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Is Taking a Mortgage the WORST Decision Ever??
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Life is short. Live passionately.
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Rank: Elder Joined: 9/12/2006 Posts: 1,554
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sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Once you buy stock of company x can you add value to it to ensure you get maximum returns? I bet you cant you just have to seat and wait for management to do the right thing. While in real estate investment its the very opposite you are in control.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Jamani wrote:sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Once you buy stock of company x can you add value to it to ensure you get maximum returns? I bet you cant you just have to seat and wait for management to do the right thing. While in real estate investment its the very opposite you are in control. Isn't that the beauty of stocks? you don't have to add value to it. you can also invest in a company with real estate interests or a REIT. Life is short. Live passionately.
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Rank: Elder Joined: 9/12/2006 Posts: 1,554
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sparkly wrote:Jamani wrote:sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Once you buy stock of company x can you add value to it to ensure you get maximum returns? I bet you cant you just have to seat and wait for management to do the right thing. While in real estate investment its the very opposite you are in control. Isn't that the beauty of stocks? you don't have to add value to it. you can also invest in a company with real estate interests or a REIT. All the same you have no control on any decision good or bad... You can only pray and wish management makes the right decisions on your money.... That makes it ugly on stocks.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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MaichBlack wrote:2012 wrote:sparkly wrote:A mortgage is a debt , period. A debt that should be repaid. Not all debt is bad! I'm sure you know that especially if you're in business. Mortgage if used wisely can help own now what you'd most likely never afford in the future. I see it as using other people money to invest low for a very high return in the long term. I know someone who's now paying installments of 70k mortgage in a neibourhood that rent is 160k now. I'm sure there was a time he felt like a fool but now he's laughing all the way to owning his home in a very leafy suburb. The trick to beat mortgage is pay more than your set installments. Installments for 70k are for a mortgage of 5 million at 16% for a period of 20 years and 4.7 million for 15 years. Never mind if he/she bought the house 5 or more years ago the interest rate was far much higher! Kindly inform us which neighbourhood is this where a house purchased for 5 - 6 million is now fetching rent of 160k and when the house bought. Name of the Estate please. Mentioning these two things doesn't compromise your anonymity or that of your friend so it shouldn't be a problem! Ball on you side.... @Maichblack. You can doubt all you want but I hope you're doing something towards owning your home. I've been to the property and I believe him because I know him, I know he owns it and he has nothing to gain by lying to me, we're past show-off age. I don't know the principal price of the property at the time of acquisition. The property is in Parklands and I can tell you the the owner is a wazuan so maybe he'll see this thread and share with you more if he wises to. But I can tell you about my personal experience. I bought a 3bdrm property through mortgage at Dalamare, opp. the former Trade Bank, now Integrity Centre at about 4m all costs included. I can assure you that the rent is more than the mortgage. The entire rent goes into mortgage repayment and by my calculation, I'll complete the mortgage 4 years early and even much sooner if rent goes higher. My point though was that stocks are more riskier then mortgage in my books and the stock market is not for everyone. There are as many people who've made crazy money and as many who've lost almost in equal measure. People need to find out what's good for them and not build a kiosk because the neigbour's is doing well. Oh and something else which I'm sure @architect will agree with, do not take the new 105% mortgages from banks, that is the new credit card of mortgage (read expensive repayments) always have your own kitu kidogo saved unless you are serious risk taker and extremely sure of the projected value.
