To Rent or to build

To Rent or to build your own house? Which is better?

Would you rather rent (pay for a building) or build and occupy your own? Most frugal people tend to go with the idea of building their own instead of renting. However some corporate companies prefer to pay rent than getting engaged in the messy business of construction and maintenance. Stanbic Bank and MTN, the two foremost corporate entities in Uganda do not own any of their offices. Where Centenary Bank spent colossal sums of money to put up nineteen story building to house its head office on Kampala Road, Stanbic chose to sell it’s biggest building asset, the former UCB towers (now renamed Charm Towers) and is now renting Crested Towers and other smaller buildings for it’s offices.

Why would a company or an individual lock out substantial capital into a building instead of investing in other portfolio? It depends on where one is standing. For Stanbic case they say that they would rather concentrate on their banking business than getting entangled in real estate. I tend to agree with them. Managing a building like Mapera house can be a nightmare. Infact, you should not be surprised to find that Centenary Bank spends almost the same amount in maintaining that building like they would spend on renting. Buildings such as Mapera house can depreciate faster if the maintenance isn’t we’ll handled. To avoid all these hustles, that’s why some companies would rather pay rent than build their own houses.

The same scenario applies to individuals. There are many who would rather stay in rented premises than building their own. These are, again mostly guys that work in corporate companies. Some even prefer to pay for apartments. Therefore to rent or to build for one self depends on available resources and cash projections of an individual or company. According to Centre for Affordable Housing Finance in Africa, (CAHF) 29% of people live in their own houses. The rest are still renting. If you are not sure about the stability of your job or the profitability of your company, then it’s a good deal to build a home for yourself when you still have liquid cash. However if your financial future is as hazy as fog, then you need to build your own to avoid nagging landlords that will keep knocking on your door thus distracting you from your business.