If there is an investment in the world that has the “never say die” spirit, it is homeownership. You won’t be too far from the truth, if you say homeownership is a tool to reduce poverty and as a route to wealth-building for the middle class. This article tells us why homeownership is a cool investment.
A good investment is something that will pay you more than you paid for it. Hence, if you critically asses how much you spend on rent yearly, assuming you want to be a tenant for the rest of your life, you will realise that you will be paying more as a tenant than as a landlord.
The Merits of homeownership over tenancy is enormous, especially when your property yields returns.One of the most well-known personal finance authors is Robert Kiyosaki. Kiyosaki’s teachings and seminars have generated controversy but I think his definitions of assets and liabilities in Rich Dad, Poor Dad are excellent and very simple to understand. An asset is anything that puts money into your pocket. A liability is anything that takes money out of your pocket.
So is a homeownership a good investment? Does your personal residence put money into your pocket or take money out of your pocket? Rich Dad, Poor Dad examines why people consider owning a house as an asset, though by Kiyosaki’s definition, it is a liability.
That being said, saying homeownership is a weak investment strategy is like saying people prefer to be tenants than landlords. Although we may have people like that but we are talking about a very small proportion of our population. Typically, as a Nigerian, you will be seen as successful if you have built your own house even if the structure is in a village where no one visits.
If you have any idea of the cost of renting apartments in major Nigerian cities, you would agree with me that renting is throwing your money away,” but owning a home comes with a steep opportunity
No doubt, buying a house is cheaper than renting a house on the long run, that is why your landlord can serve you eviction notice whenever you fail to pay your rent. From a financial perspective, renting when you have the means to invest in homeownership is senseless
In addition, owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house. Buying a home is one of the smartest financial decisions you can make as early in life.
Nigerians who can afford it are reluctant to invest in homeownership because of fear of the unknown. Other reasons may include, a volatile job market, and the delaying of life events, such as marriage.
In all honesty, homeownership helps you become wiser financially and you will ultimately spend smarter. Rent payments go straight into the pocket of the landlord – and at the beginning of the next rental year, you’ve got nothing to show for it.
Homeownership also has emotional benefits. Homeowners are more likely to be invested in the local community and develop interpersonal relationships that create a reliable support system than those who rent.
If you are determined not to remain a tenant forever, then you need to start saving early, and for heaven’s sake, dump that ‘above your income’ lifestyle. For many who are looking to build a retirement nest egg, financial advisors say purchasing a home is one of the best investments anyone can make.
Better to spend your money on your own home than on unnecessary, short-term expenses that won’t provide value later.