06/03/2025
DO I BUILD A HOUSE OR START A BUSINESS ? ( My Opinion)
RETURN ON CAPITAL
After you build all you will have is a building that generates K5,000 per month . Yes of course you will not be paying rent but that’s because you have paid rent in advance . The building cost you K500,000 to build . That is 100 months of 5000 rent paid in advance. it will take you at least 8 years for you to break even ( 100 months / 12 months ) . Remember this house will also need serious maintenance capital every 3 years if you want it to last so we are talking about even 11 years before you can realise a profit of K5,000 per month FROM a house . You can sell chikanda and still make K5,000 per month .
Meanwhile in business that K500,000 will accumulate profits that will create compound interests by the month . If I invest K500,000 in business and my margin is 50% , I will be making profits directly in relation to what I am putting in . let's say I have K50,000 and I make K25,000 profit from it , that is 5 times the money someone building a house will make in half a year .
Business is a more efficient use of the capital because it multiplies profits whilst on the other hand a house only saves rental payment or brings in rental payments on a fixed monthly basis
MOBILITY RESTRICTION
A house is an immovable asset , meaning a house in Chingola cannot be moved to Lusaka . Some people live in ghost towns only because they have built a house there . The person does not even dream of moving to lusaka because they know that in Lsk , a room which used to be a garage in kamwala is K3,000 per month . Meanwhile their house in chingola in a good neighborhood is 3500 per month . A house is an asset that will tie you down in a place forever . If you look at the tragedies we have had with big companies like KCM closing , Mines in Kalulushi and Luanshya . All these things affect the value of your house and how much you can charge people because of the demand for accommodation .
Business on the other hand is very flexible , it can move when the environment is not supporting its ambitions . I remember a company called Cremosa ! It was in the town centre and was not making money. It moved to behind Manda Hill and boy is it busy now , they sell the most delicious ice cream in Zambia .
SELF DEVELOPMENT
Business for me is character building , it makes you grow as a person , you understand markets and customer behaviour . You understand negotiation , build relationships and grow your brand . You learn leadership and systems . This growth is transferable to other businesses and is used in your current business .
When it comes to building , you may develop certain skills like saving , construction project management and how to make a hard panbrick or where the best plumbers are BUT after you finish your house , what will you use that skill for . Do you intend to build another house ? You still have to look for money
CONCLUSION
I have seen many homeowners who are worried about money today , they way they are just aggressive when collecting rent tells you a huge story about the condition of things . Building a house is not financial freedom but rent freedom . A business done correctly will even buy a block of flats one day .
Owning houses is for the upper classes who can afford them for us we have to take a different route
END OF ARTICLE
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