Hi am New here signing in from Lilongwe, Malawi

[Siku NKHOMA]

Hi i bumbed into the Fastlane when i was looking for reviews of The Profit and immediately joined as i am currently binge watching all the past episodes of the Profit. Am an entrepreneur and i already feel welcome here. My line of business is real estate development and we are currently developing neighbouhoods (taking raw land and turning into residential plots). Its going well and am hoping to learn so much more here.....

 

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[KrisB]

Welcome, I hope you find much wisdom here that you can use.

 

[Young-Gun]

Welcome @Siku NKHOMA !

I'm in completely different businesses (local tutoring company and a SaaS startup)
but I've always loved real estate.
In another life I'm an architect... working with buildings and land is just SO cool to me.

You should tell us more! Maybe if you "brainstorm" your ideas out loud, the forum will have some ideas to help you get ahead!

I for one am VERY interested in entrepreneurship in countries outside the typical USA / EU culture.
And, would love to know more about you!

How did you get started in your business?
What are the biggest insights you've had lately?
What are you goals for 2017?

 

[Siku NKHOMA]

Thanks so much for your kind welcome and kind words, i have such a long story but since you asked let me share with you here.

I am an urban planner by profession and during my college training 2 incidences happened that shaped the course of my life. In 1997, during my 1st year at the University of Zimbabwe i met my future husband who was from Malawi, and in 1999 i got linked to an organisation (Dialogue on Shelter) who then became the focus of my dissertation and also gave me an internship before moving to Malawi. I left Zimbabwe for Malawi (marriage) in 2002 and in 2003 i started an organisation (Centre for Community Organisation and Development) that was shaped in the same line as Dialogue. We did amazing things, mobilised thousands of women across the country into savings schemes, trained them in small business management, helped them build almost a thousand low cost houses, connected over 2,500 families in low income communities to water mains and sanitation and many other achievements. It became clear by 2012 that even though with my insights we were making a difference, it was only reaching the few we personally could influence and yet the problems were spiralling.

In 2013, we formed a Social Enterprise that intended to form companies that pushes products to the market. We had support of the same donors who were supporting us at the NGO, we quickly formed several companies to focus on construction of houses, assembling land, management of property, brick manufacturing, green energy etc. within 2 years (2015) we have 300 low income rental units occupied in 2 cities, the brick factory had begun production. It was going all so well, until it all crumbled just like that. The Donors changed, changed the terms of projects and we definately did not have a proper enterprise DNA, we were basically a funded project implementation entity. We didn't survive because our products were on demand, but because donor funds were there. In 2016 we restructured, and we now have set the foundation right.

Since March 2016 we are now in the market where our focus is consolidating land and subdividing it into plots and putting on the market. With the high urbanisation rates the country and especially the city of Lilongwe has its such an opportunity because people want to live in planned neighbourhoods and yet the city has no plots so now its left to people like us to consolidate the land, plan and subdivide and put back on the market.

I would say we are doing very well, the investment we put in n September 2016 has quadrupled and we are certain that if we were to invest more in the land consolidation we could do so much more. I cant upload our pitch here as it is a big file, but i will give share summary of pitch below.

 

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[Siku NKHOMA]

Here is the brief to give a bit of insights and our 2017 expectations.


The Problem
Malawi is currently experiencing an acute housing shortage, with the middle class and the low income groups severely hit by this challenge. In 2010, Malawi had a housing shortage of 210,000 houses (Malawi Urban Shelter Profile) and growing given the high rates of urbanisation the country is experiencing. This shortage of housing has driven up the rentals, making it almost impossible for most urban families to make ends meet. This is leading to most households pushing to owning a plot and incrementally construct their home. Mortgage finance is not an option due to the very high interest rates (currently base rates are at 37% per annum) and thus very few people can afford to purchase a complete house. With the high rentals driven by the shortage of housing on the market, most people are finding the option of purchasing a plot and slowly constructing to be the most plausible option. Unfortunately ,the Government Agencies (Malawi Housing Corporation and the City Councils) have not been able to provide housing units for the majority hence incremental construction by all income groups. Lilaga Ltd is providing plots for households to start their home ownership journey. Lilaga consolidates land, plans, services and sells the plots on the market.

Target audience has this frustration.
With the Cities not providing adequate housing the majority are struggling to access housing and have since resorted to constructing for themselves. But even then, they still struggle to find a plot that is located in a well planned area. Unfortunately the prices of the available plots keep going up and the demand keeps rising too.

Target Audience wants to solve this problem
They want a secure process for them to purchase a plot in a neighbourhood that is properly planned and they get to raise their families. Since they can not afford to purchase a house, they can only purchase a plot for them to build incrementally.

Existing solutions are broken or nonexistent.
With the high rates of urbanisation, over 75% of the urban population lives informally in Malawi. The only option available is an informal system that is not conducive for most people. The Government organs tasked with planning and ensuring housing is provided for all have failed to cope and cant cope with the demand. This has created an opportunity for actors like Lilaga.

