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I need your advise guys. Please help me out.
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titanic
#1 Posted : Tuesday, January 05, 2010 7:58:19 AM
Rank: New-farer

Joined: 1/5/2010
Posts: 10
Location: Nairobi
I have 3 mortgages for houses A, B and C. Paying mortgage of 38K, 40K and 70K respectively per month. Live in C, I rent out A at 20K per month and B is incomplete (under construction). Monthly net earnings inclusive of rents is 147K. Loan balances for A,B,C are 2.4m, 2.9m and 5m respectively. Current values for ABC are 4.2m, 4.2m and 6.5m. Have about 1.5m in dead stocks (current value is much lower). My monthly expenses is 50K. Enrolled for an MBA which costs 500k and need to buy a car of max 600k. Want to get out of debt wana wazua please advise.
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redondo
#2 Posted : Tuesday, January 05, 2010 8:42:28 AM
Rank: Member

Joined: 12/2/2009
Posts: 161
Location: nairobi
@ titanic,It sounds to me like you are biting more than you can chew. if i were you i would put off buying the car for now and continue using whatever transport means you are currently using. secondly i would dispose of property C at the market value. that would leave me with about 3.6 million which i would use to pay off the outstanding loan on A. i would then move into property A and put the amount left from the sale of C into developing B.

The effect would be that you have one property that is completely yours(debt free), a second that is under construction and you would be living rent free as well.

.... Just an opinion
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muganda
#3 Posted : Tuesday, January 05, 2010 7:37:26 PM
Rank: Elder

Joined: 9/15/2006
Posts: 3,907
Good advise @redondo. Another opinion.
-don't sell shares now as you just take a loss; patience needed
-sell of House A to get 1.8m
-use money to pay for car, education, complete House B

At least you'll have reduced you debt by 30%, acquired your aspirational car and continued living in your house.

If you believe, you can sacrifice more you could also use surplus funds to pay down value of debt on House B/C and eventually decide to move into the cheaper house when complete.
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sparkly
#4 Posted : Thursday, January 07, 2010 1:42:40 PM
Rank: Elder

Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
@titanic, am i missing something, You earn 147k but spend 198k? Impossible.
Life is short. Live passionately.
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Evolve
#5 Posted : Thursday, January 07, 2010 2:16:25 PM
Rank: Member

Joined: 9/25/2007
Posts: 96
@ titanic
You are over leveraged. If you managed to throw yourself into all this deep commitment, I am not sure you require any advice how to get out unless there is some info that you are withholding? Your equity in the three properties is about 2.8m which even if you were to sell all, you would not be left with enough funds to purchase any of the units. Your revenue of 147K can not support your outgoings of 198K.
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Waria
#6 Posted : Thursday, January 07, 2010 3:16:23 PM
Rank: Member

Joined: 10/11/2007
Posts: 213
@Redondo is spot on. House C has to go. obviously it will cramp your style having to move to House A but looks worth it. The dead shares got to go.( bear still lurkin can always get em back) then pay off house A

Pay for your MBA and get a 500k ride. Both this will boost your esteem & chances of earning higher net though not in the short term. In the medium to long term they can land you a synergetic 'patner' whose income can help you clear the debts faster. ha!

Assuming B is one of those 'suraya-like deals'- then when its complete you should be able to get about 25k rent which you use to make extra payments- or even levearge into another mportgage

Incidentally in Kenya you can get financing on the appreciation?
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poundfoolish
#7 Posted : Thursday, January 07, 2010 3:56:35 PM
Rank: Elder

Joined: 12/2/2009
Posts: 2,458
Location: Nairobi
Nice reads...
Hii sasa ndo kuwazua
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Mkimwa
#8 Posted : Thursday, January 07, 2010 4:16:05 PM
Rank: Member

Joined: 10/26/2008
Posts: 380
How did you get 3 mortgages that are > your earnings?

Some credit analyst didnt do their work, or there is something you are not telling,
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  | | Edit by user: Thursday, January 07, 2010 4:42 PM | Reason: Not specified
titanic
#9 Posted : Friday, January 08, 2010 1:45:25 PM
Rank: New-farer

Joined: 1/5/2010
Posts: 10
Location: Nairobi
Radondo & Muganda - Thanks for your insights

Spanky - Forgot to tell you that madam also brings home about 50K, but I do not want to plan for it as she has her own projects also.

Mkimwa - It is possible to get the three mortgages. I did it. All you need is to raise the deposits. For your information, only mortgage C is from a financial institution. Mortgage A is from a Government Agency and Mortgage B from a Co-operative Society. By the way all payments are made outside the check off system
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titanic
#10 Posted : Thursday, January 14, 2010 6:25:20 AM
Rank: New-farer

Joined: 1/5/2010
Posts: 10
Location: Nairobi
Thanks all those who gave me your advise. You guys are amazing!. I have finally made up my mind. I have decided to sell House A and House B at 4.2m each. The buyer of House A, as part payment, is selling me a 2 bedroom house at Highrise for 2 m and he will take over the House A mortgage (TPS)from me and pay NSSF direct. I will only add him 200K that I will pay in 4 installments of 50K each. I am also selling House B at 4.2 m. Pay off the mortgage of house B and pay Kshs.1 m towards reducing the mortgage of C. This will reduce my monthly mortgage payment of House C from 70K per month to 56K p.m. I have also decided to moved out of House C and rent it out for 30K as I sort myself out. I have decided to rent a house where I pay 18K rent. The effect of all this is that I will have my own house at Highrise with no loan and I will reduce my monthly mortgage payments from 148K to 56K. Besides, I will also improve my cash flow by 44K. In June or thereabouts, I will look for a plot to buy and begin building my retirement home at my pace. I have also decided to sell the shares (although at a heavy loss) so that I can pay for my MBA and buy the car. Once again Asanteni sana all those who gave me advise.
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