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Wednesday, October 21, 2020

Land vs car: Which one should come first?

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Land vs car: Investments either in a piece of land or a vehicle is all about buyer preference. But there has always been a divisive debate on what between the two should come first. So which ought to come first? As written by Immaculate Wairimu:

Andrew Kari, 28, is thinking about investing within a year or so. For young men and women about his age and are just about done with the hippy and adventurous lifestyle, two investment options feature prominently.

Should it be a car or a parcel of land?

“After three years of an adventurous young life and miserly contract and commission jobs, I now earn enough to allow me to pay my rent, service and utility bills, buy my food and clothing, enjoy the pleasures of life and have enough to save,” Kari begins.

“At the moment, I am unable to invest in both options. I am in the process of deciding on which one to take first. Friends and family have advised differently on what should be my first investment option, so I am yet to decide,” he says of the choice between a car and land.

Value vs cost: What you should look at when buying a plot in Kenya

“I have thought of investing in my first car, a sports car maybe, for about Sh. 1.2 million; a BMW, perhaps. This would mostly be for status sake because I do not live far from my workplace and commuting is not a hustle. I do not have a family yet. I also have in mind that the status car may not be suitable for when I have a growing family.

“My other investment option is land, as buying a ready house is still beyond me. I have talked to a number of my friends and family, and most of my male age mates advise that I buy a car, arguing that it is still too early to get into serious investments like land. They say that a car will not only be a statement, but also be an easier way to move from one ‘happening’ joint to another.

“My family, especially my mum, is open to whatever my heart desires, but she is more inclined towards me investing in land. She says that even if I do not build on it, land value appreciates with time.

“I am yet to decide, but I am leaning towards the land option more and more, because with time, I will have a family of my own that will need to be sheltered in a bigger house. That means paying more rent, though I also know that they will need to move here and there, and a car will come in handy then.”

Mr Kariuki Waweru, a property valuer and real estate investment advisor, says it will make more economic sense for Kari to invest in a parcel of land or a two-bedroom apartment.

“At the end of seven years, the value of the car will have depreciated to about 30 to 40 per cent of its initial value, and may need a change of many parts or even its whole body,” says Mr Waweru.

“On the other hand, real estate is durable, and the land underneath a development is practically indestructible. It can also be bought with the expectation of attaining a better return on investment,” Waweru adds.

He argues that it is also probable that the car owner will still be living in a rented house and thinking of buying a bigger car to fit their new position at work or the growing family.

He says: “If this math holds true, in seven years, one who chooses to invest in the vehicle will have forfeited owning a two-bedroom master en suite apartment in the outskirts of the capital city, or buying a plot of land and building a house to shelter his/her family.”

Land vs car: This feature was first published by Immaculate Wairimu HERE.

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