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10-12M mortgage
tnai9
#1 Posted : Monday, April 18, 2016 8:44:59 AM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
Wazuans, I intend to take this quoted range of mortgage in the next three months(am a civil servant, early thirties) and am torn between a number of options. I request wazuans for their candid opinions on my thoughts.
1. Buy a nice three bedroom apartment in south B/Imara/Nairobi West/langata and rent. Target rent 50K pm.

2. Buy a 2br apartment in Kilimani/Kileleshwa or equivalents then replace some Chinese fittings at about 400K, furnish it at 700K then rent out at 80-100K(is it viable, are there tenants?)(Also don't have the extra 1.2M for repairs immediately)

3. Buy a house in Buru for 8-9M and stay in it with my family. - This option frees my payslip a bit, I can afford small other loans for biashara. Currently renting(30K PM)
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
Jon Jones
#2 Posted : Monday, April 18, 2016 9:52:39 AM
Rank: New-farer


Joined: 9/11/2015
Posts: 93
Location: Thika
tnai9 wrote:
Wazuans, I intend to take this quoted range of mortgage in the next three months(am a civil servant, early thirties) and am torn between a number of options. I request wazuans for their candid opinions on my thoughts.
1. Buy a nice three bedroom apartment in south B/Imara/Nairobi West/langata and rent. Target rent 50K pm.

2. Buy a 2br apartment in Kilimani/Kileleshwa or equivalents then replace some Chinese fittings at about 400K, furnish it at 700K then rent out at 80-100K(is it viable, are there tenants?)(Also don't have the extra 1.2M for repairs immediately)

3. Buy a house in Buru for 8-9M and stay in it with my family. - This option frees my payslip a bit, I can afford small other loans for biashara. Currently renting(30K PM)

Walk away from a mortgage if you can. Check this link: http://www.milliardaire....e/mortgage-will-enslave/
Since men have learned to shoot without missing, I have learned to fly without perching
tnai9
#3 Posted : Monday, April 18, 2016 9:56:09 AM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
Jon Jones wrote:

Walk away from a mortgage if you can. Check this link: http://www.milliardaire..../mortgage-will-enslave/


Thanks Jones. But I have access to a mortgage at 3% p.a. I believe there is no better rate anywhere in the republic. Reason I would like to take it. Plus I can get upto 100% financing, just need proper documents
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
jerry
#4 Posted : Monday, April 18, 2016 10:05:55 AM
Rank: Elder


Joined: 9/29/2006
Posts: 2,570
tnai9 wrote:
Jon Jones wrote:

Walk away from a mortgage if you can. Check this link: http://www.milliardaire..../mortgage-will-enslave/


Thanks Jones. But I have access to a mortgage at 3% p.a. I believe there is no better rate anywhere in the republic. Reason I would like to take it. Plus I can get upto 100% financing, just need proper documents

Are you getting mortgage bacause you are in GoK? If you ever moved to private sector, will the mortgage be affected? Compare what you'll spend on mortgage per month and possible rent that you can get from the house.
The opposite of courage is not cowardice, it's conformity.
Jon Jones
#5 Posted : Monday, April 18, 2016 10:06:15 AM
Rank: New-farer


Joined: 9/11/2015
Posts: 93
Location: Thika
tnai9 wrote:
Jon Jones wrote:

Walk away from a mortgage if you can. Check this link: http://www.milliardaire..../mortgage-will-enslave/


Thanks Jones. But I have access to a mortgage at 3% p.a. I believe there is no better rate anywhere in the republic. Reason I would like to take it. Plus I can get upto 100% financing, just need proper documents

If its possible to get the cash 12 million, buy an eighth in a satellite town like Ruiru...build bedsitters and you will be smiling all the way to the bank.
Since men have learned to shoot without missing, I have learned to fly without perching
tnai9
#6 Posted : Monday, April 18, 2016 10:10:09 AM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
Jon Jones wrote:

If its possible to get the cash 12 million, buy an eighth in a satellite town like Ruiru...build bedsitters and you will be smiling all the way to the bank.


