IS IT BETTER TO BUY LAND TO BUILD OR BUY A FINISHED HOUSE IN NIGERIA?
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LANDS OR FINISHED HOUSES? WHICH IS BETTER TO BUY
A lot of my clients come to me with this question, they find it hard to decide between buying land to build or buying a completed house. This could be a very tough decision to make as there are a lot of things to put into consideration. I decided to write this article for everyone out there having to make this huge decision between buying land and buying a finished house. There are a lot of factors to consider and this article will explain them in detail and in layman’s terms, the advantages and disadvantages of buying a land and of buying a finished house.
Keep reading to the end because I am going to give you all the ups and downs of both investments. I hope that this article can help you make your decision and save you the stress of making a choice.
IS BUYING A LAND A GOOD INVESTMENT?
Of course, it is always a good investment to buy land whether you are buying it for your personal use or for the future. Lands are cheaper than buying a completed building, but if you plan to build your own house on the land you purchased, it’s not so cheap.
BENEFITS OF BUYING A LAND
1. The land is easier to maintain
If you are buying land as an investment without the mindset to build anything on it, it is quite easy to maintain. You do not need a lot of money for the maintenance, you can buy a piece of land and leave it for a couple of years before reselling it without having to spend on it. Visiting the land is optional, as long as you have the legal documents that state your full name as the legal owner of the land, no one can claim the land asides from you. Also, vacant lands don’t have utility bills and property taxes are relatively low. Depending on the location, you may consider visiting the property once in a while to ensure it is free from illegal encroachment or alike matters. For more security, you may decide to fence your landed property round, this cost will also affect its re-sale value.
2. Higher Resale Value
Lands don’t wear out or get used up, it retains their value over time. The value of the land appreciates as the area where the land is located becomes more developed, this makes the land a perfect bid for high resale in the real estate market
3. Relatively easy to flip
Lands are easier to flip compared to houses. Especially when it’s located in a good area, you can sell it like 2x the price you bought it, which is what we call good Investment.
BENEFITS OF BUILDING YOUR OWN HOUSE ON YOUR LAND
A lot of people have pictured what they want their houses to look like when they finally decide to get one. Building your own home allows you to create that dream house you have always wanted, just the way you want it. Here are some of the advantages of buying land and building your own house.
1. Design Control
From the location of the land, the floor plans, and the bathroom tiles, to the colour of the paint for the house, everything is up to you. You can adjust it to your needs, considering your budget. Whatever type of building you choose to build, whether it’s a duplex, bungalow, or a story building, it’s all up to you. As long as you have the financial capacities, you can build your house however you want it, both structurally and design-wise.
2. Lower Maintenance Cost
After your house is completed, there should be some significant time before something needs to be repaired. If the constructors of the house are good professionals, and they used quality materials in the construction of the house, there shouldn’t be a need for a repair for a long time. You can enjoy your property at a lower risk of hefty breakdowns. Also, in the process of building the house, you get to supervise the whole process and make sure good materials are used to prevent risks of repairing.
3. Make it energy efficient
Choose the materials wisely and make sure that all of the appliances and materials used are energy efficient. This is very important, not only for the protection of the environment, but you can also save a considerable amount of money in the future on energy bills alone.
4. It may be Cheaper
Depending on certain factors, buying land and building your own house might be cheaper as most times developers have a quota of properties they need to sell off the plan to meet their finance and begin construction. This means that you may be able to find lower offer prices. Building a house afresh is most likely going to cost less especially if well managed while buying one from an agent or real estate person will cost more because those that build also expect huge returns for their project.
DISADVANTAGES OF BUYING A LAND
1. Risks of encroachment in some cases
Although we have government bodies in charge of land registration and proper laws to prevent encroachment, such activities still prevail in some areas. Several cases of land confiscation are being reported every year. This risk can be prevented but because of ignorance on the buyer’s part, they miss the process which ends up becoming an issue for them. Please check out our previous article on documents to get before buying any real estate property in Nigeria, especially in Lagos.
2. Low reselling value
Although it’s rare, it happens sometimes if the location of the land owned is yet to develop. The reselling price might be low because the location is unfavourable to the new buyer. Investors should know that buying raw land is a risky investment, as it will not generate any income and may not generate a solid capital gain when the land is sold.
DISADVANTAGES OF BUILDING YOUR HOUSE
1. Building takes time
From the foundation to the completion of the building, it takes between 3 to 9 months, that’s if there is the availability of materials needed and enough money. The type of building, the season, and available materials are also factors that determine how long it will take for the house to be completed.
2. Risk involved
There are certain risks involved in the construction of a new house. Poor workmanship can ruin the structure of the building which could cause the whole building to collapse especially if you can’t inspect the building or get a professional to do it. Some of the constructors use materials that are not of good quality which may cause damage to the house in the long run.
