2020, we all managed to make our contributions. I guess the motivation of not letting others down or being part of something bigger than yourself kept us going. 

The good news was that the value of our land was increasing by the day. Ruai is strategically located and continues to attract homeowners and tenants looking for peace outside the city, good infrastructure, and other amenities. The construction of the superhighway and the Eastern bypass opened up the area to investors. 

By the end of May 2021, we had hit our target of raising Ksh500,000 but the cost of land had gone up slightly, taking us more time to find the right property. 

Eventually, we managed to buy the second plot. Unlike the first one, the second plot cost us Ksh600,000. While we had hoped to buy the plot in May 2021, we only managed to make the purchase in October as some members were not able to raise the boost necessitated by the increase in prices. 

After clearing our account, members continued with the monthly contributions. Despite the significant withdrawal while buying the second plot, we closed 2021 with over Ksh100,000. By 2022, normalcy had largely resumed and we decided to boost our savings to fast-track the process of buying our third piece of land. 

Developing the Plot in Ruai

We agreed to each raise an extra Ksh10,000 one-off deposit to be made in the first half of the year (Before June) and another one-off Ksh5,000 for the second half of the year. By the end of 2022, we had Ksh620,000 but the prices of land in the area we preferred had gone up. 

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Rather than wait, we opted to buy the third piece of property in Kibiku, Ngong, where the land was slightly cheaper and the prospects of growth were higher on account of a new road that had been built to connect Ngong to Suswa Town. 

We had resolved that the next round of contributions would go to developing one of the properties we had purchased. Thus, rather than raise Ksh500,000 we set out on a target of Ksh1.5 million which we believed was enough to build a small 2-bedroomed house on the first piece of land we bought in Ruai. 

In April 2023, while reviewing the performance in the first quarter, one of our members, Newton, mentioned that he had been keeping his personal savings in a digital savings account rather than in a current account. 

Newton added that he had received his first payout on his personal savings, he encouraged us to read more about digital savings accounts for our personal development. 

Beyond collectively saving, the investment club is also a platform for members to enlighten each other on personal growth including savings and investments. 

The Big Move

Our next meeting happened in mid-May while Netwon once again followed up on the earlier push for members to have a digital savings account. 

“I read about it and I think beyond that, we could grow our contributions there. We contribute Ksh30,000 every month which is lying idle in a current account, why don't we also open one in the company name since we know we are not withdrawing the money anytime soon,” Mike observed. 

Members agreed that it made sense to open one. It was offering a 9% annual interest rate. 

It was also flexible since we could withdraw in the event of an emergency - with no penalties, which was unlikely in our case, or after hitting our target. We did not need to make major changes in collecting the contributions, members could directly deposit their monthly contributions and share the message in the WhatsApp group. 

The future looks bright

By the end of May 2023, we had saved a total of Ksh150,000 which we withdrew and deposited into the new digital savings Account. Our contributions have continued.

Our plan is to continue saving and contributing our special boost to fasten the process of raising the Ksh1.5 million. Our math shows that after 2 years, we will have earned close to Ksh100,000 in interest - money that we would otherwise have lost if we were using the current account. 

Along with Mike and two other club members, I began saving additional funds in my personal savings account. 

Since June, I have consistently saved Ksh10,000 per month, with plans to open a salon business for my wife next year. By the end of 2024, I will have saved Ksh240,000, and with the interest earned, I'll reach my goal of Ksh250,000, with some extra to spare.