In attempts to create a continuous flow of income, investment comes to mind. After a clear decision to invest, the next major topic becomes where and how. Investment opportunities abound but profitable investment area is a point that requires careful consideration. Real estate is no doubt top on the list of viable and strong investment in terms of return.
Nigeria is one of the fastest growing countries with real estate contributing 7.5% of its GDP (According to Nigeria Bureau of Statistics). In addition, the accounting and auditing firm PrincewaterHouse Cooper(PwC) claimed that the real estate sector is contributing not less than 8.7% to the nation’s GDP with a projection to increase to 10% in the near future.
Each day, a structure or two is built in both the rural and urban locations in Nigeria. Building or buying has hence become an intentional practice and a major question for both old and new real estate investors. However there are pros and cons to either buying or building.
Building is literally developing a property from the scratch to an architectural design. This covers from the basic step of searching and acquiring a landing property to the finishing state.
The primary advantage of building is the opportunity of choices. You have the opportunity of having your dream building constructed to your desire architectural design. The structure and the facilities also have greater efficiency compared to buying an old structure since it is new.
However, there are disadvantages attached to building. The process involved in sourcing, acquiring and developing a building should be something to consider before finalizing your decision. In a developing nation like Nigeria, building can be a strenuous process. Furthermore, there are lots of upfront and avoidable costs attached to building from scratch. There are sometimes unprecedented costs that arise in the course of constructing a new structure. In addition, time taken in building a new structure takes between 120-150 days. If time is a major factor you are considering, then building from the scratch may not be the best choice. Finally, another factor to consider is the future environment – this is only important in a developing area.
Buying is acquiring an already developed structure or an existing building.
There are also advantages of buying. The process of buying takes between 45-60 days contrary to building which takes 120 – 150 days. Unlike the attending factor of an unknown environment to the choice of building a new structure, buying already has an established neighborhood. Another favorable factor is that buying is relatively cheaper than building. You get more value for your money when you buy than when you build.
However, there are disadvantages attached to buying an existing structure too. You get what you see and mostly not perfectly what you want. If you are to build a new structure, you do that to your taste unlike the case of buying an existing structure where the best you may get is the closest to your desire plan. Since the structure is most likely to have been in use prior to the sale period, there is possibility that some of the appliances are no longer as efficient as they would be while they were new. Finally, extra cost of upgrade, renovation and maintenance that may come up in the course of tailoring the structure to suite your taste.
If you are in the dilemma of choosing whether to build or buy, I hope the aforementioned factors will give you inklings on what next to do.
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