{UAH} RENTALS VERSUS TREASURY BONDS*

MY MENTOR ROBBY MUHUMUZA TAUGHT ME THIS*

*RENTALS VERSUS TREASURY BONDS*

Let's take 300m/= because that is in the range of an amount a diaspora Ugandan may seek to *INVEST*. One way to invest 300m/= is rentals. Another way is treasury bonds.

*First: Rentals.*

Let's buy a house worth 300m/= in Kampala. Looking at market trends that house is most likely to be located outside the city centre, or even the outskirts. It is likely to be in Mukono or Gayaza.

Those in the real estate industry fully understand and appreciate the word location. Rupaleria says location location location.

Such a house, therefore, will most likely fetch 500,000/= to 600,000/= in rent per month. If you are chanced to get it in Najeera or Ntinda or Kireka you may collect 700,000/= to 900,000/= in rental income per month. 

From this income we have to maintain the house, pay costs of running after tenants, pay brokerage services to replace tenants who may even have disappeared with our money unpaid, pay government rental tax, pay ground rates before retaining a meagre profit.

Let's consider that total costs will draw away 40%, leaving you as landlord with balance of only Ush 420,000/= every month.

For those who may want to follow the averaging calculation in thousands... (500 + 600 + 700 + 800 + 900) out of 5 sampled =700k/=. Less costs of 40% gives you a net of 700 x 60% = 420k/=. 

Therefore, your take home from a 300m/= investment is 420,000/= per month. *Thus you need 60 years to just recover your investment before counting real profits.*

The key word is *real* profits.

👇🏾👇🏾👇🏾

*Second: Treasury Bonds*

Take 300m/= and lend it to government at 15% per year for 15 years. You do this through your commercial bank that is authorised by Bank of Uganda.

You will earn 45m/= in interest every year without contribute even the 20% as withholding tax to government programs through URA. You retain the entire 45m/= every year.

That earning is assuredly paid to you through your commercial bank account every six months as 22.5m/=, equivalent to 3. 75m/= clean income per month for the next 15 years that you lent to government. 

You don't have to maintain the investment. You don't have to pay brokers. You don't have to suffer pressure with asking tenants (government) to pay. The tenant will never run away with your money.

You can at this stage use the 3. 75m/= to slowly assuredly confidently diversify into other investments, or even into rentals if you choose to. 

Rentals are good because they mostly survive economic turn around. Treasury bonds are good in that you live a better lifestyle. 

My friend in the the diaspora, go for treasury bonds. 

My two cents. 

Kaija Patrick

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"When a man is stung by a bee, he doesn't set off to destroy all beehives"

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