BBI will solve it :)
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Rank: Elder Joined: 9/12/2006 Posts: 1,554
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2012 wrote:MaichBlack wrote:2012 wrote:sparkly wrote:A mortgage is a debt , period. A debt that should be repaid. Not all debt is bad! I'm sure you know that especially if you're in business. Mortgage if used wisely can help own now what you'd most likely never afford in the future. I see it as using other people money to invest low for a very high return in the long term. I know someone who's now paying installments of 70k mortgage in a neibourhood that rent is 160k now. I'm sure there was a time he felt like a fool but now he's laughing all the way to owning his home in a very leafy suburb. The trick to beat mortgage is pay more than your set installments. Installments for 70k are for a mortgage of 5 million at 16% for a period of 20 years and 4.7 million for 15 years. Never mind if he/she bought the house 5 or more years ago the interest rate was far much higher! Kindly inform us which neighbourhood is this where a house purchased for 5 - 6 million is now fetching rent of 160k and when the house bought. Name of the Estate please. Mentioning these two things doesn't compromise your anonymity or that of your friend so it shouldn't be a problem! Ball on you side.... @Maichblack. You can doubt all you want but I hope you're doing something towards owning your home. I've been to the property and I believe him because I know him, I know he owns it and he has nothing to gain by lying to me, we're past show-off age. I don't know the principal price of the property at the time of acquisition. The property is in Parklands and I can tell you the the owner is a wazuan so maybe he'll see this thread and share with you more if he wises to. But I can tell you about my personal experience. I bought a 3bdrm property through mortgage at Dalamare, opp. the former Trade Bank, now Integrity Centre at about 4m all costs included. I can assure you that the rent is more than the mortgage. The entire rent goes into mortgage repayment and by my calculation, I'll complete the mortgage 4 years early and even much sooner if rent goes higher. Nyayo embakasi, phase 1 was sold for 2.25m down payment was 10%, repayment per month 27k, today rent is between 27 and 35k...... And selling prices range between. 6.5 to upwards of 7m depending on value additions. My point is for a start its usually tough but with time you gain... Look at eagle plains phase 2 sold for 7.5m today selling at 20m rent is between 75 and 110k Is taking a mortgage the worst decision ever? It might be if you pay the minimum deposit and stick to given monthly payments. But overall in the long term you win, whichever way you choose to pay.
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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2012 wrote:MaichBlack wrote:2012 wrote:sparkly wrote:A mortgage is a debt , period. A debt that should be repaid. Not all debt is bad! I'm sure you know that especially if you're in business. Mortgage if used wisely can help own now what you'd most likely never afford in the future. I see it as using other people money to invest low for a very high return in the long term. I know someone who's now paying installments of 70k mortgage in a neibourhood that rent is 160k now. I'm sure there was a time he felt like a fool but now he's laughing all the way to owning his home in a very leafy suburb. The trick to beat mortgage is pay more than your set installments. Installments for 70k are for a mortgage of 5 million at 16% for a period of 20 years and 4.7 million for 15 years. Never mind if he/she bought the house 5 or more years ago the interest rate was far much higher! Kindly inform us which neighbourhood is this where a house purchased for 5 - 6 million is now fetching rent of 160k and when the house bought. Name of the Estate please. Mentioning these two things doesn't compromise your anonymity or that of your friend so it shouldn't be a problem! Ball on you side.... @Maichblack. You can doubt all you want but I hope you're doing something towards owning your home. I've been to the property and I believe him because I know him, I know he owns it and he has nothing to gain by lying to me, we're past show-off age. I don't know the principal price of the property at the time of acquisition. The property is in Parklands and I can tell you the the owner is a wazuan so maybe he'll see this thread and share with you more if he wises to. But I can tell you about my personal experience. I bought a 3bdrm property through mortgage at Dalamare, opp. the former Trade Bank, now Integrity Centre at about 4m all costs included. I can assure you that the rent is more than the mortgage. The entire rent goes into mortgage repayment and by my calculation, I'll complete the mortgage 4 years early and even much sooner if rent goes higher. My point though was that stocks are more riskier then mortgage in my books and the stock market is not for everyone. There are as many people who've made crazy money and as many