Home > Blog > Condo Advice and Tips > Key Reasons Why Condo Is A Smart Investment
Key Reasons Why Condo Is A Smart Investment
By: DMCI Leasing
We all want to see the fruits of our effort, so making sure your hard-earned money goes to the right place is a must. You might be planning to own a condominium property you can enjoy or looking at expanding your means through investing. Either way, that’s a good start. But what makes it a wise decision? Is buying a condo as an investment profitable and would yield attractive returns? Does owning a condominium instead of a regular house and lot give you any advantage in terms of pricing and convenience?
The demand for luxury condominium units increased, and continues to increase tremendously high as the economy expands. Speaking of financial advantages of condo investment, sales of units valued at more than P7 million surged over 300% in 2013 from 2011. Why are people choosing to gaze their eyes over the condo industry? Here are some reasons why owning a condo is a smart investment.
Money Works for You
Considering the boom of real estate industry in the Philippines, particularly condo ownership, is a great opportunity to make your money work for you. Buy a condo unit low and sell high-- usually on the pre-selling period-- and you can generate large profit. If continuous cash flow is what you’re after and not a one time profit, you might want to consider renting it out. Your condo investment also holds a higher value since it satisfies a basic human need. Whatever happens, people will need a shelter. It has a lower risk compared to investing in stocks or bonds.
Lower Initial Financial Demand
Especially if you’re looking for your first property, buying a condo would be a more affordable option. Purchasing your own conventional house might require higher down payment, thus making it seem impossible for you to own a home you can live in. Condominiums nowadays are less expensive and are less time consuming. This is one of the obvious differences between owning condominiums and land properties.
Take Advantage of Amenities, All within Your Reach
Most—if not all—condominiums have their own amenities that you can enjoy without paying for a large fee. Among the facilities you can enjoy are swimming pools, fitness gym, sports gym and even playgrounds for kids. You are sharing the payment with other unit owners making it a very small amount. You can take advantage of this anytime and without the need of maintaining it yourself. You are not only saving time by having all these amenities nearby; you are also saving money since you are paying for a lower amount for all of it combined. Even utility and repairs are covered by these monthly dues.
No Need to Live Outside the Metro
If you’re a young professional wanting to live in a cozy place without getting far from your workplace, the condo market is the right place to look at. While it’s almost impossible for you to find a new home inside the metro, and considering housing projects focusing on provinces near manila, more and more high-rise condominiums are being built in key cities of Metro Manila and nearby business districts. The time, money, and effort you’ll save will definitely be worth buying a condo instead.
You’re in Good Hands
The real estate market nowadays is too crowded and it’s harder to pick the gem among the stones. Looking for a desirable house on a pleasant community might take a lot of time and the decision is harder especially since it’s difficult to imagine how the environment would look like few years after. If you are going to purchase a condo unit instead, you are sure that you will be in good hands. Most condominium developers have a good reputation and track history that you can and should review. These developers are the people that will take good care of you and your property even after your purchase. You have the power to choose the best quality for your purchase.
Higher Resale Value
According to the 2014 Global Property Guide, Philippines has the fifth highest price increase in real estate properties, with condominium units prices going up by 36.4% from 2010 to 2014. While we are experiencing the fastest growing home prices, and it costs higher to purchase a property today and is harder to own one, this also shows a great opportunity for you to make money even after you use your condo and move to a new place. Condominiums in key cities in the metro hold a higher resale value. If you are not planning to stay in your condo for a long time and wants to move every now and then, it’s still a wise choice to spend it on a condo purchase.
There are lots of reasons why owning a condominium is a smart move. Whether you are planning to acquire a property to live in or to use it as an investment vehicle, owning a condo is one of the wisest decisions you can make. You are going to spend the fruit of all your efforts and hard work. Knowing more about the market, the benefits, and planning for your future does not only put you in a better position; it also gives you the edge you certainly need
By: Morexette Marie B. Erram - Multimedia Reporter - CDN Digital
Published: July 18,2020 - 02:43 PM
Full Article: Cebu real estate players mixed on PH’s new transparency index
Snippets: CEBU CITY, Philippines — Real estate players and experts here in Cebu are divided on the country’s new and slightly improved ranking in real estate transparency.
Top global research firm Jones Lang LaSalle (JLL) ranked the Philippines on the 44th spot in their Global Real Estate Transparency Index (GRETI) report for 2019.
It was released last July 8, 2020.
GRETI measures how the real estate industry in a country performs in terms of transparency, legal and regulatory framework, performance measurement, data availability and sustainability.
