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Are you dreaming of owning your own home, but do not know how to go about it, or are you worried about the cost? Do not let a tight budget be a setback!

Truly, owning a house can be an exhilarating and fulfilling experience, it can also be a consequential financial undertaking, but it does not have to break the bank. If you are looking to own your dream home on a tight budget, there are several strategies you can use to lower costs and still get the home you want. In this article, we will learn a range of cost-saving strategies, from choosing an affordable design to using prefabricated components that can help you build your home at a lower cost. By following these strategies, you can stretch your budget and still achieve your dream of building your own home.

Effective project planning is key to building a house at a lower cost. By carefully planning each step of the construction process, you can ensure that your project stays on track and within budget. One way to plan your project is to create a detailed schedule that includes all of the tasks that need to be completed and the timeline for completing them. By setting clear goals and deadlines, you can stay focused and avoid unnecessary delays or setbacks. In addition to creating a schedule, it is also important to plan for contingencies and unexpected issues that may arise during the construction process.

By having a clear understanding of your budget, you can make informed decisions about how to allocate your resources and stay on track. In addition to creating a budget, you should also explore financing options to help fund your construction project. There is a range of options available, including traditional mortgages, construction loans, and owner financing. By comparing rates and terms, you can find the financing option that best meets your needs and budget.

Functional design is a concept that focuses on creating spaces that are efficient and effective, with a clear purpose and function. By designing a house with a functional layout and incorporating features that meet the specific needs of the occupants, you can create a space that is both practical and cost-effective. One way to incorporate functional design into your home construction project is to carefully consider the layout of the space. For example, your design can be a cost-effective option for building a house because they are mass-produced and can be assembled more quickly than traditional construction methods.

Prefabricated components, also known as prefab, are factory-produced building parts that can be used to construct a home or other structure. Prefabricated components come in a range of options, including walls, floors, roofs, and complete building modules. They can be made of a variety of materials, including wood, steel, and concrete, and can be customized to meet your specific needs. One advantage of using prefabricated components is that they can be produced off-site, which can reduce construction time and minimize disruptions on the construction site. In addition, because they are mass-produced, they can often be purchased at a lower cost than traditional building materials.

One way to lower the cost of building a house is to shop around for locally-made building materials. By going for locally made materials you will potentially save a significant amount of money on your construction project as these materials can be easily sourced. In addition, most locally made materials are not just cost-effective they are also more durable and efficient. This can be especially effective if you are working with a larger construction project and have more advantages.

Your architect or builder will be key to advising you on the right size home for your budget as well as providing you with a cost to build. Their expert team will be able to understand all the steps necessary for permitting and any added cost associated with the process. Referrals from friends, family, and your realtor are the best sources to find the right builder.

Eight (8) out of every ten (10) average Nigerian dream has long been associated with the idea of owning a home. For many, owning a home represents financial success, stability, and the opportunity to contribute to the community. The benefits of owning a home, ranging from social to financial, have directly resulted in a steady rise of homeowners in Nigeria dating far back to the 1900s. Learn about some of the unique benefits of home-ownership to help determine whether or not owning home lines up with your Nigerian dream.

According to the Real Estate Development Association of Nigeria (REDAN), at the start of the 20th century, less than half of Nigerians owned their own homes. Results from a study by NOI Polls have shown that 51% of Nigerians currently live in rented accommodation, 40% of which are paying between N20,000 and N100,000 yearly (across Nigeria). Only 31% of Nigerians surveyed said they lived in their ‘personal house’ which they may have built, purchased, or inherited. The results also indicate that 85% of people would consider mortgage financing as an option for home ownership. However, when asked why they would not consider mortgage financing, 25% of respondents explained it was because they do not have a stable income.

The Association of Housing Corporations of Nigeria (AHCN) has decried Nigeria’s low home-ownership rate, saying the country ranks lowest at 25 percent, especially when compared to Brazil (74 percent), Kenya (75 percent), South Africa (70 percent) and Indonesia (84 percent). However, in recent times, the benefits of home-ownership are not far from the historical benefits; however, increased education access and economic expansion are credited for the rising trends. Buying a home offers the opportunity to secure a strong financial future and contribute to the community, making this an appealing option for many.

While there are many benefits to home-ownership, one should weigh these benefits with those of renting. There are benefits to either renting or buying, as well as downsides. At the end of the day, the decision to buy instead of rent should be based on your personal and financial goals. Many individuals enjoy renting for flexibility, while those who opt for buying a home prefer the stability involved. If you wonder “why buy instead of rent,” there are several factors to look at.

