tot:


Majority of the time, property appreciates - in most countries.

The reason land generally tends to appreciate is because it is limited in supply, consequently, as the population increases, so does the demand for land, driving its price up over time.

Yes that is true but if you look at the history of the Nigeria exchange rate since 1970, you will notice the Naira always depreciates. There has never been a period when Naira appreciates. In Naira terms you may have more Naira over time, but what is the real value of that Naira? Most Naira asset losses real value over time. Except the appreciation of that asset exceeds the long term depreciation of the Naira....which will continue to occur. Like I said you could have bought 8 brand new Toyota corollas in 2015, if you sell that house today, you can only buy 2. If you have 4 children and bought a property for 40m thinking I will sell this property and use it to send my kids to school abroad, you have failed, at best that property will only pay for 2 children’s school fees. In real terms your house has lost value. In real terms the house has not protected your wealth.

Some properties keep value more than others or depreciate less than others, so when it comes to property, the key is location!!!!

Be wary about investing in Naira assets property and stocks because in most cases the devaluation or depreciation in the Naira will erode any gains in price.

khalids:


Agreed, let's not forget that he has 40M, will he just sit there and be chopping the money....he has capital to fund and resolve his challenges....
And besides anyone wise enough to see this benefit would not have been playing around with the interest that the 40M had been generating for them

And if he feels he can't find any investment options, which is most unlikely...he can then go ahead and buy a house....

Whichever way you cut it, he is till in a far better financial situation than someone who just ploughed the 40m into one building.

No one is saying he should plough the 40m into a house foolishly. It's all about making a balanced decision. He can build a house below 40m and invest the rest. My point is investments are not guaranteed, so you shouldn't put all your income into it. Life is all about balance.

isthatso:



Yes that is true but if you look at the history of the Nigeria exchange rate since 1970, you will notice the Naira always depreciates. There has never been a period when Naira appreciates. In Naira terms you may have more Naira over time, but what is the real value of that Naira? Every Naira asset losses real value over time. Except the appreciation of that asset exceeds the long term depreciation of the Naira....which will continue to occur. Like I said you could have bought 8 brand new Toyota corollas in 2015, if you sell that house today, you can only buy 2. If you have 4 children and bought a property for 40m thinking I will sell this property and use it to send my kids to school abroad, you have failed, at best that property will only pay for 2 children’s school fees. In real terms your house has lost value. In real terms the house has not protected your wealth.

Some properties keep value more than others or depreciate less than others, so when it comes to property, the key is location!!!!

Be wary about investing in Naira assets property and stocks because in most cases the devaluation or depreciation in the Naira will erode any gains in price.

The more reason a person should at least have a roof over their house (and save the recurring expense of rent), as the 40m he is investing in TBills etc is depreciating every year in actual terms, not to mention Nigeria's high inflation rate.

tot:


The more reason a person should at least have a roof over their house (and save the recurring expense of rent), as the 40m he is investing in TBills etc is depreciating every year in actual terms, not to mention Nigeria's high inflation rate.

my father bought land in what was a prime area 35 yrs ago Today that property is worth 1000x more in Naira terms than what he paid but if you convert to dollars today he would have been better off converting the money to dollars and just putting the money in a savings account and allowing the interest to compound. The value of the land today 35 yrs later and the value of the savings account would be the same.

Like I said it was a prime property but Nigeria is a lawless country and desire able places can become undesirable in 10 years with the haphazard way we do things. Just look at Festac.

I am not saying all properties are like this but I just gave this example to highlight that property is like any other asset, some will appreciate, some won’t. There is no Decree that every property will appreciate or hold real value over time.

isthatso:


my father bought land in what was a prime area 35 yrs ago Today that property is worth 1000 more in Naira terms than what he paid but if you convert to dollars today he would have been better off converting the money to dollars and just putting the money in a savings account and allowing the interest to compound. The value of the land today 35 yrs later and the value of the savings account would be the same.

Like I said it was a prime property but Nigeria is a lawless country and desire able places can become undesirable in 10 years with the haphazard way we do things. Just look at Festac.

