…a home owner’s dilemma
I find that an easy ice breaker for people in social settings is to ask about your job or an insight into a topical industry matter. At the recent launch of realtors association, I wasn’t disappointed in the least when barely 10 minutes into the program, I was served with the now famous “so what do you think, for a prospective first time homeowner, should I buy or build?” question.
That is almost always followed with some shift in mood, one of rapt attention, ears ready to soak in some deep insight from a thought leader. I usually calm expectations by avoiding long technical talk and rather provide as realistic and a practical view as possible. I tell the story of Kwame Mintigyae, a shrewd businessman with an extreme sense of skepticism for a first time homeowner.
Kwame belonged to a pool of prospective homeowners who were suspicious of the build quality and seemingly unrealistic margins real estate developers made. For Kwame, best option was to build where he could exercise control over cost, quality and delivery.
While Kwame’s point about control, quality and delivery holds true, it also comes at a huge cost, especially if you aren’t going to be building in a prime area where infrastructure is fully developed. Just as I advised Kwame for him to make an informed choice, I will share my thoughts and leave you to form an opinion based on your circumstance.
Return on Investment
I pointed out to Kwame that while it may be true that some developers add unrealistic margins which inflate house prices, not all developers are greedy, that until you have considered all the elements and peculiar dynamics of what goes into pricing, he may just be making an emotive conclusion rather than one from a position of facts.
I made him understand that your first consideration when thinking about building or buying a house is that you should consider it as an investment; one which beyond providing you a place to lay your head or cook, provides futuristic returns and optimum value. Another consideration is the real value of your house price versus the nominal value which for most people is the four walls with fittings and fixtures.
You need to consider that for a house to move from design on paper to brick and mortar, you need not just land, building materials but infrastructure i.e roads, water and electricity to make it habitable. Some self-builders however think it is enough acquiring the land, building materials and engaging a contractor.
Sure, you can build a house that way but what you may not have considered are the time and energy you will expend supervising contractors to ensure leakages and wastage is kept to a bare minimal. You may also fail to take into account the extra cash to be spent on burglar proofs, electric/wired fencing; extra pipes and cables to connect to water and electricity.
You may also fail to realize the extra cost you may incur by driving on very dusty, bumpy roads. You are sure to visit the mechanic more and even your doctor. All these are costs that you would “not see”.
The Real Value
With the cons of self-build articulated, it would be important to highlight the pros of buying a house in a serviced area or gated community. In these environments, you would not have to grapple with bad or inaccessible infrastructure; security would be provided; you and your children would have access to neighbours of similar standing or like-mindedness, which would provide the perfect environment for your children to develop in. These are some of the real values gained by buying a house, typically built by real estate developers in a gated community/serviced area.
That was a summary of the advice I offered Kwame, it was over coffee in a cafe, indeed I used that setting to reiterate my point. My analogy was that we could have simply gone to the vendor down the street for cheaper priced coffee or “tea”, instead we walked in here because for a little extra cash, we could access free wifi, comfy seating, air conditioning and even network with other businessmen.
Buying a house, typically in a serviced/gated area as against building on lands located on city outskirts and lacking basic infrastructure, is like buying coffee from this café with added value rather than from the corner vendor down the road. What do you think Kwame’s decision was? What will yours be? Let me know.
The writer is the Executive director of Yecham Property Consult
& Founder of Ghana Green Building Summit.
Email: [email protected]
Linkedin: Cyril Nii Ayitey Tetteh
