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Is Taking a Mortgage the WORST Decision Ever??
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alma1
#771 Posted : Monday, April 25, 2016 2:58:00 PM
Rank: Elder

Joined: 9/19/2015
Posts: 2,871
Location: hapo
Swenani in normal economies buying and selling property in distress is what makes an economy thrive.

If I have a mortgage in Massachussets, I can agree to sell it at a lower price to someone else to ensure that at least my debt is covered. Even now just google auctioned properties and even you Swenani can participate.

But this is Kenya

So lets say exactly what happens. There are even court cases about this. I belive Muite had a huge case about this too.

I have a property valued at 10 million. My mortgage debt is 2 million. The godammed bank will not allow my to sell that property for 8 million. They ought to but they won't.

What they shall do is send goons at night to remove me. Then sell it at night in the interbank theiving moments to the director for 2million who then proceeds to sell it to his buddy at 2.5 million. A loss to the country of 7.5 million in value. If you think this tabia does not affect the country then go back to school.

There are auctions announced in the papers every day. Do yourself a favor and try and participate in one. You won't even be able to buy a kijiko.

Corruption has suddenly caught up with Kenyans and the bloodbath shall not be nice. you can't play around with math.

I'm shopping for deals in property. Not from the usual sijui "developers". Just shop quietly from locals, there are lot of deals out there. Especially with the cost of living increasing in fact but decreasing in paper.

Right now the number of empty rentals in Kikuyu town would surprise you. Increase rent by 1k and they leave. That's just a sign of the times ahead. Or just ask Home Afrika.
Thieves are not good people. Tumeelewana?
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washiku
#772 Posted : Monday, April 25, 2016 5:19:13 PM
Rank: Chief

Joined: 5/9/2007
Posts: 13,095
@Alma, so we can now keep the dollars ready to purchase at a very very discounted price?
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alma1
#773 Posted : Monday, April 25, 2016 5:32:09 PM
Rank: Elder

Joined: 9/19/2015
Posts: 2,871
Location: hapo
washiku wrote:
@Alma, so we can now keep the dollars ready to purchase at a very very discounted price?


Yes, just as the stock market advise is to hold your cash, the property market is even sweeter. Don't look at price, look at value.

There's a town center somewhere where the owners have not been able to complete their multistorey building. We call that opportunity.

My view on the property market is that the way Kenya is setup, even when the bubble has burst, you shall still get uneducated and compromised journalists telling you how hot the market is.

Your best option is walk away from your car and actually go door to door. You shall be surprised.

Keep away from grandiose projects. The most grandiose project in Kenya was South C. When it rains, you have to move your furniture to the upper floors. Even worse, your water is mixed with the sewage.

That is not investing, that is taking unneccessary risks.

And as this topic says, keep away from these mortgages. Just don't and don't even listen to these banks. I have friends who borrow in the US for 3% and buy in Kenya. How the hell are you supposed to compete like that?


Discounts are there if you stop talking to brokers and "property experts".
Thieves are not good people. Tumeelewana?
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Mukiri
#774 Posted : Monday, April 25, 2016 8:06:28 PM
Rank: Elder

Joined: 7/11/2012
Posts: 5,222
Xymalos wrote:
limanika wrote:
Xymalos wrote:
popat wrote:
I speak out of experience.I did a flat along Thika road sometimes before the highway was done.Thats was sometimes back in 2009.It was my first project and I was really excited.I use to get offers of land along the highway and the Eastern bypass,that I could readily afford with the money's I was using constructing.Fast forward 2013.The house was done guaranting me passive 250k p.m.but I can assure today I wish I bought land with all the 15m I used.id be worth more than 400m going by the value of the land I dissed those days. I would be doing same house from sales proceeds and believe you me I'd be having four or more flats of what I have now.Any young man shud invest in premium lands and not rush into building.My two cents


With kids grown up and out of house, I am considering selling my maisonette in a quarter (1/4) acre piece of land that can fetch 15 million and sell some plots to construct a flat/apartment complex in a good neighbourhood that can give me a passive income of at least 300K/month. I am happy living in the Penthouse. This income would give me financial freedom and liberate me from 8-5 job, thereby enjoy life more abundantly - maybe just travel, enjoy hobbies etc. Your thoughts - is this a wise idea or bad idea? Any downsides?

By current rates, to make 300k pm from rental you need to spend upwards of 30m. Unless you are versed with nitty gritties of construction A-Z and king of cost saving like the proverbial Pablo. My 2 cents.


Limanika - I have limited experience in construction and believe in letting professionals (architects, engineers, QS etc) do the job. You are right, 30m+ will be the cost; I have glanced at Institute of Quantity Surveys construction guide posted at this --link-- and can roughly estimate the cost to be 30m+ based on overall square meters. By retiring from 8-5 job, I hope to withdraw my retirement savings to go towards construction. I am determined to avoid construction loans due to their unpredictable variable interest rates.

