Okay kave here is the deal. Most people who ask for advice are not willing to act on it,coz they wanna have their cake and eat it too.

If I were you,I'd never pay that 18k. If u do the math,that's a whopping 216,000 bob a year going to waste! This is what I would do. I'd buy a ka-small plot in the outskirts of town...rongai,kiambu,ruai etc. A really tiny plot would be cheap enough for you to afford or take a loan for. Alafu,just build a temporary one room or 2-room house on it....I'd even live in a mbao house. Afterall,all u need is a place to swatch at night since u have no famo. U can live in this shack,get the same good sleep at night...while you invest all ur money to future millions.

But if u (like most people our age) want to show ur buddies ati ata wewe uko...if u want to show the girls that boi is now an adult with a jobo...then 18K monthly is the price to pay. Making ur landlord richer and yourself poorer.

Personally,I'd rather the chiks not penda me today coz i live in a shack...and I become rich. once u become rich man,u'll get all the chiks u want...even the ones who dissed u...and I'm not just talking,I'm practicing what I preach...even here in stato. Sichezi..!!



'All they see is my glory...they don't know my pain. Nothing good comes easy in life.' - Multibillionaire Nelson Muguku Njoroge

Mainat- You raise very valid issues and I have to admit my perspective is not anywhere near exhaustive about the nuances of Nai real estate market. I agree with you that building(and thus cutting the middleman/mortgage out) is the best option. For simplicity sake,I disregarded renters inflation(which I assumed to be at par with inflation rate,which is ofset by income appreciation making it a wash,too siplistic of course) My perspective is that instead of the individual buying a mortgage right now,she is better off renting and saving the money,then using her savings to build her own house.

Regarding the real estate appreciation,I think buying Nai housing back in the 80s and 90s made a lot of economic sense. Not now. There is no way middleclass Nai apartments with poor infrastructures and inconsistent services should cost $118,000 to $166,000 per http://findarticles.com/...27/is_347/ai_n31039102/),which is more than similar houses in US and UK,where per capita income 50 times those of Kenya. That is why I think buying a house in Nai now would be the worst investment one could make because you would be buying at the peak of a very over-valued market. People need to realise that houses do lose value,the japanese know this,the english know this,the dubaians know this,the americans know this and I bet you Kenyans will know this sooner rather than later.

If I had to buy a house in Nai,I would just sit back and rent while saving,this gives one several advantages. First,you wait for the market to cool down. Secondly,you get to save some money which you could use to buy a house cash or build it from scratch. Thirdly,with time there will be more and better housing options at more competitive prices.





When in doubt,follow the money.

@kave,@TB,@Mainat and others,

This is an interesting discussion,but I guess there are many ways of killing a cat. My advice to @kave would be to move to a relatively cheaper rented house,in the region of 8-10k which for a one BDR house u'd probably get in a decent place. He can then use the savings of upto 50k per month to buy cheap plots in the outskirts of Nai. In 2 yrs u'll have invested a total of 1.2M. By the end of the 2 yrs the total value of investment will be 2M or thereabout due to appreciations. In 4yrs time,if u continue buying the plots at the same rate,u'll have invested a total of 2.4M and am sure the value of the plots will be 5-6M. Now,this amount will be more than enough to do a descent house I guess on one of the plots... Nowadays there are real estate companies that will allow u to buy land in monthly instalments going upto 2 yrs. My take..

..wise as a serpent,humble as a dove

@kave,

Your concerns of getting conned when buying plots can be mitigated by ensuring that you deal with credible guys.

I have been in the business for quite some time and I can assist you on that. I do clean deals. njengasg@yahoo.com

..wise as a serpent,humble as a dove

Gecko,you have to admit that this market is way different from the 1999 market before the bubble. To show you how ridiculous the prices have gotten away from the fundamentals,just look at the equivalent P/E ratio of real estate vs the current rate,you will discover how out of whack it is. The RE P/E ratio is calculated by taking the price of your home and dividing it by what it would rent for. Of cource the home here is the monthly mortgage plus related homeownership expenses. If this ratio is less than 1,then the homeowner has positive cashflow and vise versa.

Now how many Nai homeowners who are receiving less rental income than their monthly mortgage expenses. And for those who live in their houses,you will find that the mortgage they pay is way more than what they would be paying in rent for an equivalent house in the same neighborhood. Now Im not saying that this is such a bad thing,it is just that the ratios have gotten worse during the housing bubble and there are less homeowners in the positive cashflow territory.

Regarding the irrelevant cost,notice that I bring up the rental cost to draw attention to the opportunity cost of homeownership. That is why I use the difference(83K-50K) to calculate forgone ROI.

I think potential homeowners should remember that old investment adage about past performance not being a predictor of future performance. People are using the sckewed data during the bubble years to make projections. Big mistake. Use historical figures( several decades) .


When in doubt,follow the money.