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Real Estate Investment strategy- Advice Needed
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Seles83
#21 Posted : Thursday, August 30, 2012 6:24:10 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Kausha wrote:
You should have bought the FXD 1/2012/10 in July at 14% yield or consolidated bond at 13.25%. In the first case you get 1,050,000 per annum before taxes which works out to 87,500 for the next 5 years. The money is religously paid into your account by CBK every 6 months. in 2-3 years time you have about 3m to buy a plot and start constructing slowly. In 10 years you have you 7.5m intact and you block of flats. You haven't risked much have you!


The only problem i have with Bond Market is that the other player is government?? Government has financial instruments that gives it an edge over investors anytime...

The Dollar was trading @~77 at 2010, highest @105 in 2011 and now 83-84 Range...
The CBR was at 11% in 2010 and now 18%...

Both the above situation makes an investor like me feel very vulnerable..that's why i prefer real estate..and commodity market (gold and silver)..one for capital growth and another to protect my wealth..

Stock market to me is like a casino..the house seems to win every time..Company fundamentals doesn't hold ground anymore..its just tracks smart money..I am not a connected guy..just a regular dude.who goes work and return home to his family...


More monies, more problems...
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  | | Edit by user: Thursday, August 30, 2012 6:25 AM | Reason: Not specified
chiaroscuro
#22 Posted : Thursday, August 30, 2012 8:28:59 AM
Rank: Veteran

Joined: 2/2/2012
Posts: 1,134
Location: Nairobi
1] You cannot compare bonds and t-bills to real estate. The former have no capital appreciation!

2] Rental house bought on mortgage make NO financial sense

3] Rental houses bought fully built for cash make LITTLE financial sense

4] Rental houses self-built with mortgage make MORE financial sense

5] Rental houses self-built with own cash make A LOT of financial sense
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guru267
#23 Posted : Thursday, August 30, 2012 8:50:53 AM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
chiaroscuro wrote:
5] Rental houses self-built with own cash make A LOT of financial sense


This makes VERY LITTLE financial sense when compared with the stock market!

10million earning 40-60k rent per month can never beat that 10million earning 100-120k dividend per month.. smile

Seles83 wrote:
Stock market to me is like a casino..the house seems to win every time..


I dont get it... How does an investor lose money in the stock market If they never sell what they buy??

If people had the same mentality about stocks as they do about real estate the NSE would be a much better place!
Mark 12:29
Deuteronomy 4:16
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Seles83
#24 Posted : Thursday, August 30, 2012 8:57:49 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
chiaroscuro wrote:
1] You cannot compare bonds and t-bills to real estate. The former have no capital appreciation!

2] Rental house bought on mortgage make NO financial sense

3] Rental houses bought fully built for cash make LITTLE financial sense

4] Rental houses self-built with mortgage make MORE financial sense

5] Rental houses self-built with own cash make A LOT of financial sense


@chiaroscuro

You nailed it...I just wish we had more pple like you in Wazua..

Thanks, that really awesome..
More monies, more problems...
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chiaroscuro
#25 Posted : Thursday, August 30, 2012 9:32:17 AM
Rank: Veteran

Joined: 2/2/2012
Posts: 1,134
Location: Nairobi
guru267 wrote:
chiaroscuro wrote:
5] Rental houses self-built with own cash make A LOT of financial sense


This makes VERY LITTLE financial sense when compared with the stock market!

10million earning 40-60k rent per month can never beat that 10million earning 100-120k dividend per month.. smile




@guru267; the issue is not comparing real estate with other investments; that's why I warned in my point number 1].

The issue is the best way to go about real estate investment.

Don't be like the guy I asked which is the cheapest airline to Mombasa and he advised me not to go to Mombasa [ati kuna vita]! My reason for going there far outweighs the skirmishes...

