How to find units that work for rental arbitrage in Nairobi

Operators usually describe this as a search for a property. It is really a search for a landlord. Nairobi has no shortage of apartments available to let in the areas where short lets work, and almost none of those listings will end in a deal, because the person on the other end of the phone has neither the authority nor the interest to let you re-let the unit. Sorting for that, early, is the whole skill.

Where Nairobi units are actually listed

In rough order of how useful they are to an operator rather than to a tenant.

• BuyRentKenya and Property24. The largest inventory and the most agent-heavy. Useful for building a map of what rents where, less useful for finding a decision maker.
• Jiji and Facebook letting groups. Messier, and a much higher proportion of actual owners posting for themselves. This is where the workable deals disproportionately are.
• Caretakers and watchmen in buildings you already like. The most underrated source in Nairobi by a distance. They know which units are about to fall vacant before any listing appears, they know which owners live abroad, and they know which buildings already have short lets running.
• Building management committees. Worth approaching directly in blocks where short letting is already tolerated, because the hardest constraint is usually the building rather than the owner.
• Your own network. Diaspora owners with a unit sitting empty are the single best counterparty available, and they are almost never on a portal.

Why one owner-listed unit beats ten agent-listed ones

This is the filter that matters most and it is the one beginners ignore while chasing rent figures.

An agent is paid a commission for placing a tenant on a standard lease. Asking their principal for permission to sublet creates work, delay and the risk of losing the instruction altogether, so most simply say no, and many say no without ever putting the question to the owner. You will never know which happened. An owner, by contrast, can weigh a genuinely better offer and decide on the spot.

Signals that you are talking to an owner rather than an agent: one listing rather than forty from the same phone number, a description written in the first person about “my apartment”, a willingness to discuss lease terms rather than reciting them, and a phone number that does not appear against half the units in the neighbourhood.

You are not looking for the cheapest rent. You are looking for the owner who is empowered to say yes, and who has a reason to.

Look for the unit that has a problem

An owner whose unit let instantly has no reason to entertain an unusual proposal. An owner whose unit has sat empty for three months has a very good one. Vacancy is your negotiating position, and it is visible if you look for it.

1. Days on market. A listing that has been up for weeks, or has been relisted, is an owner losing money every month.
2. Price reductions. A rent that has come down once will come down again, or will move on terms instead.
3. Awkward units. Ground floor, no lift in a mid-rise, an odd layout, a studio in a building of three-beds. Harder to let to a tenant, frequently fine for a guest who is staying nine nights.
4. Furnished units struggling to let. The furniture is already there, which removes the largest single line of your startup cost. Why the unit keeps going vacant is worth reading about in our piece on persistent vacancy.

The filters that rule a unit out before you view

Most of these cannot be fixed with money, which is why they are worth checking on the phone rather than after a viewing.

• Does the building permit short lets? Ask before anything else. Many Nairobi blocks have a committee resolution against them, and a resolution beats your lease. This is the single most common reason an operation closes after launch.
• Water. Borehole or tank capacity, and how often the supply actually fails. Guests forgive a great deal and do not forgive no water.
• Power and backup. Whether the block has a generator or inverter, and whether it covers your unit or only the common areas.
• Service charge. Who pays it, how much it is, and whether it rises. It is a real cost against your margin and it is frequently omitted from beginner spreadsheets.
• Access and parking. Whether guests can be admitted at night without an argument at the gate, and whether they get a parking space.
• Internet. Which providers actually serve the building. This is not negotiable for the corporate and remote-working guest who pays the best rates.

Which Nairobi areas to look in

Short-let demand in Nairobi is concentrated rather than spread. The areas that work are the ones with a reason for someone to stay a week: proximity to offices, embassies, hospitals or the international schools. Westlands, Kilimani, Riverside, Kileleshwa and Gigiri carry most of the demand, for different reasons and at different rates.

The trap is taking a cheap unit in an area with no short-let demand because the arbitrage spread looks wide on paper. A low rent against low occupancy is a worse business than a high rent against high occupancy, and the spread means nothing without the nights. Yield by area is covered in the highest yielding Nairobi short-let suburbs, and realistic occupancy in our occupancy piece.

What to walk away from

• A landlord who says yes verbally and will not put consent in writing. Verbal consent is worth nothing when the building complains.
• A lease shorter than about two years. You will not recover furnishing costs and you will be renegotiating from a position of having already invested.
• Any unit where the numbers only work above roughly 70 percent occupancy. That is not a plan, it is a hope.
• A building that already has several struggling short lets in it. The demand is being shared and you would be the newest listing with no reviews.

Where we come in

We manage units on behalf of rent-to-rent operators who would rather source and structure deals than answer guests at midnight. You hold the lease and the margin, we run the rota, under our arbitrage management service. We also look at Nairobi short-let numbers every week, so a second opinion on a deal costs you nothing.

Related reading: running an Airbnb business without owning property, rental arbitrage in Nairobi and the honest numbers and getting past the building committee.

Finding the unit is the first half. If you would rather not also run the calendar, the guests and the changeovers, we manage units for operators on the same terms as owner-occupied stock.