One-Stop shopping a revolution in property industry

Buying or building a home is more often than not a complicated process and people are finding the process is more manageable when they are also able to get bundled services from their mortgage financier. Consumers today want to deal with one firm and have a single point of contact for all the services that are necessary in the home-buying process.

Apartments in the Kileleshwa Area in Nairobi - Kenya.

Today efforts by Housing Finance to push bundled services are bearing fruit as more home buyers are turning to the firm to offer a variety of services and thereby, are having a better home-shopping experience. The advantages of one-stop shopping include making the transaction less expensive, more manageable, convenient and having agents and other providers working together to ensure completion of the transaction. Players in the construction and property industry continue to improve the consumer experience through Housing Finance’s Property Point.

The Property Point was established as a one-stop point for property developers, estate agents, suppliers and buyers of housing and construction materials designed to make the process of property acquisition easier. The Property Point features displays from suppliers of property in Kenya, thus enabling customers to access a wide range of options under one roof. To simplify the whole process, Property Point has entered into strategic partnerships with suppliers of building and construction materials such as cement manufacturers, tiling, paint manufacturers, cabling, storage tanks etc to make all these services accessible under one roof. This concept is a first in the East African region.

One stop shops not only offer buyers the most attractive rates and the broadest menu of products; it's also good for the builder from a control standpoint, and as a new business opportunity. These bundles or packages enable home buyers and builders a chance to compare or shop the prices of these services in order to make educated decisions affecting the end result - a successful and cost effective closing.

One Stop Shopping does not imply that every service has to come from a single vendor, rather it affords the consumer the option to go to one place to get these services. There is no doubt about it; the consumer is gaining control of the home finding process. Consumers are beginning to look for ways to control the home buying and selling process and are looking for ways to simplify and bring predictability to the settlement process.
Consumers have already indicated a strong desire for simplifying the transaction by looking to one single source to obtain all of the services they need. The consumer demand for simplicity, transparency and value will continue to grow and bundling will be an increasingly important strategy for meeting these standards.

The writer is a specialist on property at Housing Finance. For more information contact

Housing Finance on 3262000 or email propertypoint@housing.co.ke or marketing@housing.co.ke  .

Websites: http://www.housing.co.ke/ ; http://www.propertypoint.co.ke/

How zoning laws can affect your property

Zoning is a system of land use regulation in various municipalities which in practice designates permitted and extent of uses of land based on mapped zones which separate one set of land uses from another. Zoning regulates building height i.e how many levels can be built, plot coverage and ratio and similar characteristics or some combination of these.

View of a plot in Kitengela

Local governments use zoning as a permitting system to prevent new development from harming existing residents or businesses and to preserve the quality of a community.


Zoning laws affect the value of your real estate property. there are three main zoning classifications: residential, Commercial, and Industrial.  Residential zoning applies to residences and multi family dwellings, commercial zoning usually applies to office blocks and businesses, and industrial zoning normally applies to manufacturing shops and plants.  Zoning laws vary from town to town, so make sure that you know the zoning restrictions on any real estate before you invest.


The purpose of zoning laws is to specify what types of dwellings or businesses may reside in a certain area.
Zoning laws may change, and a real estate investment that is zoned commercial or residential today may be rezoned for another use in the future.


If you invest in real estate for rental purposes, your tenants may cause zoning problems if they change the use of the rented facility. Tenants who convert their home may unknowingly violate zoning laws, so it is very important to have a clause in your lease agreement stating what can and can not be done on your rental premises.


Another way that zoning laws may affect your real estate investment is when zoning is changed from one class to another. If the zoning is changed from residential to another class such as commercial, this can mean a higher property value, which means more value for your investment.
Before buying a property, it is important to talk to an expert through housing Finance who will explain to you how municipal laws will affect your property.


The experts will let you know for example if in five years, your beautiful views will be replaced by a highway or a high rise development. Zoning regulations will indicate what may be legally constructed in the surrounding area.


A variety of ordinances will also affect the placement of your new home on the lot. Regulations will specify how close you can build to the property line, roads, rivers, and lakes.  Easements for electrical and telephone poles will limit the space you have for building your home.


Unless the property is in a development of suburban tract homes, there may not be easy access to electricity or public water lines. If there are no municipal sewers, you'll need to know where you may legally place your septic system.


Zoning may include regulation of the kinds of activities which will be acceptable on particular plot such as open space, residential, agricultural, commercial or industrial, the densities at which those activities can be performed from low-density housing to high-density buildings, the height of buildings, the amount of space structures may occupy.


