Many people don’t think of their home as an investment vehicle. Unless it’s a property you plan to rent out or fix–and–flip, you might think a house is just a place to live.

But the truth is, your home is an investment in many ways. You’ll be putting a lot of money into the property – and its value can rise or fall with the economy. Plus, unlike renting, a house helps you build wealth.

Many real estate experts believe buying a home is a great investment because it’s a fairly safe place to put your money, and home values generally increase over time.

However, the returns aren’t as large as you might see on other investment vehicles.

So, is buying a home the right financial decision for you? That all depends on your goals and what your objective is when choosing a property to buy.

These days, housing developers now build apartment buildings or blocks of condos where folks especially young people can now purchase and own a unit. 

What was obtainable in the past was apartment buildings were developed and units are rented out to tenants who typically pay on a yearly basis. 

Such rentals are usually fraught with extra charges such as agency & agreement fees, maintenance fees, insurance deposits, or security deposits that insure a property against damage or vandalization.

Paying rent implies you’re at the mercy of sometimes greedy property owners who feel an urge to raise your rent whenever they find themselves in financial hot water.

They scarcely factor in the fiscal buoyancy of their rentees and often these rentees are left in dire straits as their earnings are unable to offset their new rental regimes. 

This is purely an outrage. Whatever the case, property owners are sometimes constrained to increase their rents due to increasingly lower purchasing power that is occasioned by an economic redux and retrenchment. 

Sometimes landlords really are not to blame. Irresponsible and incompetent governments are often culpable.

Persons living in rented properties or folks who don’t own their own residence need to keep an eye and maybe also an ear – to learn about updates and also intentionally seek property investment opportunities that require minimal capital to participate in with a potential of making a good return on investment. 

An example of such investment is the Off Plan Property Investment By Zylus Homes and Property; a real estate company in Lagos that offers off-plan property investment. 

Off-plan property investment allows you to invest in properties that are yet to be developed. Investors in this type of real estate futures market (more or less) invest their funds in the hope that property after being built would appreciate in value and possibly sell much more than what was invested. 

Estates, landed properties, and locales appreciate in value over a period, and this is especially true when certain major developments such as infrastructure or gentrification set in around a locale and spike a migration of people and businesses into such areas, as with the principle of demand and supply, there’s likely to be an uptick in the value of real-estate in such areas. The above instance is the fundamental premise of off-plan property investment.

The benefits of buying a house/owning a home are numerous. When you own your house, chances are the value of your property would increase astronomically over time and if you ever wish to sell, you’d make a handsome profit sometimes in an order of magnitude. 

Furthermore, owning your property means you’re permanently excused from paying rent as long as you’re resident in your own property. 

Although purchasing a home may involve making a huge expenditure, however, it may yet prove to be worth every penny down the road. 

Living in your private, handpicked space means you get to enjoy a location that appeals to you and an environment that inspires you; and this is in stark odds with rented spaces where such luxuries are more often than not, few and far between. 

When it comes to rented housing, you’re probably looking to rent space in areas where you can afford to live whilst trading off a great location and environment. 

New houses will inevitably spring up in the future and you may fancy a relocation at some point. Your current property may appreciate in value and when you initiate a sale – you may profit immensely from a deal and this is usually not the case in rented spaces. 

Rather the price of rentals increases as the value of real estate appreciates and tenants are required to pay more for what is virtually staid development. 

Buying versus renting

Renting

Renting means you can move without penalty each time your lease or rent ends. However, it also means you could have to move suddenly if your landlord decides to sell the property or turn your 3-bedroom flat into single-room units. Oftentimes, they could just bump up the rent to more than you can afford and you will have no choice but to move away.

Owing

Homeownership brings intangible benefits, such as a sense of stability, belonging to a community, and pride of ownership. However, it is not good for restless or nomadic types (people who move around a lot). 

Real estate is the original illiquid asset. You might not be able to sell when you want if the housing market is down. Even if it’s up, there are significant transaction costs when you sell. 

Changing your mind about where you want to live is far more expensive when you own.

The overall cost of homeownership tends to be higher than the overall cost of renting. That is true even if the monthly mortgage payment or installment payment is similar to (or lower than) the monthly rent.

However, you want to make a better judgment when considering buying a house. Hence,

reasons why buying a home is a good investment

1. Sometimes real estate prices increase adequately for people to make money

As in the present economic recession of Nigeria, the price tag on houses is higher although the demand is reduced. This is a good avenue for real estate investors/builders in the country to make more money.

See also: Renting vs owing

2. Getting Value

People think they are getting enough value by living in a house, and anything they ‘make’ while selling it is a bonus.

See also:  Lekki Pride

3. Benefits from real estate transaction

Various parties benefit every time you buy and sell a house – real estate agent, attorney, bank: hence they want you to buy and sell as often as possible.

However, the following factors determine when buying a house is a good investment:

See also: Understanding real estate appreciation

4. The price you paid for the house

You won’t agree that purchasing a highly-priced house is a good investment especially when the building is of good quality.

5. Additional expenses that you pay, do not ignore them.

Since the price of a house is exclusive, there are hidden costs you may be overlooking but will have to settle sooner or later. Hence, the amount of such hidden cost determines how good a house purchase investment is.

6. The price at which you will be able to sell the house

From the seller’s perspective: economic conditions determine how many houses are sold just as in the case of Nigeria’s economic recession, developers are forced to sell at lower prices in other to recover the demand being stolen by the recession.

The question of whether buying a home is a good investment depends on the future value of a property. If there’s a possibility of appreciation, then we can answer in the affirmative. On the whole, I’d say that the benefit of acquiring your own property far outweighs that of rented properties.