By Ademola H. Adigun
Renting a property in Nigeria is much cheaper than owning a home in most cities. When you are not at the high earning bracket, resist the temptation to put all your earnings into building or buying a house. Unless you can find comfortable mortgage arrangements. Key word “comfortable.”
In Nigeria, a owned home does not always translate into a wealth generator. For many, it is tied down potential capital. In business, the one with the funds is the one that can do business. So gather funds first. Then build a home in a good location from the earnings from capital. Do not rush it or dip into your pool of funds.
When you are in business and you seek to borrow money, you need assets that have wealth potential. Many times a mansion in the village might give you some social capital but nothing else. That’s why a self contained apartment in Maitama/Ikoyi might be worth more than a duplex in Kubwa or Egbeda. It’s the law of location.
A sizeable pool of funds gives you leverage. Allows cheaper cost of transactions and higher returns.
Yes, it is good to be your own landlord, great to have your parents sleep in your house and such, but you can’t buy Garri or pay school fees with that.
In my days in valuation, clients in many obscure places did not take kindly to my valuation of their house at less than 10% of the cost. Most would get irritated. But value is not cost.
Turning land to cash is much easier than turning a building into cash in most cases. The finance market here is still at infancy and expensive.
At some stage in your life, seek the services of a financial adviser. The cost is cheaper than the gains.
Remember that it is the habits of today that will influence tomorrow.