It is very important for an investor to know the zoning requirements of any property before they invest. Find out from a Housing expert what these laws are and any proposed changes. This can save you a lot of money and aggravation.
Make sure that your lease agreement states what activities are allowed and not allowed on the rental premises. Find out what the other properties in the same area as the possible investments are zoned.


By being aware of the zoning laws and requirements you will avoid some costly and time consuming mistakes.


The writer is a specialist on property at Housing Finance. For more information contact


Housing Finance on 3262000 or email propertypoint@housing.co.ke .


Websites: www.housing.co.ke; http://www.propertypoint.co.ke/

National Money Talk Night

Everyone that knows me, I like to think, knows how much I believe in the family as the cornerstone of civilization.  If families could effectively manage their resources – both human and financial – a lot of the “problems” our government is called upon to “solve” would not exist.  Yet, I also know that most people know precious little about their financial matters and it is clear that our country needs us to know more.

So, today, I am writing to spread the word about an attempt to reach our families in their homes.  I am writing about National Money Talk Night on September 16, 2010.  This program is the product of discussions with Jean Chatsky, nationally known personal finance author and media personality, the Council on Economic Education, the Jump$tart Coalition, and Jump$tart partner American Express. Their discussions led to the concept of taking a night, during the back-to-school window, where parents would be asked to talk with their children about money.  Generally, I do not like to promote for-profit enterprise activities.  Yet, the financial literacy crisis calls for action, a change in tactics, and the partners involved in this program have moved me to promote this attempt to educate the public.

Over the past few months, the coalition of partners has worked on a website where parents pledge to have a talk with their children about money.  Ms. Chatsky’s has created age-appropriate toolkits and videos for each of the following age groups: middle school, high school and college students.  In preparing these videos, Ms. Chatsky worked very closely with the Council on Economic Education, a Jump$tart Partner as well as a partner of our academic department - we are home to a center for the Missouri Council on Economic Education.  I mention this partnership, as the Council on Economic Education has edited Ms. Chatsky’s work for objectivity, suggested changes, and after several iterations the Council has found the end result to be a quality educational piece worthy of endorsement.

What I hope you will do is to pass this information along to people you know with children in the target age groups or with professionals who work with children in these age groups – like your public school system!   The way the program is set up is for participants to go to the welcome video on the site – here's the link to their home page - as well as to their other resources.  You’ll have a short 70 second video of Ms. Chatsky introducing this project and then you’ll be asked to pledge to participate and, yes, they ask if you’re an American Express cardholder and it is OPTIONAL for you to answer this question.  The point is that American Express, a private company, is working with a team of not-for-profit entities to address this area of societal need. 

What I am doing is encouraging you to spread the word to your friends, colleagues, teachers and the parents across the country about this attempt for change.  Just think how powerful it would be for several million families to talk among their members about money and what this could do to teach their children about money. 

For my fellow teachers, I want to say Thank You.  Thank you for the work that you do to teach financial matters to our country’s children.  I am sure that Ms. Chatsky welcomes this chance to help you do your job and to use her position as an effective messenger to extend the reach of our efforts.  For me, I really love for people to find financial success – on their terms.  And “their terms” often come from the talks that occur around families’ tables – at least those were the greatest gifts my parents gave to me.

 

Children and Allowance

I have been thinking about my children’s weekly allowances because of, well, an “incident” at the toy store last week.  My son wanted to buy something with his money.  One choice was a set of plastic figures—which I knew whole heartedly he would take out of the box, play with for five minutes and become frustrated with the lack of move-ability or anything else.

 

Then I did one of those mom things and muddled the waters.  I tried to talk him out of those figures.  And gave him all of the reasons not to buy them. 

 

But, then I recalled all of the many articles I’ve read about children and allowances.  The only way for children to learn about money is for them to spend it. It is much better for children to make small mistakes early with their money than to make big money mistakes later on in life.  If you give an allowance, the choice should be theirs as to what they buy so they learn the value of their money.  So then I started to back track on talking him out of the figures.  I ended up confusing and upsetting both of us, and my son left empty handed.  At the moment, I did not feel like I did a good job of handling the allowance guidelines.

 

How is a good way to structure allowances, so youth learn those valuable financial lessons? 

 

Lewis Mandell, PhD, has found that a majority of 12^th graders graduate from high school without an understanding of money and finances.  Having a financial class does not seem to be enough. Youth need practice in dealing with money and making decisions on saving and spending.  An allowance is one way many families hope to give their youth just such experiences.  When giving an allowance, you might consider some of the following.

