By Nchetachi Chukwuajah
A post on X by a man who described himself as a financial planner, Kalu Ajah, has sparked a buzz among Nigerians as they debate the better option between renting and home ownership for wealth building.
In the post, shared on Thursday, October 16, Ajah recalled the story of his client who chose to rent an apartment in Lagos at N8 million per annum in the early 2000s rather than building his own house at the cost of N300 million, insisting that such would bring him an annual return of N50 million from his investments.
The post read, “I had a client in Lagos, a very rich and liquid guy, who was once a bank MD. The guy was renting. Back then he was staying in a house in VI in the early 2000s, his rent was N8m. I knew because I wrote the cheques to the landlord.
“One day I asked him, ‘Why don’t you have your own home?’ He said, ‘Kalu, if I decide to build a house, to my taste, it will cost me N300m. I can use that N300m and make at least N50m a year. This home, whatever I ask the landlord, he does because he does not want to lose me as a tenant. It’s painted annually, etc. I don’t want to tie down my capital in a home.’ Thoughts?”
The post has since generated a buzz on X with divergent opinions about which of the options is better for wealth building.
While some agreed with the client, saying it would ensure liquidity, others argued that it is better to own a home to save costs amid inflationary pressures and other benefits of owning a home.
Others said it was better to diversify one’s source of income.
@ChibuOnwurah tweeted, “Actually, there’s no right or wrong here. Owning a house you live in is an asset, but not necessarily an investment. It doesn’t guarantee income; it just replaces rent.
“Renting and investing the difference can be smarter if you actually invest and stay disciplined.
“But a home isn’t just numbers. It’s stability, pride, and peace of mind. You can’t put a price on those, and depending on your stage in life, especially if you have a family, they might matter more to you.”
@NaijaGoldaMeir said, “What if the investment fails? Always good to have a safety net. That’s what homeownership provides. But what if the home burns down? Always good to have a safety net. That’s what investment provides. The way (out) is to diversify: build a smaller home to his taste & still invest.”
@savvymoneygirl tweeted, “I agree with him. I share the same opinion. I only started doing real estate when I grew my net worth significantly and became very liquid.”
@doctor_ameh said, “The man is a wise man who understands life and economics. Even today in Nigeria with the current rate, why would you buy or build a house of 300M when you can comfortably use the same 300M to bag an interest of between 60-70M annually? Rent a house of 20-30M annually and still retain your 300M. “Garrit???”
@_namedNameless wrote, “I agree largely with the client. Building a house you’re not earning income from is not financially rewarding especially if it comes at the cost of forfeiting your ability to invest at the scale you want to.
“I know it’s good to be a home owner, but it’s more important to have WORKING Capital. If your client built a house with 300m and forfeits 50m yearly income (with his capital unscathed), what does that do for him? Yes, one may argue that the value of the house would appreciate year on year, but that again would remain unrealized because he would never have cashed in on it – it would be his home.
“So earning N50m yearly and paying N8m rent while having a spare N42m to play with is a sensible financial decision to me. Let that N300m keep earning him passive income.”
Those who disagreed with the client and insisted that owning a home is better also cited the potential of the property to appreciate over the years.
@n6oflife6 wrote, “Horrible idea. If he dies, his family is homeless. Our 1st family house in Lagos has 10 bedrooms & was built in 1999. It’s the best decision we ever made. The Naira gets worse every year and Nigeria gets harder to make money. A N300m house 10 years ago will cost N1.5bn to build today.”
@koyaadesanya said, “He didn’t need N300M to build a house, even in Ikoyi, in the early 2000s. As a bank MD, he would have access to a facility. If he spent N300M on a mansion in the early 2000s, that property would be worth more than N7B naira today, especially if it’s sitting on about 2000 square metres.”
@EcklisG wrote, “N8m in the year 2000?? Very very liquid. However, I think the value of that N300m home will be worth more than a billion naira today.”
