Dr. Tayo Oyedeji, a former professor at the University of Gerogia in the US, has said that, contrary to popular belief, “home ownership is mostly a bad business.”
The Oxford-educated entrepreneur, who authored the book ‘How I Retired at 40’ shocked his followers when he made the revelation on Twitter and gave reasons.
Renting is wiser for most people. Don’t buy a house unless: 1. Mortgage is < 8%. 2. You can pay cash. 3. You plan to live in it for 10 years. 4. You need the psychological comfort of home ownership. Rental/investment property is great. Home ownership is mostly a bad investment.
He added: “I’ll share the math on home ownership sometime next week. The home you live in is your worst investment. For some of us, it’s not even an investment. Don’t buy the hype, do the math. Home purchase for living is a bad investment. Rental property is a great investment.”
“Do the math. An average property in Lagos is N40m. Treasury bill rate is about 12%. Your N40m will yield N4.8m a year. You can rent a good home for N1.5m and still have N3.3m left over. Your house is costing you N3.3m per year. Do the math.”
He went on to point out that, “Psychological comfort, societal expectations, and cultural norms are valid reasons for home ownership. But when it comes down to the math: it just doesn’t work. I own a couple of homes for the reasons stated above. They’re not good investment. Investment is math, not emotions!”