3. You can’t move into the house right away
Building a new house takes time, you’ll need patience if you are building the house for yourself. After the structural construction of the building, you’d need to do the interior work of the house. The electrical connections, buying of appliances for the house, everything takes time and money. You cant need a place to stay urgently and decide to buy land to start the construction from the scratch. You might need to find somewhere else to live for the main time till the house is built and furnished. This might mean extra costs for renting an apartment.
4. Land Grabbers (Omo Onile)
The real estate construction situation in Lagos state is not complete without including Land Grabbers (Omo oniles). These touts have become a major problem in real estate investment, they are everywhere always ready to cause trouble. As an investor, you should be willing to deal with them if you are opting to buy your land and build on it instead of buying a finished house. They won’t only slow down the process of house construction but also cost you more money than what you budget for.
5. The cost of Building a House is not fixed
The cost of building your dream house can only be estimated, it’s not fixed. Construction materials do not have a fixed price as a result of the economy of the country. The prices are not stable and this will affect the cost of erecting a building. Budgets don’t always work in the building of a new house as you most likely will exceed the cost expectations. There is no room for negotiations like when you want to buy a house where you can negotiate the price.
BENEFITS OF BUYING A NEW HOME
Unlike building your house from scratch, buying a new home is usually more convenient and faster. It also comes with some advantages:
1. Neighborhood choice
In Lagos state, land has become very scarce as the population of people building houses has increased rapidly in the last couple of years. You might want to buy land in Lekki and not find the perfect location for you which is why it is always advisable to buy a finished house rather than buying land. When house hunting, one of the important aspects is the neighbourhood that the house is in. depending on your budget, you can choose the area you like, close to work, and all the places that you visit daily. If you have children, the distance to a good school is also one of the big factors to consider when buying a house.
2. The possibility of moving in fast
One of the advantages of buying a house instead of building one from scratch is that when you buy a house and do the necessary payment and documentation, you can easily move in and start living in the house shortly after.
3. Less Paperwork
Although buying a house comes with some paperwork but it is nothing compared to what you need to do when buying virgin land.. Before you can start construction on the land you bought, you must register the land properly under the state laws. You need to have a good real estate agent and know how to buy land and how to register it. Check out https://exelpropertiesconsult.com/buying-mistakes-you-must-avoid-when-buying-a-house-in-lekki/ to know more. This article will help you understand the process.
4. Comfort and Saving money
An already built house can have some of the basic furniture, appliances, and landscaping that can be helpful to save you money in the beginning. If you compare the cost of building a house to buying one, it depends on a lot of factors. Sometimes, buying a finished house can be a more affordable option because banks in Nigeria prefer to disburse house loans for finished homes rather than for a land purchase.
5. Room for negotiation
Buying a house leaves room for negotiation as opposed to building one where you can’t predict how much you’ll spend on construction as the building market in Nigeria is not stable.
DISADVANTAGES OF BUYING A NEW HOME
Purchasing a home is a huge step and can be an excellent choice, but you have to make sure you have all the necessary documents before buying the house. Some disadvantages may make you reconsider buying a house. Here are some of the disadvantages
Chances are you’ll have to compromise
Looking for the right house can be exhausting and time-consuming. On top of that, be prepared that not all the features are going to be 100% to your liking. To make your house shopping experience easier, make a list of the necessary things that the house must-have, and a separate list of nice-to-have things, and start from there. When you find a house that checks all the boxes for the mandatory features and a few from the additional wish list, maybe it’s time to make an offer.
2. Possible bidding war
It is always stressful to agree on the price of the house. The negotiation process, the stress of dragging and pleading with the seller, it’s just tedious. When you see a house you like, chances are you are not the only one interested in the house. A bidding war can put the price bar for the property higher than you can afford, as well as consume a lot of energy and cause additional stress.
3. Toxic material and energy efficiency
If you buy an old house that has been built years ago, you probably won’t have insights into the material used for construction. There could be asbestos, lead paint, and mold from over the years. All of this can be a potential health hazard that you’ll want to avoid at all costs. These factors should also influence your choice of the property, and the decision of whether to build or buy a house. Bear in mind that older real estate can be built from not-so-safe and energy-efficient materials.
4. Maintenance and Addition Expenses
Older houses require more extensive maintenance and some things are bound to malfunction, maybe even sooner than you expect. Some repairs could also be required before moving in. Also, considering that you probably won’t be the first to live in the house, maybe you just want to freshen up on the appliances or make an extra bathroom. If you’re still wondering, is it cheaper to build or buy a house, consider that some renovation may be needed to make you feel more at home.
Whether you decide to buy a finished house or build one on the land you bought, you now know what you need to put into consideration
Are you looking for new investment properties in Nigeria?
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I’m Iluyinka Adeyemi, I’m your very Caring Realtor and with me by your side, all your Real Estate expectations will be met and your peace of mind is guaranteed.
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