Tuesday, April 16, 2024

I’ve a new Sh. 40,000 net job; should I build a house at my boyfriend’s family land?

My name is Jessica. I just started my career as a secondary school teacher. My net salary is Sh. 40,000. I am really confused on where to start, but I have plans for investing in rental houses and may be also buy a plot and get a really nice house.

But honestly, I have no idea on what I should start with. I also want a car to help me commute daily. My boyfriend has been giving me ideas on how we can start a business at their rental houses and then get ourselves a house in the same compound. This is really distracting me. Kindly advise

Rhina Namsia, the founder of The Acemt Consulting, a training and consultation company that provides financial planning and investment advisory.

It is great that you have some goals when it comes to what you aspire to have in the future. The reason you’re not sure where to start is because your goals are not clear. By this I mean SMART goals.

You just know you want to have rentals and a personal car but you do not know by when, what kind of rentals, how much capital you can afford, and if you can afford both the car and the rentals at a go.

SMART goals enable you to ease the confusion that it is in reaching a desired destination. SMART goals stand for Specific, Measurable, Attainable, Relevant and Timely goals.

In your case, know where exactly you want to have the rentals built. Location will inform so many things in terms of costs. Ask yourself, how much capital you need for the project and whether it is attainable now, or how long will it take you with your current income to attain it, and what alternatives you can get to attain it.

On relevance, let it be goals that align with your own personal values and have a time frame of when you would wish to have the houses up and when you should start building them.

The answers you get are going to help you start somewhere, including on sourcing for capital, and making income and lifestyle adjustments.

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You just started your career and with a net salary of Sh. 40,000, you may never achieve your goals. They remain just dreams. You need to increase your income, acquiring  land, building rentals and buying a car are not a small fete.

One of the main ways to build on this income and achieve this kind of project is to join a Sacco. A Sacco will enable you to get a loan using the 3X multiplier effect on your savings at a very affordable rate and flexible payment terms and periods.

On top of that you will be earning some dividends annually on your share capital and deposits. This can be a good extra income that can come in handy as you start focusing on your big projects.

Most Saccos have development loans that are best suited for such projects as owning a home or property. As for the car, it may be a necessity but not an emergency.

When looking for a Sacco, you might want to start by vetting teachers’ Saccos. There are a number of then with a solid track record of supporting teachers with infrastructural development loans such as affordable home loans.

At a teachers’, you are also more likely to have colleagues who can also act as your guarantors should this be a factor when seeking financing.

Owning a vehicle comes with its own kind of expenses that need good cash flow. This can wait until you get to a point where your  cash flow has grown and is a bit stable, you just started working and a Sh40,000 net pay isn’t too much, especially with an escalating cost of living.

Manage your monthly expenses so as to be able to set aside a substantial amount to the Sacco. For instance start with Sh5,000 per month towards and exercise patience, discipline and consistency while at it.

It is not wrong to share investment ideas with your boyfriend but ensure you agree to disagree respectfully or decide to do these investments separately. You don’t have to build a house at their compound.

You are the ultimate decision maker in this case as he is not yet your husband and no one knows about tomorrow. If it doesn’t sit right with you to invest in their rentals then it is not right, trust your guts and protect your money at this stage.

Discuss it with him and let him know you don’t think it is the right thing to do and you would instead appreciate it if he helped you build your rentals with the experience he got from their family rental investments instead.

Relationships and finances are a sensitive topic and both parties should be open to talk and listen and support each other by acknowledging what’s logical and legally binding without the emotional factor at play.

For instance, if you invest in their rentals, then the relationship goes asunder, what legal protection would you have for the investment you will have made?

A version of this feature was also published in the local newspaper, Daily Nation, which is a publication of the Nation Media Group.

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