I agree with you @kiwaru. You need to balance risk. I'll tell you for a fact, one of my long term goals is to build a block of flats.

Now, do rentals have the same yield as stocks? Not by a country mile! Returns in the stock exchange are far much higher that what you would get from rentals [surprise, surprise!]

Then why would I want to do flats.

1) My kids - They don't need much 'financial education' to collect rent if God forbid I was not around anymore. They might not necessarily fair too well in the stock market if they don't have the interest. The block of flats would be my security for them!

2) I might get tired of the stock market as I grow older - maybe prefer travelling to analyzing stocks and company performance. Luckily I will have the mother of all passive incomes.

3) Stability - Despite what happened in the US, rentals would provide a defense to any shocks that might be experienced in the future!

4) Risk averse(ness) - As you grow old, you become more risk averse. Low risk, low return will do. And in any case, you should have made your money in your younger ages and probably in old age you are just interested in protecting it from inflation!

But the fact remains, I will not do my block of flats on 15%+ interest mortgage. Best case scenario [henceforth referred to as 'the plan'. He he he], is to make my money in the stock market and else where then "park" some of the money in a block of flats!

So, if the @kiwaru guy bought shares 33 years ago worth Ksh 1 Milion, will he be worth Ksh 100 million today? Thats why i insisted to use an average rate of return of the NSE for the assumption to be valid.

I believe @kiwaru was discussing the % of his wealth that is held in different instruments, not earnings/income. Or which post are you talking about?

I quoted Kiwaru numbers, at an average of 15% return for real estate, the numbers remain the same. Your assumption is that the person paying the mortgage will just sit in the house he bought, and not sale it even though he knows that its worth more than Ksh 160M

Are you kidding me??? Can you kindly illustrate how you get 15% returns from a house you bought on mortgage. Not possible. Not at all. Even if you rent it out, the rent cannot cover the mortgage so we are definitely talking about NEGATIVE returns!

And kindly explain how the house worth 10m just became worth 60m - numbers please.

And remember the discussion here is about mortgage.