Owning vrs Renting: The debate continues

Credit: Gloria Buckman Yankson - Head, Corporate Affairs & Marketing – Devtraco Limited

For most first time buyers, the idea of buying or building one’s own home can be a very exciting yet daunting one. For the average Ghanaian looking to get a foot on the property ladder, cumbersome mortgage processes, land litigation problems, alarming stories about some private contractors, may all be a few of the factors that put one off buying or building their own home.

Generally, in considering renting or buying your own home, renting may seem quite attractive at first and may even be cost effective in the short term. However, Real Estate has always been considered a Long-Term Investment. Therefore, the real question you need to ask yourself is: do I really want to pay RENT for the rest of my life?

Of course, there really is nothing wrong with renting a place if your situation requires it. Not everyone can afford to readily finance their own home or even cough up the deposit on a mortgage plan when they initially decide to move away from their parents’ home. You may have moved into a new area and want some time to get to know it, so you don't make the wrong location choice. Or you may want to maintain some flexibility because you are not sure which part of town you want to settle in long term. There are several good reasons for renting.

To be honest, being a homeowner has its own teething problems. Once you become a homeowner, fixing structural damages when they occur no longer becomes a landlord’s responsibility. YOU have to ensure your house insurance is up to date when suddenly the water level in the gutter behind your house, starts rising alarmingly during a torrential downpour. And when you eventually decide to move on to pastures new, YOU will have to sort out finding someone to buy your home. Sometimes, being a homeowner can be quite a hectic job.

Nevertheless, you just can't beat owning your own home. It's YOURS, for starters, and there are huge benefits, many of which are actually financially good for you.

If you think about it, a lot of “Landlords” are just property investors who take up a mortgage, find a tenant to pay their monthly loan repayments for them plus make profit alongside and become home owners a few years down the line! Got the picture?

Statistics show that generally real estate has proven to be one of the most stable long-term investments there ever was. It is your guarantee of retirement security. For those in search of a steady return on their money, houses can be a sure bet. House prices have rarely gone down here in Ghana. If you look closely at the overall price of homes in your area over the last 10 years, in most cases, prices have risen.

In comparing renting with buying, it is always far better to own your own home than rent in the long run. Not only do you enjoy the pride of ownership but especially here in Ghana, when it comes to investing locally, it may prove to be your only long-term hedge against inflation. Besides, with rental rates increasing constantly in Ghana, there is no guarantee you will be able to afford to rent as the years go by.

Buying a home and having a mortgage is also a tremendously powerful forced savings program. Plus, when you do eventually pay off your mortgage, you own a real asset. 'Real' as in it is actually there: blocks and mortar. Not only is your home very likely to grow in value as the years go by, but how satisfying it can be when you make that very last payment on your mortgage, look around at YOUR house, look in your mirror and give yourself a well deserved and rewarding smile knowing that it all belongs entirely to you. You don't get any of that by renting.

For more tips on how to get a foot on the property ladder or to share your views on this article e-mail [email protected]