Becoming a Landlord in Nairobi Without Owning Land: Lease Model vs Joint Venture

Real estate remains one of the most lucrative avenues for building wealth in Kenya. Rental income is particularly appealing because it provides a steady stream of passive income. 

However, the rising cost of land and construction in Nairobi often puts property ownership out of reach for many aspiring investors. Fortunately, innovative models allow Kenyans to become landlords without outright owning land. 

Previously, we have covered the lease-to-build model and the joint venture (JV) model. This week, we compare the two, the differences, advantages, and risks of each, which can help you decide which method best suits your financial goals and risk appetite.

Also Read: Becoming a Landlord in Nairobi Without Owning Land: Leasing to Build Rentals 

The Lease-to-Build Model

The lease-to-build model is a simple concept where you lease land for a long-term period, usually 15–30 years, from a landowner, construct rental properties, and collect income while paying a lease fee. 

During the lease, you own the structures but not the land. Depending on your agreement, ownership of the buildings may revert to the landowner at the end of the lease, or you may renew the lease to continue generating income.

An investor can lease 1/8 acre in Kikuyu for 20 years at Ksh30,000 per month and build 10 bedsitter units for working professionals and students. Construction with modest finishes costs Ksh5 million, plus Ksh400,000 for approvals and contingencies, bringing the total development to Ksh5.4 million. 

Renting each unit at Ksh10,000 generates Ksh1.2 million annually. After deducting Ksh360,000 lease fees and Ksh120,000 for maintenance, the net income is Ksh720,000 per year. The payback period is seven years, with potential profits of Ksh9 million over 20 years or Ksh16 million over 30 years.

Also Read: Becoming a Landlord in Nairobi Without Owning Land: Joint Venture

The Joint Venture Model

In contrast, the joint venture model is a partnership between a landowner and a developer (or investor). Here, one party contributes the land while the other brings capital, expertise, or project management skills. Profits—and sometimes losses—are shared according to a pre-agreed ratio, and both parties typically maintain ownership of the developed property.

For example, Maina may own a piece of land worth Ksh50 million and Juma, a developer, contributes Ksh50 million to construct apartments. Together, they form a Special Purpose Vehicle (SPV), a company jointly owned by both parties.

Maina transfers the land to the SPV, while Juma deposits his capital into the company's account. Once the apartments are complete and rented out, profits are distributed according to the agreement—here, 50-50.

In some cases, the developer may later buy out the landowner’s share to gain full ownership, creating additional opportunities for wealth accumulation.

Read Also: 9 Ways for Owning a Home In Kenya

Key Comparisons: Lease vs. Joint Venture

Land Ownership: In the lease-to-build model, the land remains with the owner while you own the structures only for the duration of the lease. In contrast, a joint venture allows both the landowner and developer to retain ownership of the completed property, giving each party a long-term stake.

Upfront Capital: Lease projects require moderate capital, mostly covering construction and lease fees. Joint ventures, however, need higher capital because the investor contributes construction funds while the landowner contributes land value, making it suitable for larger-scale developments.

Profit Sharing: In the lease model, all net rental income (after paying the lease fee) goes to the lessee. In a joint venture, profits are distributed according to an agreed ratio, such as 50-50, reflecting each partner’s contribution.

Risk Exposure: Lease investors bear the risk mainly from construction costs and lease terms. Joint venture partners share financial, operational, and market risks, which can include construction delays, vacancies, or shifts in rental demand.

Flexibility and Control: The lease model is simpler to execute and gives the investor full control over decisions. Joint ventures are more complex, requiring clear legal agreements and collaboration, but they allow both partners to benefit from long-term property ownership.

Which Model Suits Whom?

Lease-to-build is ideal for investors who:

• Have moderate capital but want a predictable rental income.
• Are comfortable with a time-limited project horizon.
• Prefer less complexity and sole decision-making authority.

Joint venture suits investors who:

• Have higher capital or access to financing.
• Want to undertake larger projects in prime or high-demand areas.
• Are willing to share decision-making and risks for potentially higher long-term returns.

Read Also: Homeownership Option 1: Buying a Ready House

Wrapping Up

Both the lease and joint venture models provide practical alternatives for Kenyans to enter the real estate market without owning land outright. 

While the lease model offers lower upfront capital requirements and predictable rental income, the joint venture model allows both landowners and developers to pool resources, share risks, and retain long-term ownership of high-value properties.

Choosing between the two depends on your capital availability, risk tolerance, project size, and long-term goals. Whether you aim for smaller bedsitter units in Kinoo or multi-unit apartments in Ruaka, understanding these models equips you to become a landlord and generate meaningful rental income, even without owning the land from the outset.