Hypothetical Situation:  you have an idle 1-acre piece of land that you intend to make money off. You’re paying land rates and the value of the land is increasing slowly, but it’s not translating to any cash flow.

With that piece of land, would you take up agriculture or put up a building for rental purposes?

Agriculture

This rides on the advantage that there shall always be demand, either local or international, for food. After all everyone has to eat, don't they? You can opt to grow crops, keep livestock or a combination of both.  A few you might want to consider include;

• Maize – It is a staple food in Kenya and is a core ingredient for most flours both locally and internationally. In Kenya, the planting and harvesting process (including use of fertilizers, harrowing, weeding and plough) will see you pay approximately KES 15,000 for the entire acre. If well tended to for the period of 6 months, the acre of land to will produce about 35 bags, each weighing 90Kg. Given the fluctuating prices from KES 1,000 – 4,000 you stand to make KES 35,000 – 140,000. This product can also be sold in the international market where it currently retails for over KES 28,000 per ton. bringing your total to KES 98,000.
• Rabbits – Associations such as the Rabbit Breeders Association of Kenya have been working to meet the demand for rabbit meat because of the shortage in supply. Buying a rabbit will see you part with approximately KES 2000. Rearing them requires you to buy pellets and feed them vegetables as appropriate making the costs KES 3500 give or take a few. Profits in this case are earned from sale of rabbit meat which currently retails between KES 300 – 400 per Kilogram. The fur is also bought at the same price range making the total for a 6Kg rabbit KES 2,800. This means that a litter of 10 will earn you KES 28,000. An acre of rabbits can therefore easily earn you….a lot.

Real Estate

One can alternatively use the land to put up residential property or commercial property. The former refers to apartments while the latter rental space for businesses. Among the 1^st steps is acquiring a suitable design which will cost you approximately KES 200,000. Such ventures will also require approval by the relevant council and survey of land where applicable. The construction of a 5-storey building on half an acre will see you part with millions (around KES 75 Million) with the larger chunks going to the work beyond your skeleton structure. The cost of this structure however, highly depends on that of cement, labor and transport. The rent charged will also depend on the location of your piece of land and can range from KES 25,000 – 35,000. Assuming each floor has 10 rooms, you’re looking at a total income of between KES 1.3 Million and KES 1.8 Million per month. You wouldn't even make more as an MP.

Land appreciation is common to both options and land rates will still apply annually. What the numbers above tell us is that the decision to build or grow crops depends on your cash needs. Real Estate tends to appreciate the value of land faster than agriculture but should be pursued if you have a long-term goal. Construction takes a long time but the returns are usually worth it. Agriculture can be deemed more liquid as products can be sold faster and changed at will. In this case, it is better suited for short to medium term goals because of its high dependency on market prices.