Your Own House

I expect a lot of backlash for uttering these ungodly comments, considering that most of you work your entire life to finance a personal residence, but a personal residence is not an asset. It is a liability. Assets put money into your pocket, not take from it. I find it ironic that people work their whole lifetimes to finance a liability. Personally, I have no problem renting until I am retirement age. But I have a problem not owning rental property e.g flats, that actually fit the description of assets because they put cash into your pocket. In my opinion, viewing a personal residence as an asset is the greatest misconception most people have. You find a young guy splashing 15 million on a townhouse that he can rent for pennies (50k) and use the rest to build assets that actually put money in his pocket like rentals. Take this hypothetical case of two people, Jane and Billy.
Jane:
Jane rents a townhouse worth 15 million for 50k per month. She then uses her 15 million to build bedsitters and gets 150k per month from her rentals. She deducts 50k and is 100k cashflow positive.
Billy:
Uses his entire 15 million to build the townhouse next to Jane’s residence (which she rents). Billy saves 50k that he would have paid in rent, but that’s it.

At any month, Jane will have 100k more than Billy from her rentals. Remember that there is an oversupply of houses in higher and middle income segments. Jane’s rent will stagnate for a long time, but the demand for bedsitters is very high. She will increase the rent on her investment at a higher rate than the rate at which her landlord hikes hers. Both Billy and Jane will enjoy the same standard of life but in the long run, Jane will have more money for other investments. Just my two cents. Your own house is a liability, not an asset.

Wacha kusumbua sisi na hesabu on a friday. Wacha watu waishi watakavyo.

I agree…
My plan is simple rental units are going to pay for my pigsty…

First of all an asset is any item of economic value owned by an individual that can be converted to cash,
Both Jane and Billy have assets, the only difference is one generates a higher return than the other,
If we were to take into account the non-financial value of the assets it can be argued that both of the houses provide the same return,

Mimi pigsty nita-own very late in life, probably sixties. Lakini by then nikuwe na major income from rental units. Kuanza na pigsty ukiwa young ni “kulalisha” pesa mingi sana. It is only good for the ego, not your pockets.

I like your reasoning, but people build/buy houses for different reasons. In my situation, a house is form of security and freedom- I don’t have a landlord wa kusumbuana na yeye. I, however, think that a personal residence is an asset. Also gives me a chance to customize the house and make it my own.

You have a valid point concerning a lot of cash for building rentals. I totally agree that sometimes residential homes might be at some point be a liability.But the main reason why people build homes is of course security in life. Take for instance when sick and still in plot

On the flip side, it ties you down. What happens if your area becomes insecure three years from now? If I am your neighbor, but a tenant, I will just call the moving company to another house in another neighborhood. Being a tenant also has advantages over being an owner. It allows mobility. Ama hata sio insecurity, water rationing ama transformer iharibike often mkosange stima kama daily. There are many things that can inspire people to shift. Owners remain stuck.

Their is this conservative talk radio show host by the name Neal Boortz, out of Atlanta Georgia . Who stayed in a hotel from the late 70’s till he retired in the late 2000’s.
He did his calculations and hotel carried the day. Over 30 years in a hotel ! ! !
I guess it’s the same logic people use when leasing cars.

The ONLY reason people build personal homes before better investments like rentals is EGO. Nothing more. They can camouflage it in many ways such as “security” “peace of mind” etc…but its all just ego. If you rent a townhouse for 50k, when was the last time you met face-to-face with your landlord?? I almost forgot how the guy looks like personally. If you pay your rent on time, then I dont see how you can lack peace of mind.

I once more agree with you, BUT (you know that was coming) at my age (I recently hit the 4th floor) with kids, mobility is not an issue because I really don’t want to move.

Pesa itakumaliza kijana. Life is not all about making money. Any way, kila nyani na starehe zake. I’ll never regret.

Kila mtu apambane na hali yake!

Jane lazima ni single mother

Robert Kiyosaki in “Rich Dad Poor Dad” holds the same view that a personal residence is a liability not an asset.

:D:D:D

What is the value of peace of mind mturandom? The value of the pleasure of seeing the mu-afocado tree you planted in the yard is finally fruiting. The joy of hearing birds chirping in the trees you planted in your compound. When you have the answers come tell me why I should keep on giving money to someone else.

“Rent where you live, own what you can rent to others” - Grant Cardone (Real Estate Multimillionaire)

https://www.youtube.com/watch?v=bSRA9VcrGeI

Owning rental property gives you the same peace of mind. So what’s your point mzee?? You are assuming that pesa zinawekwa kwa mattress wakati unajenga pigsty yako.

I hope you’re joking, lol. I really can’t regret because I got a good deal after the 2007-2010 mortgage crisis. I already have at least $100k equity now.

He’s still too young to get this.
For him it’s about buying a house and not building a home for his family.