who've lost almost in equal measure. People need to find out what's good for them and not build a kiosk because the neigbour's is doing well. Oh and something else which I'm sure @architect will agree with, do not take the new 105% mortgages from banks, that is the new credit card of mortgage (read expensive repayments) always have your own kitu kidogo saved unless you are serious risk taker and extremely sure of the projected value. @2012, you must have been lucky to buy a 3bd apartment in upperhill for kes 4m. That must have been many years ago/over 10 yrs ago, since currently, such a property cant cost less than kes 20m. on the 105% mortgages, i agree with you. Very few real estate opportunities in Nairobi can completely offset mortgage repayment using rental income. Such properties are there but very rare. The time aspect of real estate returns , if considered, usually changes the whole picture. 10 years ago, land was not highly valued as currently so real estate sale price was low in comparison to rental income. Currently, sale price has risen but rental income has stagnated, hence need for re evaluating real estate investment based on current costs to get a clearer picture. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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a4architect.com wrote:2012 wrote:MaichBlack wrote:2012 wrote:sparkly wrote:A mortgage is a debt , period. A debt that should be repaid. Not all debt is bad! I'm sure you know that especially if you're in business. Mortgage if used wisely can help own now what you'd most likely never afford in the future. I see it as using other people money to invest low for a very high return in the long term. I know someone who's now paying installments of 70k mortgage in a neibourhood that rent is 160k now. I'm sure there was a time he felt like a fool but now he's laughing all the way to owning his home in a very leafy suburb. The trick to beat mortgage is pay more than your set installments. Installments for 70k are for a mortgage of 5 million at 16% for a period of 20 years and 4.7 million for 15 years. Never mind if he/she bought the house 5 or more years ago the interest rate was far much higher! Kindly inform us which neighbourhood is this where a house purchased for 5 - 6 million is now fetching rent of 160k and when the house bought. Name of the Estate please. Mentioning these two things doesn't compromise your anonymity or that of your friend so it shouldn't be a problem! Ball on you side.... @Maichblack. You can doubt all you want but I hope you're doing something towards owning your home. I've been to the property and I believe him because I know him, I know he owns it and he has nothing to gain by lying to me, we're past show-off age. I don't know the principal price of the property at the time of acquisition. The property is in Parklands and I can tell you the the owner is a wazuan so maybe he'll see this thread and share with you more if he wises to. But I can tell you about my personal experience. I bought a 3bdrm property through mortgage at Dalamare, opp. the former Trade Bank, now Integrity Centre at about 4m all costs included. I can assure you that the rent is more than the mortgage. The entire rent goes into mortgage repayment and by my calculation, I'll complete the mortgage 4 years early and even much sooner if rent goes higher. My point though was that stocks are more riskier then mortgage in my books and the stock market is not for everyone. There are as many people who've made crazy money and as many who've lost almost in equal measure. People need to find out what's good for them and not build a kiosk because the neigbour's is doing well. Oh and something else which I'm sure @architect will agree with, do not take the new 105% mortgages from banks, that is the new credit card of mortgage (read expensive repayments) always have your own kitu kidogo saved unless you are serious risk taker and extremely sure of the projected value. @2012, you must have been lucky to buy a 3bd apartment in upperhill for kes 4m. That must have been many years ago/over 10 yrs ago, since currently, such a property cant cost less than kes 20m. on the 105% mortgages, i agree with you. Very few real estate opportunities in Nairobi can completely offset mortgage repayment using rental income. Such properties are there but very rare. The time aspect of real estate returns , if considered, usually changes the whole picture. 10 years ago, land was not highly valued as currently so real estate sale price was low in comparison to rental income. Currently, sale price has risen but rental income has stagnated, hence need for re evaluating real estate investment based on current costs to get a clearer picture. Yes it's slightly over 10 years ago and I can tell you it was the most difficult decision I'd ever made in my life. I had many people telling me it was a mistake and for every thought I had in my head in favour I always had 10 against and in that I can relate to the starter of the thread. There were 3 houses for sale and no buyers. They were in the market for quite a while.
