What should I buy first, a residential stand or a car? Many of us will be faced with this question in our life time. There are a lot of different opinions over the issue.
Taking return on investment line of thinking, one stands to benefit more from purchasing a residential stand. A residential stand is an asset which has value, which is unlikely to go down, but will probably appreciate in value. You can then build a house overtime. You then rent out your property and be guaranteed of a monthly returns from the initial investment unlike what it is with a car. In high density areas, a decent room can be leased out at $70/month, consider the passive income if you have built a four roomed house. One can also move out from where they are renting to their house, and thus save themselves from paying rent.
For a car, the story is different. A good number might want to make it a taxi and be cashing in some substantial amounts of money. But cars depreciate in terms of value from the first day of driving not to mention the cost of maintaining it during its period of use. With a car you will need to be constantly taking it the mechanic, pay ZINARA licences and insurance yet City council rates are all you need to pay for a stand. This is on the backdrop of the fact that in that same stand, you can even think of establishing a backyard business either rearing chicken or doing some small scale gardening. Even if you have not yet built a house, you can put a small cabin, and have someone manage your backyard business. These might be additional revenue streams for you which are hard to come by if you had chosen a car over a stand.
Purchasing a stand is a lifetime investment which not only benefits the owner but future generations as well. What we all need to take note of is the finite state of land in terms of its supply which will be weighed down by the constant increase in populations. This has a tendency of pushing land value upwards unlike the case with cars, unless it is a special type of a car. You will be able to leave something for your family. With this noted, investing in land has a potential of yielding better results in the future.
On the other hand, there are many people who have undeveloped residential stands, which have been lying idle for more than 5 years. It’s an asset yes, but it’s not bringing any value, not bringing any money. What’s the use of having multiple residential stands when you then fail to build the houses? At least if you manage to build a house, the stand will become a real asset, as you will get income from the rentals.
However, when it comes to the cost of purchase, a car might seem too be a better channel to direct one`s monies as it is cheaper. Of course, this line of thinking is buttressed by our history of monies which are prone to depreciation. A number of people when they start making good monies they quickly think of purchasing cars perhaps as a means of ensuring that their money is bringing in some semblance of developments for them. It may also give you a better “social” status.
A car will also bring convenience, you can easily go from point A to point B. If you are running a business, a car will be of great help as it may be used to carry raw materials, deliver goods to customers etc. You can easily plan your time, as you won’t have to walk to a bus station, and wait for a kombi/minibus which may delay you. It will be convenient to visit friends & relatives, especially if you have a family. If I have the money, why should I not buy a car and enjoy the benefits now, rather than buy a residential stand which will bring benefits many years from now? Isn’t it the reason why I am working, so that I can enjoy the fruits of my labour? I can always buy a residential stand later after buying the car.
A number of individuals who bought cars in the days when our economy was dollarized managed to make a killing. These individuals will tell you cars are better than stands. What these individuals did was invest in a car which they would rent out to a driver who would use it under “rent to buy” terms. They would agree on a time frame in which payments would be made in some cases spanning to periods up to 6 months at the end of which the driver would assume ownership of the car. This was a better investment for the initial owner as they received more money than their initial investment, so much so that one can think a car is better. Some also turn their cars into taxis. With the coming of Econet’s Vaya (Uber-like-service), you are able to earn extra money as a driver with your car.
What do you think? Which is better to buy first, a car or a residential stand?
A note from StartupBiz Zimbabwe: Everyday we send business updates via Whatsapp. Send the word “Subscribe” via Whatsapp to +263778798072 (StartupBiz Zimbabwe) to receive free business ideas and business tips in your Whatsapp Inbox everyday.