“Price is what you pay; Value is what you get”Warren Buffett
Today let me tell you a story about a time when I nearly paid the price of focussing solely on lowest cost rather than investing in value until I had a sudden moment where I realised that investing an extra $25,000 would actually be of priceless value.
I hope from this you can consider when to pay the lowest price and when do focus on the value of investing in more.
A further thought is to be clear on your WHY to invest in value rather than focus solely on the lowest cost option.
Why I hired an Architect
After qualifying as a chartered accountant in 1989, much of the first two decades of my career in Cayman were based on numbers, on value. I also spent lots of time developing property projects and, yes, squeezing the lowest costs so that we could make the most profits from projects.
When eventually deciding to build a home for myself, I continued with this, including deciding to do the designs myself and then use only a draftsman to get plans ready for planning permission and then to build. You see, I thought I knew that I could save about $25,000 this way on what was a budget of well over $2,000,000.
Why would I hire an architect? After all, I knew construction, had my budget nailed down, had the size of the house I wanted with the right number of rooms etc, so why, as a cost-conscious guy, spend $25,000 on an architect.
However, happily, something happened before I was ready to build the house that made me invest the best $25,000 in the whole project. I hired an architect. At the time I was heading up a committee getting designs done of a national aquatics centre for Cayman and we hired an architect to design it.
An aquatic centre is basically quite utilitarian, a pool in the ground, a deck, spectator stands, changing rooms, offices. However, when our architect showed us the designs I gasped with wonder! He had indeed designed totally to our specific needs, yet at the same time he had designed a national aquatic centre that would make Caymanians proud, that also captured a Cayman style and essence. It was functional and it was truly beautiful.
At that exact time, I was also about to “pull the trigger” on sending the plans for my house off for approval, but I stopped. I hired the architect.
He then interviewed us in-depth about our lifestyle, what we wanted from the home (and more). He then took time over several weeks to visit the plot of land at different times of day (including sunrise and sunset) to see how the light flowed in different directions and angles.
After all of that, he took our basic simple design and, without materially increasing the cost of construction, made numerous amazing shifts in the design to add huge value.
The budget increase for this was only around 1%, the value increase? Priceless.
We lived in that home for nearly 10 years and every day I loved everything about it. Priceless.
As I noted above, get clear on your WHY if you are investing for value. My why was wanting to love the house as a home. About the best $25,000 I have ever invested in value.
Oh, and the house is for sale now (see lots of photos and property listing details here), on one of the most wonderful sites in Cayman. Yes, it is built strongly and resiliently with real focus and care. What this story also tells you is that is was built beautifully.
Also published on Medium.