Acquiring a home is, for most persons, the largest single investment of a lifetime. One of the most important decisions a person has to make in pursuit of that home is whether to build or buy the property.

Twenty-five-year old media practitioner Tashoy Holness was at that crossroads recently and chose the route of buying a home because she believes it is less expensive and less stressful.

“I think it’s a lot more expensive to build because you have to buy the land, then you have to get material for the house, then surveyors, etc… It’s a lot more added expenditures,” Holness told Sunday Finance.

“I’m from Hanover and I see a lot of persons building but having to stop because they don’t have money here to do this, and there to do that,” she said.

Not that there is sufficient availability of land to choose from within the Corporate Area anyway, Holness believes.

“Of course I want somewhere in Kingston; I don’t want a country area… but there is nowhere in Kingston where you can actually build because Kingston is already built out,” said Holness, who is currently looking to buy a home in the $9-million to $15-million price range.

Most of her assertions are actually supported by realty industry experts.

Victoria Mutual Building Society (VMBS) vice-president of centralised services Horace Bryan shared with Sunday Finance far more cons than pros associated with building a home.

The advantages of building a home, Bryan said, are that persons can design and build exactly what they want; If owners have the time and knowledge to oversee projects, they can control costs by being their own contractor; and it is possible to build in phases based on the availability of funds.

But the disadvantages of building a home, Bryan said, are that building plans must be commissioned and approved; one must seek a building permit/approval from the relevant Parish Council; sometimes it is difficult to identify a reliable contractor; there is always the possibility of escalation/price increases; construction insurance is usually mandatory for most lending institutions; and many persons are subject to extortion and the theft of building material in Jamaica, and therefore have high security costs.

Statistics show that more persons are going after loans to purchase homes rather than land, according to the VMBS executive.

“More people are purchasing homes,” said Bryan, adding that “Land purchases are not typically taken for immediate construction but, in most cases, are used as an investment vehicle.”

Bryan added that the loan tenor tends to be shorter when borrowing to purchase land alone and that interest rates to purchase land may be higher than the rates to purchase a house if there is no evidence that construction will commence soon.

“The Loan To Value (LTV) ratio tends to be lower (as well),” Bryan noted.

Past president of the Incorporated Masterbuilders Association of Jamaica (IMAJ) Michael Archer said it may appear cheaper to build a home rather than to buy, but that’s only on the face of it. He bemoaned the risk one runs with escalations in price when trying to build.

“The problem is that, on the face of it, it may appear cheaper to actually build your own house but if you don’t get adequate professional help, it may end up being a more expensive venture,” said Archer, emphasising that “If you’re building your own place, you must get competent professional help.”

Archer said a contractor typically charges from $4,000 to $8,000 a square foot to build a house, depending on the type of unit.

But the former head of the IMAJ said there are uncertainties in building because of the volatility of the cost of steel and lumber, influenced by oil prices. This, against the background of what he believes is a buyers’ market for real estate, made his recommendation come easy.

“For the average middle- income person, I’d recommend that they should probably buy rather than try to build,” Archer advised.

“Based on the market today, my sense is that there’s a certain amount of softness in the market, which would mean that there are schemes on the market now done by reputable developers that I would suspect provides great value for money,” Archer added.

But one new development company, Magwall Jamaica, said last week that it has an efficient construction mechanism that allows it to build family homes for persons at less than half the going rate, by their calculation.

The company said that, with the use of structural insulated panels (SIPs), it will build homes at $4,500 a square foot with no escalation clauses through its patented building system in which the majority of a house is factory-made.

“Typically, our research indicates that the cost of building a home (in Jamaica) will cost somewhere between $10,000 to $12,000 per square foot,” Magwall Jamaica CEO Sam Catling told this newspaper.

“We can cut back price by more than half for somebody who wants to go out and build their own homes, going to the local hardware store and buying the block and steel and other finishing materials,” he noted.

The upshot is that Magwall Jamaica is offering to build a 900 square-foot, 2-bedroom, 2- bathroom home for persons for $4.5 million, though that does not include land.

“We are coming with a product that a young professional could buy with one National Housing Trust (NHT) contributor,” said Catling.

Part of the mission of the NHT is to increase and enhance the stock of available housing in Jamaica as well as to provide financial assistance to contributors who wish to build or buy a home.

If you do not own a house and you have never received a loan from the NHT, you can apply for a Non-Homeowner’s Loan and can join with a qualified co-applicant if you please. NHT offers up to $1.5 million per person to purchase land and up to $4.5 million (Non-Homeowner’s Loan Limit) per person to purchase a home. The maximum amount of construction funds made available by the Trust for persons wanting to build on a land purchased with financing from the organisation is the Non-Homeowner’s Loan Limit minus the amount already borrowed.

Against this background, building or buying a home is clearly not an easy decision. But industry experts advise that, build or buy, it is important that one remains patient when looking for the perfect home. Deciding and agreeing on making that big investment can be a long and exhausting process.