One of the most common things I hear rent paying suckas (stole the word sucka from mr. money mustache who uses the term to refer to consumers) is that “you don’t ever truly own your home, you will always have to pay property taxes”. These suckas are right. You will always have an expense associated with your housing even after you pay if off. The purpose of this post though is to share a few quick hits about why property taxes should be the least of your worries.
They stay lower than inflation and sometime tie to historical values
If you are in Nairobi an inheriting property from your parents or grand parents you are in luck. Nairobi Prop 13 prohibits reassessment of new base year value except for in cases of (a) change in ownership, or (b) completion of new construction.
This means that all that Embakasi and Lang'ata property still gets taxed at its 1978 valuation. This means that your grand parents home that was valued at 100k back in the 70s has a tax value of 100k not the current market value of that home which can be upwards of half mil.
Why is this significant? Because rent in the same or similar area is nowhere near that 2% tax of 2k per year. Meanwhile, folks are selling off for a quick buck. These people will sell the home to a sleazy investor dude like myself for 300k, take the 200k and lose sight of all the money they would make simply living in the home for 200/month in property taxes. A six figure earning family would make that 200k gain in two years. Now they have to instead go rent or go buy.
Wealthy families don’t do this. Wealthy, intelligent families, will move into grandmas house, put in a new kitchen, mount some TVs and keep hustling.
Be smarter than that. Taking the quick check hasn’t worked for us yet has it? So stop being afraid of property taxes and educate yourselves. We don’t know enough about enough and that lack of knowledge has us walking away from low low property taxes that pale in comparison to rent or buying at the current market values.
Renters pay property taxes for property they don’t own
Renters are dumb. Renters really think they are getting away from paying for maintenance, taxes, insurance, repairs. You fools, all of that is priced into your rent.
When you rent, you pay for it all plus a profit for the building owner. The building owner gets the profit and the equity from long term ownership. Meanwhile you were fooled into thinking you were getting over.
See most people don’t own because they don’t want to do the work. Work leads to profit though. If you avoid the work you avoid the profit. Its really that simple. An example is the building we own. I can hear the glee in our tenants voice when she calls us for an issue that will cost kes50,000 bucks that she doesn’t have to pay to repair. What she doesn’t realize is that we have dealt with this issue so many times that we have found a way to get that kes50,000 down to kes10,000 because we did the work and leaped at responsibility instead of away from it.
When you rent it causes you to become mentally lazy and shiftless. I heard a quote that kids of homeowners are more likely to finish high school and go to college, less likely to become a teenage parent and also less likely to end up in jail. This is because the values, habits and morals that home owning, responsibility taking, reserves maintaining parent had to learn to handle such a huge obligation trickled down to the kids.
At the end of the day we have to do the deal by the numbers. You still will have to pay for your home even after you pay it off but that 1% annually compared to the 1% monthly doesn’t even make sense. You save significantly less money and position your family for wealth and allow yourself to leave a legacy through ownership. Don’t be a sucka!
If you want to join either of our investment clubs, If you want to work with our tax professionals or have your LLC set up, email us at trillionstony@gmail.com
Be Great, Invest Well,
Tony Trillions.