In the same breath, the reasons for @seles wanting to go real estate far outweigh the potentially higher returns from stocks.
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Kausha
#26 Posted : Thursday, August 30, 2012 3:21:39 PM
Rank: Member

Joined: 2/8/2007
Posts: 808
Why do I get the feeling people are just murking around here for to elicit debate and not in need of advice...mmhh..@sel....what do you think!!
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Kim2012
#27 Posted : Thursday, August 30, 2012 4:49:55 PM
Rank: Hello

Joined: 4/2/2012
Posts: 2
@ Seles83 :-
Find more real estate options in the link below, thats in a location with great potential for capital gains in the near future:-
http://www.canarysprings.com/

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  | | Edit by user: Thursday, August 30, 2012 4:53 PM | Reason: Not specified
Vj
#28 Posted : Thursday, August 30, 2012 11:43:41 PM
Rank: New-farer

Joined: 9/6/2010
Posts: 97
Location: nairobi, kenya
Its actually been a while since I came to wazua!

Anyway i've been in the property business from my university days, and one thing I profited immensely from is levereging. But i've seen people going bankrupt from the same, the key is having a positive cash flow and back up strategy for worst case scenario.

From your initial post i see you have around 7.5 m in cash. My advice to you is to go for the sucasa apartment and the 4 ways villa.

With this option you'll need a loan of around 10 M, with monthly repayments of around 180k for a 10 yr loan. your rent should be able to cover half your repayment, and judging from location as OZ i assume its australia, sending back around 1k AUD shouldn't be a daunting task.

As for suraya, they are okay...you'll get what you pay for.

Real estate always feels expensive when you buy it, but when you look back 10 years later its always a sound decision.
Before you can be be old and wise, you must first be young and stupid.
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itz
#29 Posted : Friday, August 31, 2012 12:57:43 AM
Rank: Member

Joined: 3/20/2009
Posts: 348
Vj wrote:
Its actually been a while since I came to wazua!

Anyway i've been in the property business from my university days, and one thing I profited immensely from is levereging. But i've seen people going bankrupt from the same, the key is having a positive cash flow and back up strategy for worst case scenario.

From your initial post i see you have around 7.5 m in cash. My advice to you is to go for the sucasa apartment and the 4 ways villa.

With this option you'll need a loan of around 10 M, with monthly repayments of around 180k for a 10 yr loan. your rent should be able to cover half your repayment, and judging from location as OZ i assume its australia, sending back around 1k AUD shouldn't be a daunting task.

As for suraya, they are okay...you'll get what you pay for.

Real estate always feels expensive when you buy it, but when you look back 10 years later its always a sound decision.



Quite interesting advice there from Vj.He started the post by telling you that leverage is good when you have positive cash flow(meaning your PITI) is covered by the rent.I totally agree with that and that is why you should not use leverage in the way he suggests.chances are you will blow up if interest rates are spiked to 25%+ and you dont have tenants for a few months or non payment.
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Seles83
#30 Posted : Friday, August 31, 2012 2:38:12 AM
Rank: Member

Joined: 11/9/2007
Posts: 288
Location: OZ
Vj wrote:
Its actually been a while since I came to wazua!

Anyway i've been in the property business from my university days, and one thing I profited immensely from is levereging. But i've seen people going bankrupt from the same, the key is having a positive cash flow and back up strategy for worst case scenario.

From your initial post i see you have around 7.5 m in cash. My advice to you is to go for the sucasa apartment and the 4 ways villa.

With this option you'll need a loan of around 10 M, with monthly repayments of around 180k for a 10 yr loan. your rent should be able to cover half your repayment, and judging from location as OZ i assume its australia, sending back around 1k AUD shouldn't be a daunting task.

As for suraya, they are okay...you'll get what you pay for.

Real estate always feels expensive when you buy it, but when you look back 10 years later its always a sound decision.



Thanks for the feedback about Suraya...Mortgage option is good..but kinda put me in stretched and more vulnerable....What i wanted to find out..is it really worth put myself in such a position? or are there better ways of doing it?

Lastly from one of your post, you move back from UK to Kenya to establish property development business..how is it working for you mate?
More monies, more problems...
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