 

Setting up the allowance

Some families give an allowance unconditionally, that is, the children get a set amount every week or every month just for being part of the family.  Others believe that children should get the allowance as a reward for doing chores.  And some people combine approaches, giving a set amount and then paying extra for chores.

For example, at our house, we believe that certain chores and jobs have to be done as part of a family.  We do not pay for the day-to-day things that have to be done.  We give a weekly allowance separate from that. 

 

Allowance amounts

Before the age of five, children may have a basic sense of money—for example, recognizing coins. Cognitively, though, they will not begin to understand the value of an allowance until around ages 5 to 7 (around 1^st grade).

 

So, how much do you give?  Some recommend $1 per week for every year of age.  Others say half of the child’s age.  It depends on your resources, the size of your family and on what you expect the youth to pay for, too.  Some teens have to buy their own clothes, so the allowance might be higher to include those items.  Whereas, some youth can spend allowance on toys or entertainment only and not have to buy clothes.

 

The research firm Yankelovich did a national survey in 2005 of almost 1,500 children.  The study found that less than 60 percent of children ages 6 to 17 get some sort of an allowance.  Those who do get an allowance, got anywhere from less than $5 a week to $50 per week. 

·         6- to 11-year-olds—the average is $5 to $9 a week

·         12- to 17-year-olds—the average is $10 to $19 a week

·         around 15 percent of 12- to 17-year-olds received $20 to $49 weekly

 

Concept of spend-save-give

In giving children and youth an allowance, families hope to instill financial knowledge in their children. By the time youth are in college or young adults, they should be able to manage a year’s living expenses.  To be able to do so, they need role models and they need a chance to practice through the years.  This includes saving money and learning they cannot have everything right away.

 

Some families set up an 80/10/10 rule for saving and spending.  Children save 10 cents from each dollar; set aside 10 cents from each dollar for giving; and have 80 cents from each dollar to spend as they choose. (Or some other sort of breakdown for how much to save and spend.)

 

For very young children, this might be giving them coins to put into a piggy bank or box to save until they have a better understanding of what money means.

 

For younger children (and even for adults), one way to do this is by having envelopes or jars labeled “spend,” “save,” and “give.”  When children get an allowance, they divide their money into the corresponding envelopes or jars.  Or, as youth get older, they can set up electronic spreadsheets with spending-saving-giving categories and track expenses there, too.

 

As with other parenting issues, families need to decide what works for them in regard to allowances. They need to consider the ages and developmental stages of their children, but will need to see what works for them.  It’s good to revisit every few months or each year, and if one approach isn’t working, families can try a different one.

 

And lucky for me as a parent, the toy store event was not a single time opportunity.  The frustration was part of life’s lessons—things don’t always work out like planned (for both my son and me).  But we’ll still have plenty of chances to practice those money lessons and skills. 

 

For more information on allowances, see the following (these are just a few website resources):

·         Children and Allowances http://missourifamilies.org/features/financearticles/allowance.htm

·         Kids and Money Newsletters http://www.ext.nodak.edu/extnews/pipeline/d-parent.htm

·         Age-by-Age Guide to Giving an Allowance http://parenting.kaboose.com/age-and-stage/age-allowance.html

 

Lucy Schrader
HES Associate State Specialist and
Building Strong Families Program Coordinator
University of Missouri Extension
162 Stanley Hall
Columbia, MO  65211
573-882-4071
SchraderL@missouri.edu

 

 

References

Kids and Money. Retrieved August 17, 2010, from North Dakota State University Extension Services: http://www.ext.nodak.edu/extnews/pipeline/d-parent.htm

Mandell, L. (n.d.). UB School of Management. Retrieved August 16, 2010, from Lewis Mandell: http://mgt.buffalo.edu/faculty/academic/finance/faculty/lewm

Moses, E. (2000). The $100 billion allowance: Accessing the global teen market . New York: John Wiley & Sons, Inc.

Yem, S. S. (n.d.). Kaboose. Retrieved August 16, 2010, from Age-by-Age Guide to Giving an Allowance: http://parenting.kaboose.com/age-and-stage/age-allowance.html

 

Turning dreams into homes

For over forty years, Housing Finance has been “turning dreams into homes” for thousands of Kenyan families and housing developers. Mainly by providing easy access to mortgage finance and by enabling our clients to save money as they build, buy and own their homes.

