Funmi Oyatogun+ Your Authors @funmioyatogun Experience designer, geographer and tourism strategist at @tvpadventures. I curate the popular #showmeonething on web and YouTube. ~ Everything is by design. Nov. 12, 2019 2 min read + Your Authors

I'll always remember how @tayooye broke down step by step how to make logical money / investment decisions. He used a house as an example: do you want to buy a house because of the sentimental value or do you want to buy a house as an investment?

A thread.

1. Let's say you have only 50m Naira as disposable income. You want to invest it and being a full blooded Nigerian, the first thing that comes to your mind is 'buy a house' as an investment. Have you analysed all the other options? Is this a waste of money or a wise investment?

2. If you need the house because of family size or for sentimental reasons, etc, then go ahead and buy your house. However, if the single reason for buying this house is as an investment, THINK AGAIN!

Let's do the calculations...

3. If you buy a 50m Naira four bedroom property in Lekki Phase 99, How much could it possibly appreciate in the next 10 years? Let's say the value of the house increases by 10% each year. In 10 years, you'll be able to sell your house for 130m, if you can sell the house.

4. Buy by the time we remove the cost of the running the house, servicing it with utilities, repairs, paying home owner fees, and co, your annual expenses may climb to about 1.2m Naira annually.

In 10 years, that's 12m Naira off your 130m home value.

Profit = 118m Naira.

5. However, if you invested 50m Naira in a secure mid-yield instrument, you could get 15% annual returns from your investment. If each year, you took 3% of your returns and paid rent in a fully serviced apartment, you can rent anywhere that costs as high as 1.7m Naira a year.

6. So, at the end of 10 years, your investment that earns 15% a month will be worth almost 150m Naira, after you've removed 3% returns every year to pay for a fully serviced apartment to live in with no stress and possibly in a nicer area that the house you wanted to buy.

7. Just make sure you have weighed all the options before you choose to invest.

If all you care for is a good place to live and the best value for your investment, think again before you buy that expensive house. If you want a house because you NEED YOUR OWN HOUSE, go for it.

You can follow @funmioyatogun.


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