Funding Ikirunga Cabins

A discussion document: Gift, Interest free loan, Interest paid loan. An outright gift will generate a substantial income for the village. Ownership will be vested in The Shyira Foundation which will then use the resulting income to set up projects and pay wages.

Working on the basis of  cabins costing £30k each and wholly owned by a new Shyira Foundation after 5 years, in each scenario.

Once the cabins are up and running after, say 2 years, we would hope they would each generate £7.5k to £15k in a 6 month season, letting at 3 night minimum at £150/night, GROSS income less rental costs. This is only a rough estimate of income and costs.

FUNDING @ £15.000  rental income per annum:

1.     Outright gift of cabin,  5 year rental: Gross income £75,000                                                    

2.    Interest free loan for 5 years, repaid from rental income in 2 years @ £15,000pa =  NET income £45,000

3.    Loan £30k at, say, 5% interest, plus capital repaid from rent over 5 years resulting in interest charge £7500 and repay over 5 years at £6000/year. Total finance cost £37,500, total rental income: £75,000                                                             NET income £37,500

…..but excellent income thereafter because Shyira Foundation will own cabin

OR  assume £10,000 rental income per annum:

1.     Outright gift of cabin,  5 years rental   GROSS income   £50,000

2.    Interest free loan for 5 years, repaid from rental income in 3 years @£10,000pa =                                            NET income  £20,000

3.    Loan £30k at, say 5% interest plus capital repaid from rent over   5 years  results in interest charge £7500 and repay over 5 years at £6000pa. Total finance cost £37,500, total rental income: £50,000                                                                NET income £12,500

……..But excellent income thereafter because Shyira Foundation will own cabin

OR assume £7,500  rental income per annum:

1.     Outright gift of cabin,  5 years rental    GROSS income  £37,500

2.    Interest free loan for 5 years, repaid from rental income in 4 years @ £7500pa                                                 NET income  £7,500

3.    Loan £30k at, say 5% interest, plus capital repaid from rent over 5 years results in interest charge £7,500, and repay over 5 years at £6k pa. Total finance cost £37,500, total rental income: £37,500                                                                  NET income: £0

…………but good income thereafter because Shyira Foundation will own cabin.