[quote=Genghis Khan]It is flawed to compare rent with mortgage installments which are part principal, part interest.

The interest is an expense comparable to rent, the principle is a locked in investment comparable to a savings account balance or money in your CDS. You can get this investment back in cash by refinancing or sale of the property... interest and rent are gone forever...

The difference is the underlying asset which in this case is real estate not stock. You should get capital gain and income (rent payable from u to u).

Things to consider
1. Price vs. value of property now and in future (u make money when u buy as in stocks)
2. Cost of debt vs. investment returns
3. Other investment alternatives {better yields / lower risk / shorter payback etc.}

Consider the random numbers below which I have not put much thought into.

2011
rent 50k
mortgage 110k
bread 40
fuel 120

2013
rent 65k
mortgage 110k
bread 65
fuel 170

2018
rent 90k
mortgage 110k
bread 120??
fuel 300??

2025
rent 150k
mortgage 110k
bread 200??
fuel XXXX??[/quote]

Quick question, would you buy the house now and rent out at half price, or you'd wait until rents were more reasonable (e.g. 2018 in the example)?

City Hall opens Nairobi’s leafy suburbs for high-rise buildings

http://www.businessdailyafrica.com/City+Hall+opens+leafy+suburbs+for+high+rise+buildings+/-/539546/1221476/-/11qr/-/

[quote=Drunkard] .......My analysis tells me that renter is the smart one based on the current propery market situation and the opportunity cost associated with the disparity between mortgage payments and rent payment! In short, invest the difference between your rent payment and mortgage payment for 15 yrs and see how much it will turn out to be![/quote]

@Drunkard, you cannot compare rent payments with mortgage. It is not all about maths, it is also about security.

Compare this scenario. A Tenant becomes incapacitated, or worse dies - family cannot anymore pay rent, and has to leave owners premises to I do not know where. Same happens to a person servicing mortgage, and the insurance pays the mortage difference. Family of the later is secure under their roof.

If one books a house off-plan (normally 10%), and as the developer constructs tries as much as possible to raise about 40-50%, mortagage of the remaining 50 -60% will be cleared in less time and lower interest.

In mortgage, one can also do top - up payments, hence speeding up the payments.

Supposing also that you have just started paying mortgage and the property you booked at 7.5m can now sell at 10-12m. I will not even blink, sell, pay up the loan, and pocket the difference, with which I am better off in another similar arrangement.

[quote=Genghis Khan][quote=Drunkard]
My analysis tells me that renter is the smart one based on the current propery market situation and the opportunity cost associated with the disparity between mortgage payments and rent payment! In short, invest the difference between your rent payment and mortgage payment for 15 yrs and see how much it will turn out to be![/quote]
What "current propery market situation"? Do not over-analyse.

Lemme give u an example, I got a mortgage for 6.25m for a 3bed flat.

I have paid up less than 300k and with 18+ yrs to go.

Now market price is at around 10m if I can sell with patience... force sell at least 8.5m... this is after 17 months... (2.25/6.25)*(12/17) = 25% return or 42% if you work with 10m.

Rent was around 35k, now its 45k... which is a 6% dividend...

My plan is to eventually buy land and construct when i have a family. By then i will have the OPTION to sell it and pay off the mortgage and pocket the change (5m plus i hope) OR rent out the flat and let someone else pay the remaining 15yrs of my mortgage ... by then rent will be higher than installments. Trust me i will make a good decision... based of course on the then "current propery market situation".[/quote]

[quote=StatMeister]City Hall opens Nairobi’s leafy suburbs for high-rise buildings

http://www.businessdailyafrica.com/City+Hall+opens+leafy+suburbs+for+high+rise+buildings+/-/539546/1221476/-/11qr/-/[/quote]
@GK this might affect your future sell

[quote=Genghis Khan][quote=eco]Compare this scenario. A Tenant becomes incapacitated, or worse dies - family cannot anymore pay rent, and has to leave owners premises to I do not know where. Same happens to a person servicing mortgage, and the insurance pays the mortage difference. Family of the later is secure under their roof.
[/quote]
I like![/quote]

Home loans have embeded life / disability covers. Anyone can still take these covers without a mortgage