BBI will solve it :)
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Same as stock. Buy low sell high. I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate. You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet. Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does... Trick - Buy places that are opening up and wait... 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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@2012, you shuld count yourself very lucky/wise for the decision made. The current land price appreciation will continue around nairobi since the nairobi economy is dependent on the international economy hence insulated from kenya's economy. As long as a property can attract international clientele who pay top dollar for rent, it will continue increasing in value. On the other hand, properties whose main target is local kenyans can not be able to sustain growth if kenya's economy stagnates. I have analysed the sustainability of the high nairobi cbd land value and have seen that it will continue till price per acre hits kes 2.8billion, in year 2030, 17 years from now. http://www.a4architect.c...and-prices-appreciation/As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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MaichBlack wrote:sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Same as stock. Buy low sell high. I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet. Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does... Trick - Buy places that are opening up and wait... @MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Kitengela is another good example - For people who got in early. They were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought! 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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mkonomtupu wrote:MaichBlack wrote:sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Same as stock. Buy low sell high. I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet. Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does... Trick - Buy places that are opening up and wait... @MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets Borrowed money creates panic. Good example: safaricom Shares! Those who bought using loans bolted out at a loss! Those who had used their own money [most - me being one of them] stayed put even when it was at 2.x/=. Some actually added more! I can only borrow for "sure" investments. Those are few and far apart. 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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the trick in investment is in gaining as much info before buying. If its stocks, those who know which stock is undervalued, overvalued, has better management etc will make returns. In real estate, those who know which property has the best opportunities for growth, is undervalued, overvalued, structurally sound, has room for improvement etc make the best returns and vice versa. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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MaichBlack wrote:Kitengela is another good example - For people who got in early. The were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought! Very true. Kitengela was one of my regrets. I was working on Msa road back then and land around EPZ was going for 'would you believe' 35k an acre!!!? We all knew about it but wisdom was not with us. I actually bought a car on loan for 720k at that time. I used to feel pain whenever I saw any Nissan of that model.
BBI will solve it :)
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Rank: Elder Joined: 10/9/2008 Posts: 5,389
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2012 wrote:MaichBlack wrote:Kitengela is another good example - For people who got in early. The were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought! Very true. Kitengela was one of my regrets. I was working on Msa road back then and land around EPZ was going for 'would you believe' 35k an acre!!!? We all knew about it but wisdom was not with us. I actually bought a car on loan for 720k at that time. I used to feel pain whenever I saw any Nissan of that model. You could be a billionaire today. 
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Rank: Member Joined: 2/16/2013 Posts: 123 Location: MSA
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mkonomtupu wrote:MaichBlack wrote:sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Same as stock. Buy low sell high. I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet. Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does... Trick - Buy places that are opening up and wait... @MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets Thanks to this thread I have made a decision I had not even contemplated a week ago: Got an offer letter for a small plot to be paid by cash, and had to do it fast before I change my mind, and applied for another small mortgage. My plan would to use my current rent and some extra cash to clear the debt as fast as possible. This means I also will pay more visits to the fuel pump. Apply for a loan against the free house to develop the plot. Would I have made a good decision, on the mortgage? Timely advice is as lovely as golden apples in a silver basket. Proverbs 25:11
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Rank: Member Joined: 10/19/2009 Posts: 671 Location: Nairobi
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2012 wrote:MaichBlack wrote:Kitengela is another good example - For people who got in early. The were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought! Very true. Kitengela was one of my regrets. I was working on Msa road back then and land around EPZ was going for 'would you believe' 35k an acre!!!? We all knew about it but wisdom was not with us. I actually bought a car on loan for 720k at that time. I used to feel pain whenever I saw any Nissan of that model. Pole. Precisely, which year was this? "Back then" is quite relative.
Life is joy, death is peace, but the transition is very difficult.
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Rank: Elder Joined: 6/19/2008 Posts: 4,268
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knight026 wrote:2007-2014= -15.89%
2007-2011= -22.68%
The returns have been good past 5 years because the market had bottomed out in 2009. You are absolutely right if you use the "Sitting Duck" as your investment strategy. If you ride the wave, then you sure will get better returns.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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SittingPretty wrote:mkonomtupu wrote:MaichBlack wrote:sparkly wrote:Jamani wrote:Mortage issues aside...real esate investment vs stock investment....real esate is far much better. How? Same as stock. Buy low sell high. I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet. Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does... Trick - Buy places that are opening up and wait... @MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets Thanks to this thread I have made a decision I had not even contemplated a week ago: Got an offer letter for a small plot to be paid by cash, and had to do it fast before I change my mind, and applied for another small mortgage. My plan would to use my current rent and some extra cash to clear the debt as fast as possible. This means I also will pay more visits to the fuel pump. Apply for a loan against the free house to develop the plot. Would I have made a good decision, on the mortgage? Go for it if it's a small mortgage and the returns will be greater than your cost of capital(total loan+interest repayment). My cost of capital for sacco is 1% p.a. i.e. around 7% on a straight line
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