I am not saying all properties are like this but I just gave this example to highlight that roperty is like any other asset, some will appreciate, some won’t. There is no Decree that every property will appreciate or hold real value over time.

I totally agree with your point on investing in property or stocks in Nigeria can be risky because we do not have a structured system.

What you have not factored though is the income (rent) he got from the property OR the rent it saved him from paying elsewhere over the 35 years.

tot:


The more reason a person should at least have a roof over their house (and save the recurring expense of rent), as the 40m he is investing in TBills etc is depreciating every year in actual terms, not to mention Nigeria's high inflation rate.

In case you missed it, my message is be wary of investing in all Naira demoninated assets, unless it is giving you returns like 50% a yea which are usually scams unless it is a business you are doing yourselfr. If you are investing in t bills at 12% and inflation is 12-15% you are losing money....even before the inevitable Naira depreciation

tot:


Yes I know he meant long term, but how that buttresses his point is what I don't understand. What difference would it make if the person planned to live there just for the short term 2-3 years?

If he buys/builds a home he'd live in for 2/3 years..

1..He will need to pay for maintenance.
2...He'd still be paying for rent where ever he travels to.


You might want to read this to understand better...

If mr A builds/buys a house for 20m and he knew he'd be living for a very time

1. it's an investment that would take him 20 years or more to payback
2. This Will safe him money of rents of 20m for 20 years years. ( If he pays 1m annualy for rents.. Dont forget that cost of rents might also go up.
3. Will likely spend money on Maintenance of the house.
4. House keeps same design for ever.

....If mr B has 20m but decided to invest it. In maybe treasury bills with 13 percent yearly returns.

1. He gets 2.6m yearly
2. He pockets 1.6M yearly as profit (minus 1m yearly rent)
3. He could reinvest the 1.6m in business or another investment (which would make him richer) or probably bought a land for 1.6m, which he might sell for X400 higher in years. Dont forget Land No or less maintenance.
4. He does not pay any maintenance fee for X years if he had bought a home(amount in millions)
5. he gets the chance to choose a modern design he would love to buy/build a home

cue64:
In a saner clime this guy is right to an extent

Ok bros.
But the question is; are we in a sane clime

dake40:


If he buys/builds a home he'd live in for 2/3 years..

1..He will need to pay for maintenance.
2...He'd still be paying for rent where ever he travels to.


You might want to read this to understand better...

If mr A builds/buys a house for 20m and he knew he'd be living for a very time

1. it's an investment that would take him 20 years or more to payback
2. This Will safe him money of rents of 20m for 20 years years. ( If he pays 1m annualy for rents.. Dont forget that cost of rents might also go up.
3. Will likely spend money on Maintenance of the house.
4. House keeps same design for ever.

....If mr B has 20m but decided to invest it. In maybe[b] treasury bills with 13 percent yearly returns. [/b]

1. He gets 2.6m yearly
2. He pockets 1.6M yearly as profit (minus 1m yearly rent)
3. He could reinvest the 1.6m in business or another investment (which would make him richer) or probably bought a land for 1.6m, which he might sell for X400 higher in years. Dont forget Land No or less maintenance.
4. He does not pay any maintenance fee for X years if he had bought a home(amount in millions)
5. he gets the chance to choose a modern design he would love to buy/build a home

Thanks for the explanation, I see your point. But one thing is all these figures are simply projections. As we saw this week, TBills are already on a downward spiral. Also, the maintenance cost people have kept mentioning is really not as significant as that.

I have been saying this exact concept for years to Famil/friends, but I have realized over time that they take such information wrongly, apart from thinking you are stupid, they will think some spiritual forces are preventing you from owning your own house, they never understand..and those of them that have already owned houses think you are insulting them.

It is also the reason a lot of people live average lives and never become wealthy. They might be rich, but they can't afford to stop working, hence they never become wealthy.

The house you live in is not an asset, since you will not sell it under normal circumstances, we call it dead capital. It is not producing any income for you, nor can you benefit from selling it if land values should increase, because, remember, it is your house....so you can't sell it.

