Good day to you out there… how is everything?… Life, business and family? I believe fine. In today’s article, I want to share with you questions your landlord will wish you never answered!
Let me start by saying this: have you heard this expression-that a lot of people cannot afford what they want… and they don’t want what they can afford? Hmmm… what a tragedy!… and that has been the bane of many people remaining as tenants throughout their life time.
Well, in this article, I am going to present to you a set of questions which if well understood and appropriately answered, will enable you speed up your journey to becoming a landlord. How do I mean? These set of questions and answers will help you get real fundamentally. They will also help you identify what you can afford while leaving you with the choice of wanting it. Plus, I feel good within me because the fact that you are reading this piece suggests to me that you are already interested in seeing where you’ve missed it… so let’s move on.
In modern society, especially Nigeria, for you to legitimately own any property, you need to be above the age of 18(eighteen). This makes you an adult by law and I want to work on the assumption that I’m communicating with those that have legal right to own property. However, before I get into the nitty-gritty of today’s work, I would encourage you to get a pen and a pad to scribble down your answers because you will be needing those answers in subsequent questions that will come up as we go on. You will also need to do some minor arithmetic work in the process… so question number one goes thus:
Sorry, just before that again, I encourage you to provide your own real answers to the questions> I will use hypothetical answers to enable you better understand the questions and be able to provide your own real answers. Now,….
QUESTION 1: How old are you?
For the purpose of this article, let’s use 30 years as a hypothetical age to answer this question.
QUESTION 2: Where would you like to live?
Is it in Lagos State? If Lagos, where in Lagos… is it Ikeja, Okokomaiko, Ikorodu, Epe, Lekki, Orile, Agege, Surulere, Victoria Island,Ikoyi, e.t.c. Where exactly would you like to live?
QUESTION 3: What size of property would you love there?
Let’s say for instance, Isolo is the preferred location of my place of abode. What type of property would I like to live in there? Is it a flat, a bungalow or a duplex? What size of house would I really want? Is it a room, a room and parlour or a self-contained apartment? You need to specify the size of the house. Let’s say, for me, a flat in Isolo will do and mind you,… I am 30 years old.
QUESTION 4:(a)What do you think would be the cost of your type of house? (b)Are you going to buy or build it?
At this stage, you may need to do some research if you don’t have the answer at your fingertips. How do you go about this? Just go to the internet and log on to any property search engine such as: www.findnigeriaproperty.com, that’s one option. Another good option is a newspaper, preferably the Monday edition of The Punch or Guardian. On flipping through, you’ll see some property ads. On the other hand, your best bet could be a well populated property journal. If you can lay your hands on one, run through it and see what a flat in Isolo is being advertised for. This gives you an idea( and an idea is all you need at this stage) of what price it may go for if you are to buy.
Now, let’s assume that our hypothetical case of a 3-bedroom flat in Isolo is selling for N7.5m; this statement portrays that I am buying the house instead of building it. And that answers question 4(b) and leads us to the next question which is…
QUESTION 5:What is your expected total earning this year?
Since this year is still running, let us use last year as our guide. This makes us rephrase our question to: What was your total earning last year?
Okay, say for example, I am a salary earner and in my case, my total emolument came to about N6m which is a total representation of everything that I took home from my salary last year as well as every other venture that I dabbled into. To answer this question correctly, you should be able to identify the other streams of income that you have and how much each of them fetch you annually so that you can add this up to your other sources of income and get a total inflow of what comes in for you every year.
With this said, let N6m be the answer to the question of what my hypothetical earning for the previous year was…
QUESTION 6:What is the 33% of what u have in question5?
Simply put, the question here is the 33% of my total income? Remember, we are working with a hypothetical case of N6.0m per annum. Therefore, 33% of N6m is:
N(6,000,000 X 3)= N1,980,000
Having answered this, my next question goes thus:
QUESTION 7:How many years do you have left to work before you clock 60 years?
We are using 60 years for our analysis because that is the retirement age. Now at 30 years which is our hypothetical age as stated in QUESTION1, how many years do you have left to work before you turn 60?
These question is very vital because they will help determine certain things in this process.
Therefore; (60 – 30) years = 30 years
So, for instance, I am 30 years away from 60 and this answers QUESTION 7.
QUESTION 8: Multiply what you got in QUESTION 6(N1,980,000) by the answer in QUESTION 7(30 years).
That is:-
N(1,980,000 X 30) = N59.4m
Now, this is where we are going…
By these simple steps, I have just determined the limit I can achieve in terms of property by any legal and reasonable means currently. That is to say that even if I can access mortgage and borrow to the maximum limit that I can, and that maximum limit is a figure that would not take more than 33% of my earnings to pay for my loan over the rest of my estimated work life before I retire,… now note that we’ve not worked in interest here, because if we work in the interest element, of course, the total figure will increase. But the limit of N59.4m that we got is really the cap and so interest must be inclusive in such a price for it to fly.
What this simply says now is that the property I can buy with my earnings if I have to take a good mortgage now should not have a loan repayment that is more than N165,000 per month. Otherwise, I won’t be able to pay within my present means. The 33% limit is because the internationally accepted expenditure on property is put at a maximum of 33% of an individual’s income.
Overall, these calculations and deductions translate to say that getting a 3-bedroom flat for N7.5m in Isolo(which was our hypothetical case) should be child’s play. I should be able to achieve it with my eyes closed!
I am quite sure you found our discussion interesting and very simple, however, the value must not be lost in its simplicity. The earlier you settle down for what you can afford, the better for you because as you advance in years, your age determines your chances… and where your earning potential is not increasing at a progression that is higher than the rate which you add on years, then your affordability rate may be dropping. A lot of people reach a peak in their earning at a particular age; and if they’ve not secured property at that particular age, it implies that as they’re going forward age-wise, what they can secure as property using any possible legal means will be diminishing in value.
I have written a mini book on this and the questions are actually 12. The book gives you more detail and puts you in a better position to achieve result or better understand what your position and what to do thereafter. You can pick your copy from SDE Bookshop.
I hope and wish that you study and apply these steps sincerely as these are questions that your landlord is praying to God that you do not have to answer. Why? The answer is simply because if you can and start to answer these questions, you have started on your part to SACK YOUR LANDLORD TM. This is why this question and answer procedure is called the SACK YOUR LANLORD TEST. It is the first stage of your house ownership dream…SEE YOU IN YOUR OWN HOUSE!!!