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Is Taking a Mortgage the WORST Decision Ever??
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mkonomtupu
#211 Posted : Monday, May 12, 2014 10:44:35 AM
Rank: Veteran

Joined: 2/10/2010
Posts: 1,001
Location: River Road
MaichBlack wrote:
sparkly wrote:
Jamani wrote:
Mortage issues aside...real esate investment vs stock investment....real esate is far much better.


How?

Same as stock. Buy low sell high.

I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.

You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet.

Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does...

Trick - Buy places that are opening up and wait...


@MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets
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MaichBlack
#212 Posted : Monday, May 12, 2014 10:47:29 AM
Rank: Elder

Joined: 7/22/2009
Posts: 7,910
Kitengela is another good example - For people who got in early. They were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought!
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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  | | Edit by user: Monday, May 12, 2014 1:12 PM | Reason: Not specified
MaichBlack
#213 Posted : Monday, May 12, 2014 10:54:22 AM
Rank: Elder

Joined: 7/22/2009
Posts: 7,910
mkonomtupu wrote:
MaichBlack wrote:
sparkly wrote:
Jamani wrote:
Mortage issues aside...real esate investment vs stock investment....real esate is far much better.


How?

Same as stock. Buy low sell high.

I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.

You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet.

Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does...

Trick - Buy places that are opening up and wait...


@MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets

Borrowed money creates panic. Good example: safaricom Shares! Those who bought using loans bolted out at a loss! Those who had used their own money [most - me being one of them] stayed put even when it was at 2.x/=. Some actually added more!

I can only borrow for "sure" investments. Those are few and far apart.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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a4architect.com
#214 Posted : Monday, May 12, 2014 11:00:43 AM
Rank: Veteran

Joined: 1/4/2010
Posts: 1,668
Location: nairobi
the trick in investment is in gaining as much info before buying. If its stocks, those who know which stock is undervalued, overvalued, has better management etc will make returns. In real estate, those who know which property has the best opportunities for growth, is undervalued, overvalued, structurally sound, has room for improvement etc make the best returns and vice versa.
As Iron Sharpens Iron, So one Man Sharpens Another.
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2012
#215 Posted : Monday, May 12, 2014 12:25:02 PM
Rank: Elder

Joined: 12/9/2009
Posts: 6,592
Location: Nairobi
MaichBlack wrote:
Kitengela is another good example - For people who got in early. The were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought!


Very true. Kitengela was one of my regrets. I was working on Msa road back then and land around EPZ was going for 'would you believe' 35k an acre!!!?
We all knew about it but wisdom was not with us. I actually bought a car on loan for 720k at that time. I used to feel pain whenever I saw any Nissan of that model.

BBI will solve it :)
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jaggernaut
#216 Posted : Monday, May 12, 2014 1:04:47 PM
Rank: Elder

Joined: 10/9/2008
Posts: 5,389
2012 wrote:
MaichBlack wrote:
Kitengela is another good example - For people who got in early. The were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought!


Very true. Kitengela was one of my regrets. I was working on Msa road back then and land around EPZ was going for 'would you believe' 35k an acre!!!?
We all knew about it but wisdom was not with us. I actually bought a car on loan for 720k at that time. I used to feel pain whenever I saw any Nissan of that model.


You could be a billionaire today.Pray
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SittingPretty
#217 Posted : Monday, May 12, 2014 2:12:58 PM
Rank: Member

Joined: 2/16/2013
Posts: 123
Location: MSA
mkonomtupu wrote:
MaichBlack wrote:
sparkly wrote:
Jamani wrote:
Mortage issues aside...real esate investment vs stock investment....real esate is far much better.


How?

Same as stock. Buy low sell high.

I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.

You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet.

Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does...

Trick - Buy places that are opening up and wait...


@MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets

Thanks to this thread I have made a decision I had not even contemplated a week ago:
Got an offer letter for a small plot to be paid by cash, and had to do it fast before I change my mind, and applied for another small mortgage.
My plan would to use my current rent and some extra cash to clear the debt as fast as possible. This means I also will pay more visits to the fuel pump. Apply for a loan against the free house to develop the plot. Would I have made a good decision, on the mortgage?

Timely advice is as lovely as golden apples in a silver basket. Proverbs 25:11
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webish
#218 Posted : Monday, May 12, 2014 2:13:28 PM
Rank: Member

Joined: 10/19/2009
Posts: 671
Location: Nairobi
2012 wrote:
MaichBlack wrote:
Kitengela is another good example - For people who got in early. The were selling/buying pieces of land. No one was selling plots. That would have been akin to selling matchsticks [as opposed to the whole match box!] because the prices were dirt cheap! Now... 1/8th can pay for the 2 or 3 acres you bought!


Very true. Kitengela was one of my regrets. I was working on Msa road back then and land around EPZ was going for 'would you believe' 35k an acre!!!?
We all knew about it but wisdom was not with us. I actually bought a car on loan for 720k at that time. I used to feel pain whenever I saw any Nissan of that model.


Pole. Precisely, which year was this? "Back then" is quite relative.

Life is joy, death is peace, but the transition is very difficult.
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Wendz
#219 Posted : Monday, May 12, 2014 4:03:25 PM
Rank: Elder

Joined: 6/19/2008
Posts: 4,268
knight026 wrote:
2007-2014= -15.89%
2007-2011= -22.68%

The returns have been good past 5 years because the market had bottomed out in 2009.



You are absolutely right if you use the "Sitting Duck" as your investment strategy. If you ride the wave, then you sure will get better returns.
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  | | Edit by user: Monday, May 12, 2014 4:05 PM | Reason: Not specified
mkonomtupu
#220 Posted : Monday, May 12, 2014 5:04:56 PM
Rank: Veteran

Joined: 2/10/2010
Posts: 1,001
Location: River Road
SittingPretty wrote:
mkonomtupu wrote:
MaichBlack wrote:
sparkly wrote:
Jamani wrote:
Mortage issues aside...real esate investment vs stock investment....real esate is far much better.


How?

Same as stock. Buy low sell high.

I invest in both stocks and real estate - using my own cash. I don't borrow to buy stock. I don't borrow to buy real estate.

You can make a killing from real estate - using your cash! Like the Ruiru bypass has made me a very happy Kenyan. Example: Bought a plot behind Kamakis (there was no Kamakis at the time - just one lonely looking pub/nyama choma place) just after the bypass was done. At that time, a plot - 2nd row - was going for 800k for an 1/8th. Today - 4 million!! And the place is just starting to grow! But I'm not selling yet.

Last year bought a couple touching the great eastern bypass. The road is not built yet. Just beacons. Guess what! Most locals - including brokers don't exactly where it is so the price was low. People are also not sure "if the road will ever be built and when". But when it does...

Trick - Buy places that are opening up and wait...


@MaichBlack, why are you afraid of leverage a.k.a. debt. Leverage is one of the big tools after compound interest. So long as your rate of return is bigger than the cost of capital you can use leverage to go places. I have just finished paying up my Sacco loan for the the NIC and KCB shares bought at 25/ and 23/ respectively. Used in the right way using "other peoples money" will boost your portfolio. My rule is not to exceed 50% of my total assets

Thanks to this thread I have made a decision I had not even contemplated a week ago:
Got an offer letter for a small plot to be paid by cash, and had to do it fast before I change my mind, and applied for another small mortgage.
My plan would to use my current rent and some extra cash to clear the debt as fast as possible. This means I also will pay more visits to the fuel pump. Apply for a loan against the free house to develop the plot. Would I have made a good decision, on the mortgage?



Go for it if it's a small mortgage and the returns will be greater than your cost of capital(total loan+interest repayment). My cost of capital for sacco is 1% p.a. i.e. around 7% on a straight line
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