What people who become wealthy (and this is why I greatly love and admire Igbo men, though I am Yoruba) do is that they save up money to establish Cashflow businesses, they will then keep on managing and saving up to establish more cashflow businesses .

These cashflow businesses will be generating income, which is saved up and then invested in passive investments like TB, Bonds, plots of cheap land all over the place, student hostels, lockup shops etc.

The income from investments initially is not as much as cashflow businesses, but it is passive and do not require active management, so as the money is coming from their cashflow businesses, they are putting it in passive investments, gradually, until it comes to a point when the yield from their passive investments can cover their yearly living costs.

At that point, they will now start putting money in non assets like their own house, and may even decide to retire, without ever working in their life again.

To illustrate this point, let us assume you do a business and just hit twenty million, or you saved up twenty million naira.

The first instinct of a typical Nigerian is to show he has arrived by buying cars and building a house, the instinct of someone who wants to be wealthy is to establish a cashflow business.

Let us assume you want to be wealthy, so what did you do?

You imported a haulage truck for five million naira, opened a paga shop with three hundred thousand, established a block industry with one million, opened a shop in a market to start selling provisions with one million, opened a small buka with five hundred thousand...everything at a total cost of seven point eight million. You now bought dollars worth eleven million, then used half of it to buy Tbills, and fixed the remaining in your dorm account. You want to be running your life with the one point two million that remains.

You have just established a cashflow business.

Your haulage truck will produce money every week, you set aside a sum to recover the cost of the truck and send the profit to a special account every week......say fifty thousand weekly

Your paga shop will produce money every day, you set aside part of it to recover the cost of establishing the business and send the profit to a separate account daily......say two thousand daily...fourteen thousand per week

Your block industry will produce money every week..........same process........say fifty thousand weekly

Your provisions shop will produce money every day......same process........say ten thousand daily.....sixty thousand per week

Your small buka will produce money every day.........same process......say ten thousand daily....sixty thousand per week

Your tbills is producing money...keep it there

Your dollars is protecting you against inflation .....keep it there

Money is entering from all directions, that is cashflow.....in other words, you have a very high liquidity.....this means that you can have access to reasonable amounts 0f money at any time for you to take advantage of opportunities.

So, as these businesses continue to grow, you keep expanding them, and opening more branches, piecemeal, gradually.

Assume you open this businesses forty weeks in a year of fifty two weeks,

Per week, you are making two hundred and thirty four thousand naira

Forty weeks total Nine Million, three hundred and sixty thousand naira.

And that is after you have removed the seven point weight million you used to establish the businesses, you will still have nine point three ,million as profit.

On just single branches.

The more you expand, the more money you make, the more liquid you become, to the point that if any opportunity comes up that requires cash, you won't be running up and down looking for money.

When it gets to a point, start using the profits you are getting from your cashflow businesses to buy cheap land in Hectares and acres, dont go to where land is presently in demand, buy land anywhere, everywhere, as long as it is secure and very very very cheap. Only suckers buy expensive land.

Buy more bonds , dollars, tbills, at any point in time make sure most of your liquid cash in the bank is in dollars.

Continue this over a period of ten years, if you dont become a hundreds millionaire, call me barstaad.

At that point, you can now build your own house, and even retire.

Please note that this advice is for people who want to be wealthy, not those who want to be rich. It is strictly for business minded people not people comfortable with earning excellent salaries.

A house is not an investment, if you fear you will die before your time and want to secure your family, and that is why you want to build your own house, there are insurance and investment banking products for that.

Think with your brain not your feelings. If you use that twenty million and build a house, other than waking up and seeing your house every morning, it will not give you a single profit, you have just buried money.....like the guy in Jesus's parable.

For people who are working and are not business men, if you save up and get this kind of money, buy dollars and keep, buy tbills, fix part of it with a cooperative bank, fix part with an investment bank like Meristem, FBN capital, Investment one. etc.....

