When I was a lad, about 10 or 11 years old, I remember bragging to one of my aunts one day that when I grew up I will not buy a car until I owned a home. I still remember how she praised me for good thinking. Why? Because society has trained us to believe that owning a home is about the best investment you would ever make, more like the “best part of living”. We believe that you haven’t “arrived” yet until you own your home. And there are many factors that fuel and further entrench this belief in our minds. And, this is not peculiar to Nigeria alone; it is a universal conviction.
The debate on owning a home vs renting has been on for so long, with varied opinions, which are justifiable in different lights. But, really, which is better: owning a home or renting for as long as you live?
Inasmuch as one may argue that you can save money on the long haul by living in a rented apartment rather than buying and then channel the excess money in investments that could earn you remarkable profits over time, a careful analysis would convincingly prove otherwise. If you live in a city like Abuja where a comfortable 2-bedroom apartment in a nice location (not high end) costs as much as N700,000 per annum, assuming you live there for 30years, that would sum up to N21,000,000. However, with N15,000,000 you can conveniently buy a well located 3-bedroom duplex. Now assuming you don’t have N15,000,000 at hand, what do you do? That’s easy. First, assess your income level. Most real estate developers provide options for installmental payments after initial deposit, some for as long as 4 or 5 years, especially on off-plan sales. You can cash in on that if your income level can accommodate that. You only need to do your due diligence to ensure that the company is genuine and their documents and approval for development from the appropriate authorities are secured before you invest your hard-earned money so that you don’t get your fingers burned. This is the mistake many have made and thereby concluded that real estate in Nigeria is a fraud. That is a far cry from the truth. There are still many credible developers in the country; just diligently search them out.
In the circumstance that you are short on finance, another option is to secure mortgage financing for your home and repay over time. Again, a good number of real estate companies in Nigeria partner with mortgage banks to avail this option to buyers. And thankfully, Nigeria’s mortgage system permits as much as N15,000,000 facility at a 6% interest rate; you only need to be registered with a mortgage institution (PMI) and contributed 2.5% of your monthly income for at least 6months to qualify. In addition, when applying for the facility, you will be required to stake between 10% – 30% of the total cost, depending on how much you are asking for. So let’s do the math: if you secure mortgage financing of N15,000,000 for your home at a fixed 6% rate, in 30years you would have paid N42,000,000 in total. Yes, I know; this is why some people refrain from mortgage, right? True, but who says you must wait until 30years to pay off? The trick is to assess your financial strength and follow what works best for you. Remember, the mortgage banks are helping you to own a home while making easy, convenient payments for it, so don’t crucify them. Nevertheless, it all boils down to your personal preference.
The purpose of the analysis above is not to discourage you but to help you make an informed decision. Yes, renting may appear cheaper but you will never get to be a landlord, an owner, and your legacy to your children would be devoid of an all-important ingredient – real estate. Furthermore, remember that in a rented apartment you are subject to the Landlord’s rules and you don’t have the liberty to customize your home to your taste. Worse, the Landlord can wake up on the wrong side of the bed one morning and issue you a quit notice for no reason other than that he wants you out, and you cannot but leave so long he’s not owing you. Oh, did I forget to mention the fact that your Landlord can dream of money at night and the next morning announce an increase in your rent? Well, you will either pay it or move out.
The truth is, the great feeling of owning your own home is unquantifiable. It affords you a sense of security and comfort that nothing else can confer. You make, break and adjust your own rules anyhow you choose. However, most importantly, you are building equity as the value of your house appreciates over time.
Finally, to conclude my opening story, I actually ended up buying a car before I owned a home. I guess life has a way of making us dance to its own tone, huh?