Other conditions I have
1. Only one mortgage allowed at a time.
2. Can only buy a residential house, fully built(no off plans), no commercials
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
tnai9
#7 Posted : Monday, April 18, 2016 10:16:04 AM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
jerry wrote:

Are you getting mortgage bacause you are in GoK? If you ever moved to private sector, will the mortgage be affected? Compare what you'll spend on mortgage per month and possible rent that you can get from the house.


I have considered this, and I'll only move if the new employer gives me an increment that will cover the increased interest. I also have an allowance of up to 1yr within which to sell the house and pay off. I also realize i will be forced to be very choosy with employers
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
TheGeek
#8 Posted : Monday, April 18, 2016 10:27:19 AM
Rank: Member


Joined: 7/3/2014
Posts: 245
tnai9 wrote:
jerry wrote:

Are you getting mortgage bacause you are in GoK? If you ever moved to private sector, will the mortgage be affected? Compare what you'll spend on mortgage per month and possible rent that you can get from the house.


I have considered this, and I'll only move if the new employer gives me an increment that will cover the increased interest. I also have an allowance of up to 1yr within which to sell the house and pay off. I also realize i will be forced to be very choosy with employers



This will be a yoke. You better off renting then saving and investing.
In the world of securities, courage and patience become the supreme virtues after adequate knowledge and a tested judgment are at hand.
Shak
#9 Posted : Monday, April 18, 2016 11:28:59 AM
Rank: Elder


Joined: 2/22/2009
Posts: 2,320
Location: Africa
Jon Jones wrote:
[quote=tnai9]Wazuans, I intend to take this quoted range of mortgage in the next three months(am a civil servant, early thirties) and am torn between a number of options. I request wazuans for their candid opinions on my thoughts.
1. Buy a nice three bedroom apartment in south B/Imara/Nairobi West/langata and rent. Target rent 50K pm.

2. Buy a 2br apartment in Kilimani/Kileleshwa or equivalents then replace some Chinese fittings at about 400K, furnish it at 700K then rent out at 80-100K(is it viable, are there tenants?)(Also don't have the extra 1.2M for repairs immediately)

3. Buy a house in Buru for 8-9M and stay in it with my family. - This option frees my payslip a bit, I can afford small other loans for biashara. Currently renting(30K PM)

Walk away from a mortgage if you can. Check this link: http://www.milliardaire..../mortgage-will-enslave/[/quote]

If you take a 10million shilling mortgage for 18 years you'll be repaying around 60k per month so option 1 would not make economic sense. A 7-8 million shilling rental property would make more sense.Also look into the possibility of making accelerated repayments so that you're not tied to the full 18 years
tnai9
#10 Posted : Monday, April 18, 2016 11:43:22 AM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
Shak wrote:


If you take a 10million shilling mortgage for 18 years you'll be repaying around 60k per month so option 1 would not make economic sense. A 7-8 million shilling rental property would make more sense.Also look into the possibility of making accelerated repayments so that you're not tied to the full 18 years


I was looking at it this way, that if am paying for example 70K pm for fifteen years, and renting at 50k, effectively am just topping up the rental income with 20k,so my net salo is just less 20k(off course have to provide for defaults etc). This allows me to take and service say another sacco loan. I expect, over the fifteen years, rent to increase and at some point it may pay the mortgage.
The Sacco loans will be for starting projects/biasharas to assist in accelerating the mortgage.
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
tnai9
#11 Posted : Monday, April 18, 2016 11:52:20 AM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
This is where am coming from - http://www.aren.co.ke/calculators/loancalc.htm

LOAN REPAYMENT CALCULATOR
Amount Borrowed 10,000,000
Annual Interest Rate (%) 3
Number of Monthly Payments 180
Monthly Payments 69,058
Total Payment 12,430,440
Total Interest 2,430,440

"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
Othelo
#12 Posted : Monday, April 18, 2016 12:39:13 PM
Rank: User


Joined: 1/20/2014
Posts: 3,528
That loan is dirt cheap, go for it. I would go option 3 way and fast track repayment. Remember the asset 'property/house' will be appreciating in value over the long run!!!
Formal education will make you a living. Self-education will make you a fortune - Jim Rohn.
Plimsoul
#13 Posted : Monday, April 18, 2016 12:45:02 PM
Rank: Member


Joined: 3/3/2016
Posts: 132
Yeah, 3% is too a good a deal to pass up I think. Whatever option you decide, I'd take the mortgage.