Dont bury money....

isthatso:



In case you missed it, my message is be wary of investing in all Naira demoninated assets, unless it is giving you returns like 50% a yea which are usually scams unless it is a business you are doing yourselfr. If you are investing in t bills at 12% and inflation is 12-15% you are losing money....even before the inevitable Naira depreciation

Yes agreed, but I wouldn't call buying a property which I intend to live in an investment. It is simply a means to meet a basic need of shelter and have some security.

tot:


You are not getting my point.
Bonds historically are low returns, stocks which return more over the long term go up and down AND you can lose money as well.
A roof over your head is guaranteed. Investments are NOT guaranteed.

How about reinvesting the fund in Business with strong backup?. Afterall, he worked before he could have such amount of money to buy a home in the first place.. I understand your point about having roof over one's head.. He could get a roof under his head via renting too and reinvest his capital.

The OP is only coming from an angle of "JOURNEY TO SUCCESS"

charliboy654:
This guy na mumu o, so the house you rent, is it some someone else house.

He who calls another a fool shall be in danger of hell. Matthew 5 :22

tot:


I totally agree with your point on investing in property or stocks in Nigeria can be risky because we do not have a structured system.

What you have not factored though is the income (rent) he got from the property OR the rent it saved him from paying elsewhere over the 35 years.

I do agree though with what you said earlier and the guy did mention it as one of the reasons for buying a house. Buy a house because you have a pyschological need to own your own home , for peace of mind etc.

tot:


The more reason a person should at least have a roof over their house (and save the recurring expense of rent), as the 40m he is investing in TBills etc is depreciating every year in actual terms, not to mention Nigeria's high inflation rate.

These are valid reasons, My point is to challenge this idea that property is always appreciates, that it always stores wealth or that it is always a good financial investment especially in Nigeria over time. Also if you buy a house and are paying a mortgage, you are buildiung equity inside instead of throwing away to a landlord.

dake40:


How about reinvesting the fund in Business with strong backup?. Afterall, he worked before he could have such amount of money to buy a home in the first place.. I understand your point about having roof over one's head.. He could get a roof under his head via renting too and reinvest his capital.

The OP is only coming from an angle of "JOURNEY TO SUCCESS"

Well, he could have inherited the money....lol.
Yeah, I get your point.

isthatso:


I do agree though with what you said earlier and the guy did mention it as one of the reasons for buying a house. Buy a house because you have a pyschological need to own your own home , for peace of mind etc.



These are valid reasons, My point is to challenge this idea that property is always appreciates, that it always stores wealth or that it is always a good financial investment especially in Nigeria over time. Also if you buy a house and are paying a mortgage, you are buildiung equity inside instead of throwing away to a landlord.

Yep, get your point.

tot:


Well, he could have inherited the money....lol.
Yeah, I get your point.

Believe me, building/buying a house with this kind of money is the worse decision anyone would ever make..

alpontif:
I have been saying this exact concept for years to Famil/friends, but I have realized over time that they take such information wrongly, apart from thinking you are stupid, they will think some spiritual forces are preventing you from owning your own house, they never understand..and those of them that have already owned houses think you are insulting them.

It is also the reason a lot of people live average lives and never become wealthy. They might be rich, but they can't afford to stop working, hence they never become wealthy.

The house you live in is not an asset, since you will not sell it under normal circumstances, we call it dead capital. It is not producing any income for you, nor can you benefit from selling it if land values should increase, because, remember, it is your house....so you can't sell it.

What people who become wealthy (and this is why I greatly love and admire Igbo men, though I am Yoruba) do is that they save up money to establish Cashflow businesses, they will then keep on managing and saving up to establish more cashflow businesses .

These cashflow businesses will be generating income, which is saved up and then invested in passive investments like TB, Bonds, plots of cheap land all over the place, student hostels, lockup shops etc.

The income from investments initially is not as much as cashflow businesses, but it is passive and do not require active management, so as the money is coming from their cashflow businesses, they are putting it in passive investments, gradually, until it comes to a point when the yield from their passive investments can cover their yearly living costs.

At that point, they will now start putting money in non assets like their own house, and may even decide to retire, without ever working in their life again.

To illustrate this point, let us assume you do a business and just hit twenty million, or you saved up twenty million naira.

The first instinct of a typical Nigerian is to show he has arrived by buying cars and building a house, the instinct of someone who wants to be wealthy is to establish a cashflow business.

