This is a question that has plagued many in the quest for home ownership. The question is even more puzzling for first time home owners with limited resources that are seeking maximum value for their investment. The quest to find shelter goes as far as human beings go. However with time, homes have become more personalised and almost a reflection of individuality and self. Rightly so as there are many advantages that come with owning a house.
In most cases the value appreciates with time, the amount of money you spend on housing stabilises and becomes predictable, it creates a sense of pride for the owner, a sense of community and belonging and the fact that it can be used to acquire more capital is just a bonus.
However, for most in the lower and middle income bracket it is not that simple. Putting an investment on a house now might mean foregoing a lot of things that could have benefited from the capital invested in the house that maybe could have catapulted one to the home ownership goal. This is why this piece also touches on renting as part of the home ownership plan.
To rent
While you might be dreaming of having your own custom built house, renting might be the option for you for a period of time before you get there. It is usually the cheapest option of the three. People commonly refer to renting as throwing away money but this highly depends on the amount of rent you are paying.
Essentially, you are buying space for a limited amount of time as you would an office but for your family. Because it has the advantage of low maintenance costs and no property tax it is a way to lay low as you save money for other things. Renting also has the advantage of social amenities that have been constructed to attract people that would be expensive to install on your own.
When should you rent? When you do not wish to stay somewhere for a long time, when your finances are focused somewhere else, when it allows you to be very close to your place of work. When your finances are low. The idea is to not spend more on rent than you should and not to get comfortable if home ownership is your end goal.
To buy
This option saves you the hustle of starting from scratch. You are able to acquire a quality house that is connected to various amenities, with communal facilities,and well planned. Some of the units are usually well located in the suburbs meaning you will have access to the town centers.
Since the houses are developed for sale, they feature the latest trends in housing. The maintenance structure is usually laid out and the houses are serviced by property management companies at a monthly or yearly service rate which reduces the management headache.
There are two methods of buying a house commonly used:
Mortgage – This is where renting meets buying. You pay for your house over a long period at a constant rate. This is an option for you if you have an assured source of consistent income for a long period of time.
Upfront payment or Deposits with monthly installments – This is where you pay the full amount for a house or apartment within a short duration of time. Either all upfront or by making a deposit and paying in installments over a short period of time.
While this option seems easy,especially in the current real estate market since many similar homes are churned out at once, one has to note the high interest rates and the inflated prices attracted by the price tag. There is also a high chance of having units with similar house plans. Also important to look out for is the land ownership aspect of this deal.
When should you buy? When you have cash at hand and do not mind buying into a community. When you do not like the hustle of construction. If the house is appropriately located, either for you or it has the ability to fetch a high rent or has a high resale value and finally, if you want accommodation as soon as possible
To build
This could either be one of the cheapest options or the most expensive of all. The biggest advantage of building is that it allows for flexibility in time. You can do it at your own pace and if need arises during construction one can divert the funds away and continue later. The other advantage is one can customize their house to suit all their needs.
As a side note, I would like to assure most people that while everyone needs to feel unique, there is probably a house design out there that is pretty close to what you have in mind and therefore a little research into floor plans goes a long way. Building your own house also comes with a sense of pride that comes from starting a project and running it to completion. The cost of the project also depends on whether you use a professional contractor or not, the materials being used and the complexity of your structure.
When should you build? When you need a custom building, when you have a preferred house location, when you are not in a hurry to move in, When cash flow is not smooth and you want the option to build in phases and when you want to use alternative methods of construction.
Read more on, two bedroom houses you can build for less than 1.5 M
Hope this article has been useful. Build wisely!