Benefits of Renting

Flexibility: Renting awards tenants the flexibility to move without penalty. Renters have to wait until a given lease ends to move out. For individuals who frequently move due to a job (or personal preference), renting allows the freedom to pick up and leave more easily than owning a home. While home-ownership does not necessarily mean you are stuck in a given place, more transactional costs are associated with buying and selling a home if you decide to move frequently.

Low Responsibility: As a renter, you are not responsible for property maintenance in the same way that homeowners are. Landlords are often in charge of lawn maintenance, trash picks up, water and sewer services, repairs to the property, and more. While these costs are accounted for in the price of rent, tenants have a low level of responsibility regarding property maintenance compared to homeowners.

Predictability: When you sign a lease, you are agreeing to a set amount of rent for each month. In some cases, your bills and living costs may be included as well. This means that renting comes with a sense of financial predictability, the cost of living will roughly stay the same month to month.

Benefits of Home-ownership

Building Equity: Equity refers to the amount of value you have in a given asset. As you pay off your mortgage each month, you will be building equity in your home. This differs from paying rent because you will be contributing to a physical asset rather than making monthly payments to a landlord. This is why purchasing a home is often thought to be a financially savvy move.

Long-Term Savings: By building equity in your home, you are also setting aside money for your future. That’s because there are several ways to tap into your home’s equity down the road. Studies show that home-ownership rates peak at or near retirement ages, suggesting that home equity contributes to retirement savings for many Nigerians. Therefore, by buying a home, you are promoting financial stability.

Building Wealth: As your property increases in value, so does your equity, allowing you to sell for a profit. You could use that extra money to reinvest in a new home as well as an investment property. Additionally, you could use your home to build wealth right away by using it as a rental property or house hacking.

Control Over Expenses: When you own a home, you can be certain of the monthly payment you will need to make while living in the house. On the other hand, when you rent a home, you are faced with the uncertainty of an increase in rent if your landlord decides to change it. Unless you decide to change your mortgage terms, your monthly payment will remain the same throughout your home’s mortgage. Strong Credit History: Owning a home can help you strengthen your credit over time, as long as you are consistently making your monthly mortgage payment. As you build your credit, it will become easier to secure other forms of financing, for example, if you decide to purchase a new car or finance an investment property.

Privacy: Buying a house indeed becomes a public record. However, living in a home compared to an apartment often affords people more privacy overall. In most cases, you will not share any walls or spaces with other tenants. As a homeowner, you can decide who comes over and when rather than receiving notices from your landlord to enter. Many first-time home buyers enjoy this new level of privacy after buying a property.

IS HOME-OWNERSHIP RIGHT FOR YOU?

While there are several benefits of home-ownership, you may want to assess your situation before deciding to purchase a home.

However, renting a home instead also comes with its perks and may be the better choice depending on your circumstances. Before deciding if home-ownership or renting is the right choice, try asking yourself these questions:

Can You Afford The Property?

Homeowners must be prepared for a down payment, closing costs, and other sudden expenses high in price. You should have money saved well beyond your mortgage in case of any surprise home repairs or maintenance issues. Smaller down payments along with private mortgage insurance only add to your total costs. Needless to say, be sure you are ready for every expense before becoming a homeowner.

How Long Do You Expect To Stay On The Property?

If you intend to break even on a house, you will want to plan on living in the property for more than three years. Closing costs and commissions will be high, and the house may not appreciate within the first three years.

Why Are You Looking To Buy A Property?

If you are an investor, purchasing certain properties may provide you with financial benefits. However, the shorter the time you hold the property, the less likely you are to make money on it due to high fixed costs. If you frequently move in and out of properties, it may cost you more in the end. If you plan to rent out properties once you move, be sure you have a property management plan in place.

SUMMARY

As home-ownership rates continue to rise, more and more Nigerians aspire to own a home. If owning a home is part of your dream, taking the time to familiarize yourself with the benefits of home-ownership can help set you up for success as you determine whether or not to one day pursue this goal. If you do think you might be ready to take the first step towards buying a home, check out our estate offers.

Which benefits of home-ownership came as a surprise to you? Let us know in the comments below!

With over a decade of experience in the real estate industry, Segun Abolaji, managing director of Leisure Court Estates, has advised the federal government to regulate the sector to make housing affordable for Nigerians. 

In an interview with TheCable’s SAMAD UTHMAN in Abuja, Abolaji said the government has a lot to do in terms of land access for the industry and a working mortgage system for the masses. 

TheCable: How did your background influence your career

Abolaji: I am from Osun state, Ikirun to be precise, Although I was born in Lagos. I grew up in Lagos, my life. Growing up in Lagos taught me a lot of things, including challenges.

