PROPERTY INVESTMENT 101

To kick off my blog here on Condominium Investment Philippines, I would like to present my first article tackling the basics of property investment. Hope you like it!

Are you considering buying real estate with the intent of making money from it? Its not as hard or as unattainable as you may initially think. Property and condominium investment here in the Philippines has been rising in recent years due to the real estate boom. So far, demand for residential units have been very strong, with no signs of slowdown for the near to mid-term future. Real Property Investment is a potentially lucrative and rewarding venture. Here is a simple guide that may be of help to get you started.

1.       Property Evaluation

It goes without saying that for one to make profit out of a business venture, one’s costs should be lower than his/her selling price. So the most basic in making a real estate purchase is to know the pricing of properties in the area and what influences it. Will there be an upcoming development that may substantially increase property values in the near future? Is it near a school, market, business or commercial center?  Does it have nice amenities, which definitely adds to the attractiveness of a property? Is it easily accessible? In short, your first goal is to know if you are getting a good deal for your hard-earned money.

2.       Know The Ways How To Make Money from Your Investment

There are ways on how you can profit from your real estate investment. Here are some of the most well known:

·         Straight Buy and Sell – Buy it cheap, sell it high. Always works. You just have to make sure that the property you’re buying isn’t gonna be hard to sell. It’s best if you already have a ready buyer really keen on purchasing a property in the area.

·         Property Lease – Long Term Lease. Usually applies to commercial or semi-commercial property where the lessee intends to utilize the land to put up an income-generating structure, usually via rentals, such as a marketplace, mall, etc.

·         Joint Venture – Is where a property developer cooperates with the land owner to construct a structure either for rentals and/or sale. The proceeds of the profit shall then be divided amongst the developer and lot owner.

·         Rentals – Applying to residential and commercial spaces, you can make good semi-passive income by having several properties being rented out. Most popular right now are condominium developments within or very near work or school areas. They are usually rented by people living far from their place of work or study as it is more convenient, safer and cost effective to rent rather than make the tedious daily commute.

A good program that is now possible with this scenario is that you may now purchase a condominium unit for terms and assuming its very near “RFO” (Ready For Occupancy), you can then use the rentals you get to pay for your monthly amortization fee, this makes the investment “self-liquidating”, a truly attractive proposition indeed. But you first have to make sure about Step 1 – Property Evaluation, know first if the demand for rentals in area is good and if the development/developer is a trusted, reputable one in terms of build quality, good property maintenance and management.

3.       Self-Evaluation

Is this what you really want to do? Real estate investment is not really that tricky and doesn’t take up too much time. And at the end of everything, you still have your property which you can sell, rent out, or use, instead of you renting a place from someone else.

4.       Capacity To Pay

Very important. Consider if you are biting more than you can chew. You have to consider that if you are purchasing a property for term, you should have a very good estimate that you will be able to meet the payments, or that you can easily sell the property for profit down the road. The self-liquidating property investment will definitely be an attractive proposition as you would be able to cover your monthly amortizations from your rental profits. You just need to have a sound strategy to make this work like a well-oiled machine.

A good thing with some property developments, such as the one I represent, you can practically own a condo unit for the same price as rentals or lesser. Imagine being able to own a single-bedroom unit for as low as less than $200 a month. Truly a steal. I’m considering some units now that I plan to rent out to students and workers, giving me decent profit on top of covering my monthlies. ;)

5.       Property Management

Are you going to do it hands on managing your property investment/s? Doing so will usually entail that you are responsible for:

•          Making good the monthly payments (amortizations), and association dues (if applicable).
•         Looking for, Evaluating, and Managing Tenants
•         Property Maintenance, etc.

4.       Consult an Expert, or Experienced Person You Can Trust

You don't have to re-invent the wheel. With a few inquiries and smart research, you can find someone whom you can trust who's also adept at real estate investment. You can either pick his/her brains over coffee, or have him assist you for a cooperative, co-beneficial arrangement. It would also be advantageous for you, especially if you're residing abroad or live far away from the property you purchased. Just make sure you trust the person you've picked to represent you.

Real Estate Investment in the Philippines

The environment for real estate investment in the Philippines is very good as the economic outlook of the country is on the rise. The best property investments are those within or near high land value areas, such as those with schools, commercial and business establishments. Property demand in these areas don’t usually go down, and in fact, rise steadily and quickly. If you can, its best to get a pre-selling property to maximize profits.

If one would ask me if it’s a good investment to buy a condominium property here in Metro Manila, I would say, it depends upon the area. But definitely, YES! The socio-economic factors and business and industry environment in the Philippines are very healthy. The real estate industry is especially bullish. You just have to do your due diligence and consider the preceding items above when investing or purchasing real property.

Well, I think that just about covers a good deal about property investment. 

Hope you like my first article!

Cheers!

Tony