Swahib, I advice to try a small construction project first, just to understand it. Say a house in the village. Else you'll be taken to the cleaners. From what I've experienced in construction, you are better off being your own boss. The price for your ignorance and unwarranted trust, will cost you millions

Proverbs 19:21
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MaichBlack
#775 Posted : Tuesday, April 26, 2016 10:55:14 AM
Rank: Elder

Joined: 7/22/2009
Posts: 7,838
Impunity wrote:
MaichBlack wrote:
Unaffordable mortgages. Only 22,000 mortgages in the country!

And these are mostly people putting up commercial buildings - malls, offices etc. - and can charge a premium to afford the loan repayments!!!


In mayuu countries Mogej rates are at 3 to 6%...hii yetu ya 23% and variable cant make it.

Mark Zuckerberg got his mortgage at 1%. The rest of the Americans were getting theirs at between 2% and 4%.

Giving a whole new meaning to "the" 1%
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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hardwood
#776 Posted : Tuesday, April 26, 2016 12:07:53 PM
Rank: Elder

Joined: 7/28/2015
Posts: 9,562
Location: Rodi Kopany, Homa Bay
http://www.businessdaily...0/-/xccbn3/-/index.html

Quote:
The appetite for prime properties has defied the tough conditions, with most of the deals said to be cash- based.

“Only one per cent of houses are bought through mortgages,” said Hass Consult head of research and marketing Sakina Hassanali at a recent press briefing.
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Othelo
#777 Posted : Tuesday, April 26, 2016 12:24:04 PM
Rank: User

Joined: 1/20/2014
Posts: 3,528
hardwood wrote:
http://www.businessdailyafrica.com/Nairobi-luxury-home-prices-second-fastest-growing-in-Africa/-/539552/2949560/-/xccbn3/-/index.html

Quote:
The appetite for prime properties has defied the tough conditions, with most of the deals said to be cash- based.

“Only one per cent of houses are bought through mortgages,” said Hass Consult head of research and marketing Sakina Hassanali at a recent press briefing.


I always wonder why KRA has shortfall on tax collection!!!
Formal education will make you a living. Self-education will make you a fortune - Jim Rohn.
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kaifastus
#778 Posted : Tuesday, April 26, 2016 1:14:58 PM
Rank: Member

Joined: 8/17/2011
Posts: 207
Location: humu humu
Alma,A crash in housing markets is unlikely to occur now. The empty rentals you are seeing reveals a disconnect between supply of housing stock (buildings) versus demand for housing services (rent. this is normal and usually clears. (price changes and migration into or out. Again if kenyas housing market collapse,pple will not be laughing as they pick bargains..oo no. All sectors will be affected. Again more developed Urban areas like nairobi,Nakuru town Kisumu mombasa towns (commercial and residential rental properties) will be more resilient to any crash. Dont expect a billionaire who owns property in nairobi CBD to sell it at throw away prices! Study the US housing market crash once again as well as demand and supply of housing in Urban economics. You are going to wait for bargains all your lifetime!
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UpcomingPaperChaser
#779 Posted : Wednesday, April 27, 2016 12:40:44 AM
Rank: Member

Joined: 1/20/2015
Posts: 489
Location: Nairobi
There is an oversupply of office space in Nairobi, so lets say the bubble has already burst for office complex developments.
Enjoy every moment of your life, you never know when your time will come.
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Rongla
#780 Posted : Wednesday, April 27, 2016 2:14:31 AM
Rank: Member

Joined: 10/3/2008
Posts: 101
Well there is probably an oversupply of certain types of properties and this does'nt necesarily mean the bubble has burst or will any time soon.In Kenya, there are very few mortgages and if the bubble was to burst, Only a certain percentage of the22,000 mortgagees will be affected and its impact wouldnt be that significant.

The factors that lead to the last property bubble burst in the west was mainly due to subprime mortgages, where people with bad credit rating, low income and could'nt afford mortgages repayments were given mortgages of more than 100% of the properties value (plus furnishing mpaka HD TVs na shopping thrown in for good measure) and the interest rates were very low, in most cases less than 3%. when the rates increase by just half % , shida ikaingia. Defaulters increased na 50%.

On the contrary, in Kenya you can only get upto 80% mortgage if you are lucky and the interest rates are incredibly high, meaning the banks go overdrive in due diligence before giving out mortgages

I mean no hard feelings to Boda boda guys, I know they work incredibly hard and they do a fantstic job. But can you imagine giving the whole lot mortgages at say 3%. Their income is fixed. An increase in interest rates will be a crisis. That's when the bubble will burst.

Price stagnation is what is happening and is likely to hang around for some time.Why is it so? Well almost Every wazuan, boda boda guys, mama mbogas, teachers etc literally all hustlers have a plot or several around Nairobi( I mean Kiambu Ruiru Kite etc). The same lot are waiting (hoarding) for the prices to go up so that they can sell some of the plots and build flats etc. What they dont know is most of their "potential" buyers are sellers too.

China has ghost cities built for millions of people. Have you heard of a bubble burst in china yet?
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  | | Edit by user: Wednesday, April 27, 2016 2:27 AM | Reason: Not specified
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