Housing Finance was incorporated on 8th November 1965 as per the Banking Act, under the name the Housing Finance Company of Kenya. Our founding shareholders are the Commonwealth Development Corporation (CDC) and the Kenyan Government. In 1992, Housing Finance Company of Kenya offered part of its equity to the public and became a quoted company on the Nairobi Stock Exchange. Since then, shareholding of the company has changed partly through a share issue on 26th February 1999 when 30 million government shares were put on offer to the public and on 11th July 2007 when the CDC Group agreed to sell all its shares to Equity Bank Limited and British American Investments Company (Kenya) Limited (BAICL). The shareholding stood at 7.32% Government, 20.0% Equity Bank Ltd, 4.9% BAICL, 7.87% NSSF and 59.91% to the public.
The company then undertook a Rights Issue in June 2008 where the firm was seeking to raise Kshs. 2.3 Billion through issuance of an additional 115 million shares. The shareholding then changed to 3.7 % Government, 24.9 % Equity Bank Ltd, 17.25% BAICL, 6.83 % NSSF and 60.8 % to the public in which it currently stands.

The rights issue was declared a success with a 3% over-subscription. The money would be used to recapitalize the Company's Property Financing and Development business.

Perhaps however, the most significant change took place on 6th March 2002 when the company re-branded. Out of Housing Finance Company of Kenya was born the vibrant and aptly named Housing Finance. A company built on the strength of the old yet; clearly focused on availing new housing opportunities to homeowners, and meeting the growing housing challenges of today.

For example in our first year of operation of 1966, we provided a total of 34 loans of maximum Ksh. 100,000 each. Today, Housing Finance serves over 40,000 customers with deposits of Ksh. 8.4billion.

This is a new Housing Finance which is working towards being:
‘The premier financial enabler for the property industry in Kenya’

Efficient Indexing

The debate between the believers of index investing and the supporters of active investment management continues.  My guess is that this debate will never cease.  We do find that that index investing outperforms the majority of money managers, when markets are generally rising, and that the expense ratio of index mutual funds are quite low, as there is little for the manager of a pure index fund to do, except buy what is in the index .  Indexing also allows the investor immediate diversification and reduces the potential for style-drift that can effect active managers’ pursuit of returns.

 

Indexing has been around since the 1970s, when Wells Fargo and American National Bank established the Standard and Poor’s Composite Index funds for their institutional clients.  Later, one of the strongest proponents of index investing, John Bogle, founder of Vanguard Mutual Funds, started the First Index Investment Trust in 1975.  Moreover, index investing has been widely supported by research such as Malkiel’s, A Random Walk Down Wall Street (1973) and Ellis’ The Loser’s Game (1975). Yet, there are some aspects of indexing that we would like our readers to know.

 

Traditional indexing is where the money manager simply buys what is in the index, in accordance with the standards of the index.  For example, if the index is the Standard and Poor’s 500, a value-weighted index, the manager simply buys the stocks in the index in the same proportion as their equity value is represented in the index.  If, for example, the value of one large firm makes up 1% of the index, then 1% of the index’s funds will be invested in that firm.   Moreover, traditional indexing requires that each firm in the index be purchased, regardless of the quality or financial strength of the firm.  (It is indexing, not analysis.)

 

Synthetic indexing mimics an index through the purchase of derivative products, such as equity index futures, and low risk bonds to replicate the performance of a similar investment in all the equities in the index.  This is similar to enhanced indexing, where index fund management is “improved” by trying to generate slightly greater returns by employing strategies to fund management.  Popular strategies include a) constructing a proprietary index rather than one designed by a third-party, b) trading algorithms where elements are traded to enhance returns, c) tax strategies where elements are bought and sold to reduce taxes, and d) excluding certain investments that do not meet the standards of the index, such as firms with excessive debt, in bankruptcy, or facing a particularly volatile period in their history.

 

A growing segment of the market for indexing products are Exchange Traded Funds (ETFs) that are bought and sold on the major stock exchanges, similar to the common stocks of corporations.   Recently, Schwab, Vanguard and Fidelity have both instituted policies where those that have accounts with them do not pay commissions when purchasing their proprietary ETFs, while commissions are charged on the ETFs of other firms.  As an example, the Schwab U.S. Large-Cap ETF^TM can be purchased in a Schwab account for $0 in commissions with an annual expense ratio, as of 1 July 2010, of 0.08%.  Moreover, each of these companies have Treasury bond ETFs; multiple domestic equity ETFs, including large–cap, small-cap, as well as those oriented toward growth and value; and several international ETFs.

 

The bottom line is that for small investors to find financial success, it is hard to beat the appeal of index investing, as long as the investor remains well diversified across asset classes and remains committed to their plan through both up and down markets.  If you can manage your emotions, while managing your money, the appeal of a self-directed index mutual fund or ETF portfolio is real.