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Eighth Wonder of The World
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mwekez@ji
#21 Posted : Tuesday, May 06, 2014 8:07:25 PM
Rank: Chief


Joined: 5/31/2011
Posts: 5,121
streetwise wrote:
The equation about rent is like this:

The wise man finds a house and goes to the bank to obtain a mortgage to buy the house. He intents that one day the house will be not only his but will be loan free.

Once he has obtained the mortgage he says to himself, why should i pay the monthly payments till the mortgage is fully paid. This to him not a nice idea and headage.

He says to himself why not find someone to pay the mortgage for me..and sure enough he finds someone who is so excited to not only pay the mortgage monthly rates but also stays in the house keeping it safe till the mortgage in fully paid at which time the guy who initially obtained the mortgage can say to the good Samaritan.. I need to occupy my house.

Question: who bought the house and who is the final owner ?


@streetwise, there is no way monthly rentals can match monthly mortgage payments.

Take an example, a house costing Kes. 6.5M will attract monthly mortgage payments of Kes. 90K* while monthly rental for the house will be about Kes. 30K.

*Loan interest rate, 15%; Tenor, 15 years
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murchr
#22 Posted : Tuesday, May 06, 2014 8:19:04 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,980
streetwise wrote:
The equation about rent is like this:

The wise man finds a house and goes to the bank to obtain a mortgage to buy the house. He intents that one day the house will be not only his but will be loan free.

Once he has obtained the mortgage he says to himself, why should i pay the monthly payments till the mortgage is fully paid. This to him not a nice idea and headage.

He says to himself why not find someone to pay the mortgage for me..and sure enough he finds someone who is so excited to not only pay the mortgage monthly rates but also stays in the house keeping it safe till the mortgage in fully paid at which time the guy who initially obtained the mortgage can say to the good Samaritan.. I need to occupy my house.

Question: who bought the house and who is the final owner ?


And where is the owner living while renting out his house?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
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tinker
#23 Posted : Tuesday, May 06, 2014 10:19:14 PM
Rank: Member


Joined: 11/15/2010
Posts: 454
Location: Nairobi
shalishali wrote:
Mukiri wrote:
Applause Applause Applause @MaichBlack

Sound advice there. I've always wondered with people who put money in the bank, money that should be making you more money! I've been fighting my chama on this.

Second is salaried employees who look forward to their salaries so that they can spend it! If you are paying rent from your salary, you are a slave:-(

hapo you have really caught some of us!


If this is true, then more than 90 % of Kenyan salaried employees are slave. it got me thinking - 12 yrs a slave?
....He who began a good work in you will carry it on to completion..
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The optimist
#24 Posted : Wednesday, May 07, 2014 12:08:37 AM
Rank: Member


Joined: 6/14/2010
Posts: 521
Location: Nairobi
murchr wrote:
streetwise wrote:
The equation about rent is like this:

The wise man finds a house and goes to the bank to obtain a mortgage to buy the house. He intents that one day the house will be not only his but will be loan free.

Once he has obtained the mortgage he says to himself, why should i pay the monthly payments till the mortgage is fully paid. This to him not a nice idea and headage.

He says to himself why not find someone to pay the mortgage for me..and sure enough he finds someone who is so excited to not only pay the mortgage monthly rates but also stays in the house keeping it safe till the mortgage in fully paid at which time the guy who initially obtained the mortgage can say to the good Samaritan.. I need to occupy my house.

Question: who bought the house and who is the final owner ?


And where is the owner living while renting out his house?

I find this mentality of taking mortgages rather self defeating. Why would you tie down your income that has potential to redeem you off the shackles of povery for so many years in the name of comfort!
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murchr
#25 Posted : Wednesday, May 07, 2014 2:08:43 AM
Rank: Elder


Joined: 2/26/2012
Posts: 15,980
The optimist wrote:
murchr wrote:
streetwise wrote:
The equation about rent is like this:

The wise man finds a house and goes to the bank to obtain a mortgage to buy the house. He intents that one day the house will be not only his but will be loan free.

Once he has obtained the mortgage he says to himself, why should i pay the monthly payments till the mortgage is fully paid. This to him not a nice idea and headage.

He says to himself why not find someone to pay the mortgage for me..and sure enough he finds someone who is so excited to not only pay the mortgage monthly rates but also stays in the house keeping it safe till the mortgage in fully paid at which time the guy who initially obtained the mortgage can say to the good Samaritan.. I need to occupy my house.

Question: who bought the house and who is the final owner ?


And where is the owner living while renting out his house?

I find this mentality of taking mortgages rather self defeating. Why would you tie down your income that has potential to redeem you off the shackles of povery for so many years in the name of comfort!


Well, it all depends on the % of income that you are willing to tie down. How long would you be able to pay your rent in the neighborhood where you are comfortable?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
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MaichBlack
#26 Posted : Wednesday, May 07, 2014 9:20:01 AM
Rank: Elder


Joined: 7/22/2009
Posts: 7,455
mwekez@ji wrote:
@streetwise, there is no way monthly rentals can match monthly mortgage payments.

Take an example, a house costing Kes. 6.5M will attract monthly mortgage payments of Kes. 90K* while monthly rental for the house will be about Kes. 30K.

*Loan interest rate, 15%; Tenor, 15 years

The optimist wrote:

I find this mentality of taking mortgages rather self defeating. Why would you tie down your income that has potential to redeem you off the shackles of povery for so many years in the name of comfort!


I agree with @mwekez@ji and @The optimist 110%

Visit this link to see my reasoning
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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nashx
#27 Posted : Tuesday, October 22, 2019 11:16:22 PM
Rank: Member


Joined: 2/28/2014
Posts: 188
Location: Nairobi
Here is my take on using the Eighth Wonder of the World to grow your wealth in Kenya

https://youtu.be/t_M0ApJi94c


Read the companion article here:

https://nashthuo.com/the-power-of-compounding/
Offering my personal finance knowledge for free
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