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Is Taking a Mortgage the WORST Decision Ever??
Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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http://www.co-opbank.co....dex.php/loan-calculator
@maichblack, true, from the above mortgage calculator, 70k repayment is for a 5m house. 160K per month rent is for riverside, westlands apartments http://rustenburg.olx.co...e-nairobi-iid-606804446
These apartments cost at least kes 20m and above, attracting mortgage repayments of 270k monthly. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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a4architect.com wrote:@2012, true. am in the process of finalising a palacial residence in an upmarket nairobi neighbourhood which is financed through mortgage and the mortgage repayments = expected monthly rent.
How did you manage to get the mortgage since I imagine that you are self-employed? When I applied for a mortgage a while back I had to prove that i am employed(I believe most banks would require one to open an account with them where the salary would be channeled) In my case I easily paid off the balance with the benefits I got when I was laid off..phew..
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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a4architect.com wrote:@2012, true. am in the process of finalising a palacial residence in an upmarket nairobi neighbourhood which is financed through mortgage and the mortgage repayments = expected monthly rent.
How did you manage to get the mortgage since I imagine that you are self-employed? When I applied for a mortgage a while back I had to prove that i am employed(I believe most banks would require one to open an account with them where the salary would be channeled) In my case I easily paid off the balance with the benefits I got when I was laid off..phew..
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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@chaka, its for a client of mine . Am the project manager/architect. I built my own house using cash, with no bank loan a few years ago. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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whiteowl wrote:MaichBlack wrote:Note: This thread is not about Stocks vs Real Estate. It's about mortgages and whether they make any economic sense whatsoever. The question is, if you were to invest the money you spend on monthly payments, would you be better off?
"Invest" here is not limited to stocks!
Personally I invest in both stocks and real estate [undeveloped plots].
Biggest surprise from this thread: People imagining a 25% annual return is "mythical". What would one be doing in wazua if their target is 12%? You need wazua(ns) to make 12%? Eish!!! Its not mythical at all. I've made about 60% returns in my 1st year and posted it here Tell them @whiteowl. Hii si kelele! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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a4architect.com wrote:@chaka, its for a client of mine . Am the project manager/architect. I built my own house using cash, with no bank loan a few years ago. This is relatively easy for an Architect, hardly so for other professionals.
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Rank: Member Joined: 1/24/2013 Posts: 325
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MaichBlack wrote:@vin and @Lolest - See post# 318 in this thread. I got into into Co-op at 16/= levels. I am now approximately 40% and it's not even a year yet!I also got into CFC in the 40's level. Now that is currently worth 135 + 22.75 (CFC Stanbic + CFC Insurance Holdings) = 157.75/= This is approximately 250% returns to date.. Annualized, this would be in excess of 50% returns annually!!!Never mind I added some more at 33/= during the rights issue. MaichBlack, when I'm ready to plunge into the stock market I know who to contact..
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Rank: New-farer Joined: 1/3/2014 Posts: 32
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2007-2014= -15.89%
2007-2011= -22.68%
The returns have been good past 5 years because the market had bottomed out in 2009.
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Rank: New-farer Joined: 1/3/2014 Posts: 32
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Obi 1 Kanobi wrote:MaichBlack wrote:I know a number of people believe taking a mortgage is good decision because it enables you to own a house using money you 'don't have' and pay for it slowly. I beg to differ in the strongest terms.
Let's talk numbers.
If you take a mortgage for 10 million at a rate of 15% repayable in 20 years, you will be paying Kshs. 131,678.96/= every month:-
=PMT(15%/12,20*12,10000000,0,0)
Now, in 20 years, you will have paid
131,678.96 * 12 * 20 = Kshs. 31,602,949.98
Will the house be worth 31 million in 20 years? Maybe, Maybe not. But that is not the basis of my argument!
Now, assuming you decided to be investing the money [while paying rent] what would you end up with?
Let's assume you use the 31k to pay rent [you cantop it up if you want] and then be investing the 100k monthly at an annual return of 25% [which many wazuans can do with their eyes closed!] your investment will be worth a whooping Kshs. 671,911,370.91/= in 20 years!!!
=FV(25%/12,20*12,-100000,0,0)
Which guy would you rather be???
