digitek1 wrote:vky wrote:similar concept but method and execution is inverse of what you have but its all good we need such strategies to make property affordable.
@a4architect, my thoughts exactly, using a personal loan as opposed to a mortgage would work well, say, @obiero decides to sell his nyayo estate house at 6m, @vky is interested in the house but can not meet the requirements of a 6m mortgage but has access to a personal loan facility of upto 2m, vky can opt to buy 25% of obiero's house for 1.5m and also pay obiero a monthly reduced rent of 14000 if the normal rental rates are 28000, vky clears the personal loan in five years then takes out another personal loan to buy the next 25% till he gets to fully owning the house.
this arrangement would last 20yrs or less with obiero getting 1.5m every 5 years plus reduced rental yield over the entire tenure of the agreement
after the first five years the house value has gone up so the next 25% is much higher... no savings here
The price of the house is agreed on at the beginning and is not changed. If it is 6m you pay 1.5m four times or 2m twice. Seller's benefit? Rent before you finish paying for the house. If rent was 28k, after paying the first 25%, your rent becomes 21k. So you'll pay the seller 21k * 12 * 5 = 180k before you can pay for the next 25% and the cycle goes on and on. This 180k doesn't count as payment for the purchase of the house. It is rent for the 75% of the house you DON'T own!
Why this my not work in Kenya. In the west, under normal circumstances (ignoring the property market crash which was a special case), there are no crazy swings in terms of property prizes and rents. In Kenya on the other hand, the prizes of land and houses increases at crazy rates and only a confused property owner would agree to such an arrangement. I'd rather continue getting 100% rent and then sell the house at double the price in a couple of years - lump sum! Win - win! More rent, more lump sum. And in the mean time I would have increased the rent a couple of times.
I would NEVER sell my property in Kenya under such an arrangement!! But if there is anyone willing to sell me his property on the same arrangement, bring it on. Even if you quote an above market rate price, I'll still come out as the winner! Any sellers???
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.