Also, I think it's important to remember that monthly payments are stagnant, rents are not. Think about what rents were 5-10 years ago in Nairobi. They probably won't be 30k or 50k forever.
Obi 1 Kanobi
#14 Posted : Monday, April 18, 2016 3:40:17 PM
Rank: Elder


Joined: 7/23/2008
Posts: 3,007
Its a no brainer, take the mortgage quick quick.

The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
Rahatupu
#15 Posted : Monday, April 18, 2016 4:24:18 PM
Rank: Veteran


Joined: 12/4/2009
Posts: 1,938
Location: matano manne
@T9, I'd go for the mortgage without thinking twice. Please share the fine details of the procedure and process with at rahatupu at ymail dot com.

One more thing, the banks have a way of working round the restrictions on commercial properties. However, you'd have to already have the land on which to put up a commercial building (you could get this from your sacco), so the 10-12m could be used for construction of say ground floor.
tnai9
#16 Posted : Monday, April 18, 2016 4:37:27 PM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
Obi 1 Kanobi wrote:
Its a no brainer, take the mortgage quick quick.

The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment.


That is very good to realize, hadnt looked at it this way..I should have taken more Econ unitssmile smile . Its not so obvious to me. I look at the installment vs Income..Thanks a lot Obi..Applause smile
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
tnai9
#17 Posted : Monday, April 18, 2016 4:42:33 PM
Rank: Member


Joined: 6/21/2010
Posts: 345
Location: easto
Rahatupu wrote:
@T9, I'd go for the mortgage without thinking twice. Please share the fine details of the procedure and process with at rahatupu at ymail dot com.

One more thing, the banks have a way of working round the restrictions on commercial properties. However, you'd have to already have the land on which to put up a commercial building (you could get this from your sacco), so the 10-12m could be used for construction of say ground floor.


Thanks Rahatupu. Nitarudisha mkono..
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
Xymalos
#18 Posted : Monday, April 18, 2016 5:49:09 PM
Rank: New-farer


Joined: 2/14/2015
Posts: 85
Location: Kenya
tnai9 wrote:
Jon Jones wrote:

If its possible to get the cash 12 million, buy an eighth in a satellite town like Ruiru...build bedsitters and you will be smiling all the way to the bank.


Other conditions I have
1. Only one mortgage allowed at a time.
2. Can only buy a residential house, fully built(no off plans), no commercials


With those conditions, consider this option: Buy a fully built small residential house with a large compound e.g., 1/2 acre or 1/4 acre. And then you can consider building another house(s) in the site to generate income - in the longterm. But, of course take the money - maximum allowed.
FRM2011
#19 Posted : Monday, April 18, 2016 7:09:15 PM
Rank: Elder


Joined: 11/5/2010
Posts: 2,328
Boss at 3% you don't even need a calculator. You are getting free money (inflation @7%).

Another sweetener, mortgage relief of up to 12,500 deductible from taxable income.

If your employer can agree to effect the above at source, your monthly interest charge drops by another 4k.

However, you need to find out who caters for the fringe benefit tax I.e. the difference between what you are paying in interest and what kra thugs usually call the fringe benefit tax rate. It's usually announced quarterly and it's the average of 91-day t bill rate for the preceding quarter.
Bachuma Gate
#20 Posted : Monday, April 18, 2016 7:26:28 PM
Rank: Member


Joined: 3/26/2012
Posts: 280
I wouldnt accelerate payments if the job is secure n salo okay. You will miss out on the concessional interest. Do an excel work out.

Having said that; go for not so mordern house but on a big compound. Eg Otiende; kimathi east. In future you can demolish the house and build flats.
DOH
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