Why Lilaga
Lilaga has the capacity to assemble land at the pace and scale that ensures neighbourhoods can be developed. Given Lilaga's extensive Urban background and know-how, it is geared to be the leading Real Estate Developer in Malawi with the capacity to take advantage of the Real estate opportunities Malawi has to offer. Through Lilaga's fully fledged development team (Civil Engineers, Planners, Land Surveyors and Architects) the whole development process is covered from land acquisition to plot development and handing over for Marketing. The sales and marketing strategies ensures that the plots are offloaded as quickly as possible. Lilaga is the trusted brand for delivery of plots in Malawi.

The Solution
By ensuring plots are available at the pace and scale that makes them accessible, people can now access plots that have been previously denied to them. Lilaga has identified Acacia as the growth neighbourhood for the city, that will have in total 4 to 5,000 plots once complete. These plots range from the 15mx30m that are on the market for $2,400 to 20mx30m ($3,200) and some slightly bigger. These plots are gradually realsed on the market and target the growing middle class. By creating this neighbourhood, Lilaga provides an option to people who have been left to live informally. The high demand for plots is also creating a security challenge as people are losing their money through fraudsters, having Lilaga a company sell the plots directly to the public has undercut that challenge. We expect the services of Lilaga to grow to other cities as there is equally a big demand for the plots.

Market Validation & Traction
Lilaga begun selling plots in April 2016 and over 400 plots have been sold by end of January 2017

Key Metric: 400 plots sold since April 2016
Key Metric: $935,000 in Gross Revenues
Key Metric: 70% Profit Margins
Revenue Goals 2017: $2,000,000
Plots to be sold in 2017: 625

The Ask
The success of Lilaga depends on a creation of a land buffer to plan and ensure there is a pipeline of plots. Without pre buying the land in advance, its impossible to create the neighbourhood that makes purchasing a Lilaga plot appealing. Lilaga purchases the land from the current community members who have been caught up by urban sprawl. Thus with high rates of urbanisation, a Land Buffer is the only way to project into the future and ensure the benefits of an established neighbourhood are realised.

Lilaga needs $2,100,000 to facilitate the creation of a 600 acre buffer, that will create 3,000 plots to be sold within a year (after commencement of sales) and payments over 24 months. All the allied costs besides purchasing of Land will be anchored by Lilaga and this amounts to ($3,416,667), representing 62% and Investors, investment of $2,100,000, representing 38%, making the total project cost at $5,516,667. This investment ratio will be the basis of profit sharing. From the estimates this give Investors an expected return of almost 100%.

The net Profit is expected at US$5,974,751 thus US$2,270,405 for the investors.

Funding Goals
These funds are critical for Lilaga to create a buffer. These funds will go straight into land assemble a process that will take 3 months to allow for planning and design of the neighbourhood to take place. Lilaga will cover all the other allied costs through the revenues its currently generates off the plots it has on the market. Given that the land has to be assembled in advance before that area is "attractive" Lilaga currently does not have the upfront resources for this purchase.

Cost of land / acre = $3,500
N# of plots / Acre = 5
Cost of land / = $700
Plot Development costs / Plot = $1,138.89
Plot Retail Price / Plot = $3,200
Cost of sales = 30%

Investment Brief
Capital Needed: US$2,100,000
Total Project Cost: US$5,516,667
Lilaga Contribution: US$3,416,667
Hold Years: 3
Annual Return: 30%+
Offering Location: Lilongwe,
Category: Malawi Real Estate
Proposition: Value Added

Welcome @Siku NKHOMA !

I'm in completely different businesses (local tutoring company and a SaaS startup)
but I've always loved real estate.
In another life I'm an architect... working with buildings and land is just SO cool to me.

You should tell us more! Maybe if you "brainstorm" your ideas out loud, the forum will have some ideas to help you get ahead!

I for one am VERY interested in entrepreneurship in countries outside the typical USA / EU culture.
And, would love to know more about you!

How did you get started in your business?
What are the biggest insights you've had lately?
What are you goals for 2017?

 

[Choate]

Hello, welcome to the forum. Your introduction is very inspirational!

We did amazing things, mobilised thousands of women across the country into savings schemes, trained them in small business management, helped them build almost a thousand low cost houses, connected over 2,500 families in low income communities to water mains and sanitation and many other achievements. It became clear by 2012 that even though with my insights we were making a difference, it was only reaching the few we personally could influence and yet the problems were spiralling.

I would say we are doing very well, the investment we put in n September 2016 has quadrupled and we are certain that if we were to invest more in the land consolidation we could do so much more. I cant upload our pitch here as it is a big file, but i will give share summary of pitch below.

Hopefully everyone can see the correlation between how Siku NKHOMA is people focused, and problem focused, and her success thus far. It is evident through reading your post how passionate you are about solving the housing shortage problem for the people of Malawi. It is awesome how you started local, found success among those you could personally reach, and are now growing to help more people in need throughout your country.

 

[Siku NKHOMA]

Hello, welcome to the forum. Your introduction is very inspirational!





Hopefully everyone can see the correlation between how Siku NKHOMA is people focused, and problem focused, and her success thus far. It is evident through reading your post how passionate you are about solving the housing shortage problem for the people of Malawi. It is awesome how you started local, found success among those you could personally reach, and are now growing to help more people in need throughout your country.

Thanks so much Choate, for summing it up so well,

 

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