I didn’t grow up in a wealthy background. I came from a very humble background. And that has always been a guide in my life. I do tell people, just like Nasir El-Rufai in his book ‘Accidental civil servant’. Coming out from secondary school with very good grades, one of the best in school and then at the end of the day, you find yourself in a very tight corner writing JAMB here and there. At the end of the day, it didn’t scale through. Someone told me, “why not think of this Building Technology course instead of doing Electrical and Electronics Engineering, we don’t even know what those courses entail”.

That’s why I always tell people that mentorship is very important in education. I know that the same thing applies to the business world, where some people jump into a business without knowing about it and the challenges therein.

The course — Building Technology — formed the basis of my career and business from that time, and I’ve never regretted it.

TheCable: How did Leisure Court start?

Abolaji: Leisure Court started after my university education. It started as a result of moving from an agent on the street of Abuja to a professional builder.

As a professional, I infused my knowledge in building construction into the property market and that gave birth to the real estate company.

Talking about Leisure Court itself is a whole different story. From getting an appropriate name for the business, talking to my lawyer and visiting the website of the Corporate Affairs Commission (CAC).

Leisure Court gives a better description and understanding of pleasure and an estate or group of houses where one can come and relax after a stressful working day.

TheCable: What are the challenges facing the real estate sector in Nigeria?

Abolaji: When you’re talking about business environments in Nigeria, we all know what is obtainable. There is no enabling environment for businesses in Nigeria.

Land disputes formed an integral part of our challenges in the real estate sector. If land issues are solved, you have solved virtually 50 to 60 percent of the real estate problem in Nigeria. Most often, the issues in real estate are basically due to enabling government regulations or provisions.

Most real estate companies buy properties from third parties, which involves extra costs. It is also difficult to get loans from the banking sector to grow your business. We cannot do it all alone, we hope government come to our aid and make things easier and better for us in the sector.

TheCable: How do you think government can come in?

Abolaji: As I said earlier, one of the four things is to provide land. The government has done this in the past, but it got into the wrong hands due to corruption and inadequacies.

It doesn’t even get into the hands of developers at the end of the day. And then the developers will have to buy from those appointed homeowners, and then the costs increase. If the government can allocate land to the developers, not politicians, not cronies or families, it would be a lot easier and then give us an enabling environment.

The mortgage bank should function better to provide mortgage loans. It is effective in every other part of the world.

Sometimes we have to take advocacy to some of these civil servants to tell them that they contribute to the National Housing Fund and that the money is there. You know it’s your right to apply for it, and most employees will retire without knowing they’re supposed to benefit.

So we should make it easier. In Nigeria, it looks like the only people that can assess mortgage loans are civil servants, but it should be everybody, every citizen. And if adequate support is given to the developers, it will be a lot easier.

TheCable: What was your share of the COVID-19 pandemic?

Abolaji: The pandemic dealt with everybody, and the real estate sector was one of the worst hit. How do you talk to someone to buy a land or a house when they are struggling to eat or have health concerns?

The sector is gradually picking up. Apart from COVID-19, the country also fell into recession, and we have an economic crisis. So all these are factors affecting the sector.

For us, we do more affordable housing, the kind of housing that goes around and touches ordinary people in society. The affordability of our properties made us cope with some of the economic challenges.

TheCable: Apart from federal mortgages, what is the real sector doing to increase home ownership in Nigeria?

Abolaji: As I said earlier, we’re more into affordable housing. Although affordability is relative but when you’re talking about price, we have landed properties that you can get for even as low as a million naira or even less. We presently have offices in Abuja, Lagos, Osogbo, Akure and some other offices coming up.

In Osogbo, we have land for as low as a million and even less than a million in places. These properties are located in places where people will ordinarily think they would be about 5 million. We have acquired some other properties as low as 400000 where people can easily contribute and pay in instalments.

We also have flexible payment plans within which you can pay. We have some that are six months payment plans, one-year payment, 18-month payment plans and so on. That’s affordability and our ways of helping the government to allow more people to become homeowners.

Yes, we have a total of about over 10 estates in Abuja. We have in Idu, Apo, about five different estates on Airport road and virtually all of them are affordable.

TheCable: So in the next five years, or less, what is the target of the company?

Abolaji: The company’s target is to provide more housing solutions for the Nigerian populace. We are proud to ensure that a lot of people have been taken from the status of being a tenant to landlords. So our target is to build over 10,000 houses — presently, we have achieved about 3,000 in eight years of doing this business.

TheCable: If you have the power to change something about the real estate sector. What would that be? 

Abolaji: Well, if I have the power to change anything, I think regulation. The real estate industry is not adequately regulated.

I will say the government should put proper checks on the activities of real estate companies — in terms of quality, better administration and value for money.