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Selling 0.5-acre land (2.0 M) to buy a 2-bedroom apartment (3.5M)
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Abby
#1 Posted : Monday, June 27, 2011 6:31:39 PM
Rank: Member


Joined: 3/7/2011
Posts: 112
Hi Gentlemen,

Kindly help with a small matter.

We have some apartments on Mombasa road near Athi River. I like the location and I like the 2-bedroom apartments being put up as we talk. The apartments go for 3.5M, to me a good deal.

I desire to own one and live in it or rent it out; trouble is I have no cash. However, I do have 0.5 acres near Saitoti's place (Kitengela, Namanga Road) whose value is around 2.0M (700 meters from Namanga Road).

My question is whether it is Ok to sell 0.5 acre at 2.0M and buy the 2-bed apartment at 3.5M? Since they will take 1 year to complete, I can clear the balance using other means.

Any thought on this?

Thanks
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bwenyenye
#2 Posted : Tuesday, June 28, 2011 11:59:28 AM
Rank: Elder


Joined: 5/24/2007
Posts: 1,805
Abby,

My two cents.

It really depends on the returns. A 2 bed house at that location will fetch a rental income of max 15K this year. That will be a return of about4.3% p.a without including transaction costs. The appreciation of land is normaly much faster than housing in Nairobi. I however do not know what you are doing with the land but you can definitely make higher returns even by pttuing up simple rental structures.
I Think Therefore I Am
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Abby
#3 Posted : Wednesday, June 29, 2011 7:26:50 PM
Rank: Member


Joined: 3/7/2011
Posts: 112
Good thoughts my friend; I appreciate it.

Indeed, I will struggle and see how to own a unit without doing away with the land.

I bought this land some 4 years ago at 500k; now, it is gold. As people settle at the place more and more, the returns should be impressive.

Thansk
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Josey
#4 Posted : Thursday, June 30, 2011 5:36:25 PM
Rank: Member


Joined: 9/12/2009
Posts: 236
Location: Nairobi
Abby,
Better keep the land it is much more valuable, and appreciates faster.who knows you might later sale it and buy a 5 bedroom maisonette..
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Barrywhite
#5 Posted : Friday, July 01, 2011 3:36:40 PM
Rank: Member


Joined: 12/2/2009
Posts: 286
Location: Nairobi
Abby,

Keep the land. Find a way of buyung the house; and if you find no way at all, then the opportunity to buy this wasnt meant for you. The appreciation of the land will be far greater than the house; besides selling the land would still leave you with Kes. 1.5m in order to pay for the house in full.
The laudable is more often than not rendered laughable by overclaim
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half_empty
#6 Posted : Sunday, July 03, 2011 1:49:14 PM
Rank: Member


Joined: 3/23/2007
Posts: 127
Prioritise the house since it provides both income and capital growth. But don't sell the plot just yet. Just hustle and pay the minumum deposit (say 0.5m). 2 years later when construction is completed the value of your plot could be high enough to clear the balance on the house.
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