These indexes are also often used by real property developers and other industry players in gauging their decision whether or not to invest in a particular location.
The Philippines ranked 44th out of 99 countries surveyed, making it a Semi-Transparent country, and a slight improvement from its 45th spot in 2018, JLL noted.
Real Estate Investing: Read These Tips Before Buying Condos in the Philippines
Posted by: Joanne Almaden - www.PhilPropertyExpert.com
On: May 10, 2014 Last updated: September 13, 2018
You’re probably looking for opportunities to grow your money without getting too involved in the “process”. Or you could be someone who has a serious look on his face, determined to start a long-term quest to financial freedom, no matter what it takes.
And then you turned your attention to real estate — more particularly, condominiums — because you noticed everyone’s gone crazy about it. There must be money in there, right?
But like anything else new, the first challenge you have to overcome is your lack of knowledge. You don’t know what to do, what questions to ask and what things to look for.
If you are this person right at this very moment, the following is a quick list of pointers that should help you get started. It’s not everything there is to know about investing in condos, but if you are a newbie to this serious game, this will give you a great jump-start to an exciting and rewarding journey ahead.
1. Stop Thinking Too Much About The Location
Location, location, location!
Since you’ve taken an interest on this topic, you must have heard this mantra once or twice before. Everyone in the real estate industry has been told this and this is one of the first things they learn. The gurus say that there are only 3 things that matter most in this business. And those are location, location and location.
But is location really all that important?
Well yes, of course! If you haven’t heard that from anyone else before, I’ll be the first to tell you that. But what they don’t tell you is that there’s always a good location everywhere. That’s because there’s whole bunch of different people with different jobs, different preferences, different circumstances and different whatever.
Besides, established and trusted condo developers are not stupid to build their condo projects at locations where no one would be interested. So you can trust that this thing has already been taken care of for you and you don’t have to stress about it anymore.
If you are looking to buy a condo for investment, your choice should really just depend on who your target market is. And that brings us to the next thing to keep in mind.
2. Know Your Target Market
Here in the Philippines, a common characteristic you can observe with condominium developers is that they build projects for specific groups of people. They already have specific targets before they launch their projects.
Some condo developments offer units that cost higher than units in other projects. Likewise, some also offer units that are priced a lot lower than the others. But just because some projects are located next to each other, doesn’t mean you can already compare them fairly based on price alone.
When you check them out closer, you will find their differences in a lot of the details — some in the little and some in the major details. Like the sizes of the units, the facilities available in the common areas, the amenities, the quality of the management services, etc.
This is because some condominium projects are built for the average Juan and some are built for the Juan who got ahead in life. They are not built equal.
So if you are to be wise in your real estate investing, do your research and find out about the trends in the market. Do this carefully so that you will be able to target the right market. Just because the Juan who got ahead in life is willing to pay more for his shelter requirements, doesn’t mean the high end market is always the most lucrative.
Like the stock market and any other market for that matter, the real estate market also has its own cycle. And there are times within this cycle when there is more money to be made in the low- to mid-income level markets.
And this will then also lead us to thinking about the next item which is all about timing.
3. Be Crazy About Your Timeframes
You’ve done your research and you’ve identified the right market for you to target. Whatever kind of Juan you have chosen, you’re already sure that you’ll get “the biggest bang for your bucks“.
So now, the next thing you have to consider is when to actually approach Juan and offer him your property — whether you want to re-sell it for immediate and one-time profits, or rent it to him for ongoing monthly income.
Timing is also one of the most important elements in real estate investing. It is so important that if you mess it up, you could potentially end up stuck with a useless property. One that will never produce a return on your investment for the next decade!
Part of getting the perfect timing is making sure that the condo property you buy will be available for your target market at the right time they are expected to need it.
Let’s say for example you’ve decided you want to target the mid- to low-end market. And in your research, you found out that the demand from this market for condominiums will peak in 2016; and then slowly dwindle down after that.
Then you have to make sure you get a property that is already available and ready for occupancy right now! Or at least buy one that will be turned over to you not later than 2016.
Alright, you don’t really have to be crazy and go extremely overboard about it. 😀
But you get the idea… You have to be really serious about time frames. This means you’re gonna have to make sure you only deal with a reliable developer. One that is already known to deliver their promises on time. That is the next item on this list.
4. Consider the Developer Of the Project
We’re talking about investments here. And when it comes to investment, time is our single most valuable resource. Unlike money, we don’t get to literally create or generate more time. So you should be really mindful when spending this very precious resource.