Let us assume you want to be wealthy, so what did you do?

You imported a haulage truck for five million naira, opened a paga shop with three hundred thousand, established a block industry with one million, opened a shop in a market to start selling provisions with one million, opened a small buka with five hundred thousand...everything at a total cost of seven point eight million. You now bought dollars worth eleven million, then used half of it to buy Tbills, and fixed the remaining in your dorm account. You want to be running your life with the one point two million that remains.

You have just established a cashflow business.

Your haulage truck will produce money every week, you set aside a sum to recover the cost of the truck and send the profit to a special account every week......say fifty thousand weekly

Your paga shop will produce money every day, you set aside part of it to recover the cost of establishing the business and send the profit to a separate account daily......say two thousand daily...fourteen thousand per week

Your block industry will produce money every week..........same process........say fifty thousand weekly

Your provisions shop will produce money every day......same process........say ten thousand daily.....sixty thousand per week

Your small buka will produce money every day.........same process......say ten thousand daily....sixty thousand per week

Your tbills is producing money...keep it there

Your dollars is protecting you against inflation .....keep it there

Money is entering from all directions, that is cashflow.....in other words, you have a very high liquidity.....this means that you can have access to reasonable amounts 0f money at any time for you to take advantage of opportunities.

So, as these businesses continue to grow, you keep expanding them, and opening more branches, piecemeal, gradually.

Assume you open this businesses forty weeks in a year of fifty two weeks,

Per week, you are making two hundred and thirty four thousand naira

Forty weeks total Nine Million, three hundred and sixty thousand naira.

And that is after you have removed the seven point weight million you used to establish the businesses, you will still have nine point three ,million as profit.

On just single branches.

The more you expand, the more money you make, the more liquid you become, to the point that if any opportunity comes up that requires cash, you won't be running up and down looking for money.

When it gets to a point, start using the profits you are getting from your cashflow businesses to buy cheap land in Hectares and acres, dont go to where land is presently in demand, buy land anywhere, everywhere, as long as it is secure and very very very cheap. Only suckers buy expensive land.

Buy more bonds , dollars, tbills, at any point in time make sure most of your liquid cash in the bank is in dollars.

Continue this over a period of ten years, if you dont become a hundreds millionaire, call me barstaad.

At that point, you can now build your own house, and even retire.

Please note that this advice is for people who want to be wealthy, not those who want to be rich. It is strictly for business minded people not people comfortable with earning excellent salaries.

A house is not an investment, if you fear you will die before your time and want to secure your family, and that is why you want to build your own house, there are insurance and investment banking products for that.

Think with your brain not your feelings. If you use that twenty million and build a house, other than waking up and seeing your house every morning, it will not give you a single profit, you have just buried money.....like the guy in Jesus's parable.

For people who are working and are not business men, if you save up and get this kind of money, buy dollars and keep, buy tbills, fix part of it with a cooperative bank, fix part with an investment bank like Meristem, FBN capital, Investment one. etc.....

Dont bury money....

Thanks for the analysis. I enjoyed every bit of it...

dake40:


Believe me, building/buying a house with this kind of money is the worse decision anyone would ever make..

He can split the money, doesn't have to spend it all on a house!

Cashflow without assets makes no sense. Assets without cashflow also makes no sense. It is all about BALANCE.

Slimsly100:



Ok bros.
But the question is; are we in a sane clime

the question is are you in a saner clime?

bizzibodi:

The man thinks he is in London,do we have morgage in Nigeria?

This is not a London matter people in Nigeria now buy houses on loan with monthly installments paid to the real estate company, the terms of the contracts are often biased more like predatory lending to me. Stay woke

fsgbeats:


Nice but on the long run , buying a property in Lagos @40m will definitely appreciate to more than 50m in 3years or less. Property is the best investment to me..land never depreciates but appreciates in value. Also when you buy a property its yours for life and your generations to come.Lagos has a high space to value ratio but its still not compared to newyork which is the most expensive globally

Why is it that we Nigerians dont read to understand... The dude didn't say having a house as investment is bad. He only said having it as a home to live in, is bad investment... If you are building for resale or renting out, definitely its a good deal. But why waste that money to build/buy a house to live in when u can reinvest and use only a part of the profit to pay rent

charliboy654:
This guy na mumu o, so the house you rent, is it some someone else house.