@Maich, your numbers are right, but its never that easy, based on the same arguement, a pension plan where one contributes 5K and the employer 5k should see employee retire with Sh 68 million at the end of 20 years but this never happens. even when the rate of return is reduced to 12% per annum, the amount to take home after 20 years should be approx 10 million, but which people get this. No my friend, investments are very complicated and more often than not the rate of return of taking a mortgage or investing in a financial instrument of any nature is the same. using NSE to argue is not going to fly, check the 20 share index, its currently below its all time peak, meaning on an overall basis, there has been no growth in wealth, yes people have made money but thats at the expense of others This was in the 1st page, and am quoting it again. You cant tell people blindly that its possibly to compound 25% for 10-20 years. Thats a fallacy. Make the money, but if you are to give advice, its not the way you gave it.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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knight026 wrote:You cant tell people blindly that its possibly to compound 25% for 10-20 years. Thats a fallacy. Make the money, but if you are to give advice, its not the way you gave it. Don't let the opinions of the average man sway you. Dream, and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand. Robert G. Allen
I always feel like it's two key ingredients when it comes to following your dreams, making something happen that the average person deems difficult. If you truly believe it, that's step one. Step two, is, you know, the hard work that goes along with it. - J. Cole
The average person puts only 25% of his energy and ability into his work. The world takes off its hat to those who put in more than 50% of their capacity, and stands on its head for those few and far between souls who devote 100%. - Andrew Carnegie
If I could explain it to the average person, I wouldn't have been worth the Nobel Prize. - Richard P. Feynman
Average. It was the worst, most disgusting word in the English language. Nothing meaningful or worthwhile ever came from that word. - Portia de RossiNever count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: New-farer Joined: 1/3/2014 Posts: 32
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Its quotes now, not numbers anymore. Enjoy the weekend. Next time, before you give an investment advise, here or anywhere, have solid numbers.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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@knight026 - People here make way more than 25% annually - consistently. I was actually scaling down to 25% to cater for bad years. We are talking about facts - what has been happening. Not what one is thinking. Search for threads and you will see. Better yet, don't. Just click on the links provided. But to be fair to you, you've only be a member for four months. You will learn. As you are busy [theoretically] explaining how it is not possible we are busy [practically] making money. Will it be the same for the next 20 years? No one knows. But that's not even an issue. I can get my money in and out of stocks as I please. And guess what, if I can make 50% or more in some years - like I and many other wazuans [actually] do at times - I might not even need the 20 years. But having said that, I totally respect your opinion. It is in diversity that we thrive. It would be sad if everyone agreed with what I said. I'd never learn new things or get an opportunity to look at things from a different angle. But it could be nice if our arguments were based on FACTS as opposed to emotions. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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knight026 wrote:Its quotes now, not numbers anymore. Enjoy the weekend. Next time, before you give an investment advise, here or anywhere, have solid numbers. You are some piece of work!!! What have I and the rest be giving you? Actual money made in the NSE. Not fantasy market. People who say what they are buying when they are buying it and what they are selling it when they are selling it and the figures are there for everyone to see. I given you the links. Do you ever click them? And I am not giving you any investment advice. I would have to tell you what to buy and when to buy. That's not for this thread. About the quotes, you actually need them! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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@maichblack, good quotes above, especially the below by Carnegie. The average person puts only 25% of his energy and ability into his work. The world takes off its hat to those who put in more than 50% of their capacity, and stands on its head for those few and far between souls who devote 100%. - Andrew Carnegie As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Member Joined: 5/31/2011 Posts: 250
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MaichBlack wrote:knight026 wrote:Its quotes now, not numbers anymore. Enjoy the weekend. Next time, before you give an investment advise, here or anywhere, have solid numbers. You are some piece of work!!! What have I and the rest be giving you? Actual money made in the NSE. Not fantasy market. People who say what they are buying when they are buying it and what they are selling it when they are selling it and the figures are there for everyone to see. I given you the links. Do you ever click them? And I am not giving you any investment advice. I would have to tell you what to buy and when to buy. That's not for this thread. About the quotes, you actually need them! @Maichblack Great contribution. To reiterate your point got into CIC early last year at 4 bought 100k and I exited the other day at 11.80 Now lets do the maths You lose money chasing women, but you never lose women chasing money - NAS
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Kenyan Oracle wrote:MaichBlack wrote:knight026 wrote:Its quotes now, not numbers anymore. Enjoy the weekend. Next time, before you give an investment advise, here or anywhere, have solid numbers. You are some piece of work!!! What have I and the rest be giving you? Actual money made in the NSE. Not fantasy market. People who say what they are buying when they are buying it and what they are selling it when they are selling it and the figures are there for everyone to see. I given you the links. Do you ever click them? And I am not giving you any investment advice. I would have to tell you what to buy and when to buy. That's not for this thread. About the quotes, you actually need them! @Maichblack Great contribution. To reiterate your point got into CIC early last year at 4 bought 100k and I exited the other day at 11.80 Now lets do the maths @Kenyan Oracle - Congrats!!! That's quite a handsome return! And because some of this fellows will not want to do the math, let's do it for them: - (11.8 - 4) / 4 * 100% = 195% [ Approx: 191% net of commissions] in one year. As people are busy saying it is not possible see how you can double triple the money you had last year! If you can repeat the feat, early next year you'll have 9 times what you had early last year! But as Robert G. Allen would have you know, 'they' will say you were just lucky on this one and you are crazy to imagine you can repeat the feat! And you are also being greedy.
Don't let the opinions of the average man sway you. Dream, and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand. Robert G. AllenNever count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Member Joined: 1/4/2013 Posts: 255
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Some years back I pulled out of a mortgage deal (lucky for me there was a caveat) after I did the math over and over again. I projected that even if I cleared the mortgage in five years it would still have costed more than the going market rate. However another real estate opportunity presented itself and I dug in with cash and made 300% returns in two years. I have recently entered the NSE as an investor to diversify from the real estate scene. What I can add to this thread is that if you are going to go into real estate go in with cash. The mortgage rates we have in .ke are unsound investment-wise. It is hard to get a deal where the monthly rent will be in excess of the monthly bank payments to give you returns in the league of cash investments in real estate or investments in stocks or bonds and bills.
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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@its2013, some few real estate deals can easily offset the loan repayments such as below. http://www.a4architect.c...tate-investments-kenya/
Most kenyan real estate deals will find it difficult to offset the loan repayments. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Member Joined: 1/4/2013 Posts: 255
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@a4architect I like your ideas. I'm doing some due diligence on them. I plan on keeping in touch.
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Rank: Elder Joined: 9/12/2006 Posts: 1,554
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Mortage issues aside...real esate investment vs stock investment....real esate is far much better.
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Is Taking a Mortgage the WORST Decision Ever??
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