The most common middle class money trap is buying/building a house. It provides people with a false sense of security. Consider this, you build your house, probably take some loans, and then you lose your job in the worst case scenario. What next? Like most people, you will sell the house for a song, because you believed the middle class fairy tale about owning a house and thought you were secure.
Build rentals, use that rent to rent the house you live in. That way, even in the worst case scenario that you lose your job or business collapses, the rentals will give you a lifeline and you can pick yourself from there. A house is a good thing to have, but you need the cashflow more than the house, especially as a young man coz shit happens.
A house is a consumption item, like food. You donât get into subsistence farming just because you need food. You buy the food with cash obtained elsewhere and if you lose your job, the subsistence farming wonât save you from other expenses like rent or school fees. The same way owning your house wonât save you from food expenses and school fees expenses. Cashflow is the holy grail because you can use it to pay for all expenses.
Sometimes you donât have to ask pple for advices. Kuna vitu mtu huamua mwenyewe. I know you have already made your decision hence whether you will build or not will not depend on the answers here.
Bad idea hio pesa nunua nayo shamba fanya nayo ukulima as you buy time the best way to build a house is when you are married and past 32 ndio utajua kama ulioa bibi ama kunguru women rarely setlle with a visionless broke men and if they do then they truly love you hao wengine ni kama nzi kwa mavi wamevutwa na uvundo wa pesaâŚ
I live in an area where some people own the houses they live in. During rona, some of them lost their jobs. Thatâs when they realized that a house is a consumption item because it couldnât feed them, pay their maids, etc. Some couldnât even pay a 5k service charge yet they call themselves proud home-owners. Obviously, they ended up listing their properties for a song. Those that moved out and tried to rent the houses out couldnât get tenants for their houses because houses donât rent as fast as apartments especially during an economic contraction. Owning a house is good if you own solid and reliable sources of income, not a regular job or business.
So if those pple didnât own houses and were instead renting wangekuwa better off? Ati kama huna solid income usikuwe na nyumba. I think hata huyo mwenye hana solid income ndiye anahitaji kuwa na own house
Life always revolves around cashflow. You can choose to bury your head in the sand like an ostrich, or face the reality. A house is a consumption item that is great to have, but should rank very low in a sober mindâs list of priorities. Buying/building a personal residence before securing your cashflow is putting the cart before the horse. If you lose your income in any way, and need fast cash, thatâs when it will hit you that the house was not actually an investment, but a consumption item, because you will be forced to sell it.
The only disadvantage with that system is that bills creep in which make you forget that you had a house to finish in the first place. You enter a comfort zone.
Problem number 2 is building a house while living in it mtasumbuana na mafundi proper. Mkipika lunch wanateremka downstairs kuchunguza ni nini miss mboch anapika. Na ujue fundi ni donât care.
Does it mean everything else in my life ni nyumba tu nitageukia kuuza kikiumana? Not everything I have is an investment. A family house, just like clothes, is a necessity.
This is a debate that never ends but I dont see people mentioning opportunity cost. If you use those millions to build a home remember that the money will be held up over many years. If you have 5m right now you could have decided to increase your earnings by doing business instead. Building the house gives you security and you can sleep better but it also robs you a chance to improve your cashflow by investing that cash and doubling it. Whatâs more important to you at 28 (assuming you are unmarried and childless)? Building a home yenye hujui nani atakaa (you may get triplets), ama improving your financials till you decide on family
Hii debate most people have drunk the full kool aid that banks, and society tries to push to the middle class. A guy has a good run in his younger years in business or in his career and the first thing he does is buy/build a house. It sounds smart at the beginning coz who doesnât want a roof over their head. At 28, you already know that if you are employed, younger guys get cut first. If you are in business, most businesses donât stay super profitable for long before competition sets in etc. At 28, you have many good and many rough years ahead of you. A personal residence wont cushion you during the rough years. Cashflow will.
Example:
Two guys work their asses off, get 15M each. Person A builds some bedsitters with that money. Person B builds a mansion. Both get fired immediately after completing their projects. Person A will live off the rent, re-adjust his lifestyle and survive on the rental income. Person B will experience a cash crunch, sell the house for a song due to desperation, and probably make dumber decisions with the remaining cash.
the dream house.
3 floor house with 3 bedrooms spanning the whole floor. These 3 bedrooms can still be separated into bed-siters with a common area⌠table room and kitchen. live in one floor or rent them out as a 3 bedroom houses or bedsitters.
ALWAYS PLAN A HOUSE FOR SALE OR RE-PURPOSE- MULTIPLE RE-PURPOSE