Actually, he made a very valid point, investing in a house that you give out for rent actually pays more that buying a house for your personal use.

Now, the problem with this theory is in Nigeria you are at the mercy of the owner, the owner can come any day and just ask everyone to leave, then you have to go look for another, pay lots of money to fix things, pay the ridiculous agency fee and legal fee all over again.

Gerrard59:
Mr Tayo's post suites business people who need to reinvest their profits into the business moving forward than salaried people. As someone whose parents bought quite a number of properties (of which some are emotional properties), I understand Tayo's point. Moreover, real estate unlike some persons say depreciates in the face of poor infrastructure, rising crime, rising sea levels and general poverty. Also, real estate is very illiquid - one cannot just wake up tomorrow to sell his/her properties at the same price they were purchased. It takes time to appreciate and even more time to find buyers. Worse still, inflation/devaluation eats up whatever gains it might have accured.

Tayo never said "don't build a house". He simply said don't build a house when you can reinvest the money into more profitable ventures. It's also true that the house one owns and resides in is not an investment, never! It doesn't generate revenue rather it requires maintenance which requires money. It's more profitable to buy and lease out than buy to reside.

Funny enough, people stress their lives by building houses in places like Ota, Agbara, Okokomiako yet work in VI, Lekki and Ikoyi. This is suicidal! Better to rent in Ajah, Yaba and invest in a business then later utilise the profits at a stage to purchase a property in those areas. When one even factors in the life expectancy rate in Nigeria, renting is better than outright purchase. The reason most do the latter like Tayo stated is because of their children and societal expectations. Unfortunately, some of these properties are sited in "emotional locations".

Lastly, knowledge of basic economics, mathematics and accounting is essential for every individual in his/her quotidian activities.

Well said nwanne

pacehood:

This is not a London matter people in Nigeria now buy houses on loan with monthly installments paid to the real estate company, the terms of the contracts are often biased more like predatory lending to me. Stay woke

For own many yrs,is it d paid at once,pay in 3,6months or 1yrs where u will see 2brm going for #30m,my friend that is not morgage that is building & selling houses to d rich.

The guy is actually correct counting on short term investment.

Viking07:
His opinion has since been brilliantly countered and sent to the dustbin.

https://mobile.twitter.com/AyoBankole/status/1194587749560532993

I have used the same principle and it's still working for me Sir. In fact in Nigeria there are better loopholes to make bigger profit than Kiyosaki method

dake40:
The dude is ABSOLUTELY right

He really is.

Most people commenting don’t realise that he’s talking about having N40M to build a house.

With his method you’ll always be safe financially and not cower to landlord because you principal is always at hand.

I built my own home, not because I couldn’t rent hut because I wanted some specific architecture to deal with Nigeria’s issues.

bonusblack:


Why is it that we Nigerians dont read to understand... The dude didn't say having a house as investment is bad. He only said having it as a home to live in, is bad investment... If you are building for resale or renting out, definitely its a good deal. But why waste that money to build/buy a house to live in when u can reinvest and use only a part of the profit to pay rent

I read once that the best way to hide information from black peoples is to put it in writing.

Sad.

Yoighaman:


He just gave an example of Lagos and you say it does not apply in Nigeria. Is Lagos in France or Germany?

So what if he used Lagos as an example?

If you had an opportunity to own your own house in say Maryland or Yaba for instance, would you prefer to forgo the opportunity and rent instead because of some mumbo jumbo economic theory?

Guy chill. U no understand this man oh!

charliboy654:
This guy na mumu o, so the house you rent, is it some someone else house.

U did not understand the man. He said owning a house is better than owning a home! So try to understsnd him first before criticising

Viking07:
His opinion has since been brilliantly countered and sent to the dustbin.

https://mobile.twitter.com/AyoBankole/status/1194587749560532993