What to buy first? A car or a piece of land? This question is as controversial as the chicken and egg dilemma. Although the car or land dilemma is just a matter of logic. It has troubled people for a long time as car prices go down and land prices shoot up.
Let’s break down some facts. Owning a car comes with a social status, one quits the walking class and joins the driving class. Owning a car also seems to attract ladies unless u are driving a blue Subaru or a Toyota probox. With those as the advantages it’s safe to say a car is not an asset, so definitely it lies on the liabilities side of the balance sheet. The car doesn’t add to ua income unless it’s a commercial vehicle, which also has it fine share of disadvantages. The car needs fuel, insurance, repairs and the list goes on. Then comes the issue of depreciation of the “asset’s” value. As soon as u buy a car it depreciates within a range of 5%-15% of it’s original value. Lets get into some simple mathematics, if u buy a car at 1 million then u will sell it at between 950k and 850k the minute you drive it. Now That’s a new second hand, ex-Japan or ex-UK, Impreza that you don’t want as ua first car. I won’t even try to calculate the expenses for the small jalopy that costs 200k, the thing spends more time at the garage than on the road. The depreciation rate is much higher than that of Lusaka’s 109k wheelbarrows. Now with that in mind why buy a jalopy and you are still paying rent? I also don’t know why.
Every African man is expected to have a piece of land by his name. Land is an appreciating asset. This means that if you buy land today you expect to make a profit if you sell it in future. The appreciation rate of land depends on the location of the parcel and size. If you bought a small piece of land and build a small house on mortgage, you would say goodbye to your landlord and start paying towards financial freedom. If you wish to own a bedsitter and become a nagging landlord then you will have to start by owning a piece of land somewhere. With vision 2030 fast approaching investing in “soil” as we call it in my native tongue will be a very smart investment. A plot around Menengai crater costed 20k in the beginning of the millennia is now selling at a whooping 250k, that’s over 10 times the original price.
I am not telling you to buy land instead of a car, I don’t want to cause you any trouble with the missus, neither am i against you parking your Range Rover sports next to your landlord’s probox somewhere in South B, but consider what you want to add on your balance sheet, an asset or a liability.