When you buy a condo unit in the pre-selling phase, meaning while the building/s are still being constructed, you need to see to it that your developer can deliver your unit at the time they promised. While there are many developers in the Philippines with good track records in hitting their deadlines, there are also lots of them who will just cause you terrible headaches.
Aside from delivering on time, also ask around and check for yourself the quality of work different developers deliver. Nobody wants condo units with leaking sewage pipes from the floors above, within a few years from turnover. And you wouldn’t want to see cracks everywhere on your walls soon after you get your unit, right?
Yes, it’s a given that some projects are priced lower, but that doesn’t mean your developer can just take shortcuts and compromise the quality of the buildings they make in order to save costs.
Also, I’ve already seen completed works from a number of different developers in the country and I can say that for projects of comparable prices, some developers really do better jobs than the others. Especially in the amenities and public spaces. Some developers just know how to make projects elegant and classy without having to raise the price too high.
And it’s one of your tasks as an investor to check on these things to make sure you get the most value for your money… Especially when the money you’ll be using for your investment is not free. By that, I mean money that bears interests and other charges, like a loan from the bank.
And since I’ve already gone down to the topic of money to be used for paying your investment property, next on the list is about making a smart choice of payment term.
5. Know Your Payment/Financing Options
If you want to make serious money investing in condo properties, you should learn about the word “leverage“.
Leveraging is about using as much of other people’s money and as little of your own money as you can, to buy your real estate investments. When you leverage wisely, you’ll be able to buy more properties (or bigger ones) with what limited funds you have on your own.
You see, contrary to what the average Filipino knows, you really don’t have to be a millionaire before you can start investing in real estate. Most condominiums in the Philippines today, especially in the major cities, cost millions of pesos at the very least. But you actually need only a little more than P20,000 to acquire one. In fact, in a lot of cases lately, even less than that!
The usual scenario (and probably the easiest also) for most people who purchase their first condo investment goes like this:
- Pay ± P20k to reserve a unit.
- Pay anywhere between 10% to 20% of the total price (depending on the developer) as the down payment (equity), in up to 40 months (depending on the turnover date of the project) with zero percent interest.
- When they’re done with the equity, they take out a loan from their bank or from HDMF (PAG-IBIG) or from the in-house financing service, to pay the remaining 80% balance of their unit.
Developers are now easing their requirements and they keep lowering their entry points to help get more people to participate in this industry. They’ve also allowed more and more flexible payment terms especially if you opt to use their in-house financing service (most developers have one).
Developers’ in-house financing services usually cost higher but they are also the most convenient and easiest to get approved for. But if you already qualify for real estate or housing loans from your bank, this is usually a smarter choice for investing since you’ll also be building your credit record as you use banks’ services.
As you progress and build a good credit record, you will be able to use more money from the banks for more investment resources in the future. Plus, interest rates for bank loans are a lot lower than in-house loans.
These options are almost always available with every developer company. So to maximize the purchasing power of the current cash you have, why not use these options? Loans like these, which are used for buying investment properties are what we call “good debts”.
Proper use of leverage and taking on good debt will allow you to get bigger returns in the long term. And speaking of long term, that is up next on the list.
6. Develop a Long Term Plan
We’re talking about serious business here, real estate is serious business and things like this require long term commitments. That is, if you want continuous and compounding profits and/or income.
Buying your first condo unit is just the first step. You don’t stop from there if you want real success. And the best way to keep going forward and never get lost is by following a long term plan.
You may already have a short to mid-term plan in mind when you buy your first property and that is great. From there, extend and expand your plan. Build on it and make it SMART (Specific, Measurable, Attainable, Realistic and Time-bounded).
While there are people who make good money with flipping (buying and then selling for a profit), this is for the short term only. When you sell your property for a profit, you get big money immediately, but it only happens one time for that unit.
A more stable strategy for the long term is building cash flow. That means keep buying more and more properties and rent them out to pay for themselves through regular monthly income. You will only be able to make small profits with this at first.
But you can use the previous/existing properties you bought as collaterals for taking out more loans. Make use of additional, compounding leverage by borrowing more money to buy more properties, which will in turn generate more cash flow for you. Do this right and your investments will have a snowball effect.
Even though market conditions change and it may not always be a smooth ride, the worst that can happen to your investment properties is appreciate in value over time. Even without generating monthly income from rent, value appreciation alone is guaranteed profits. No other type of investment can offer that security.
But of course, that is boring. 😀 Guaranteed profits are boring and part of the long term plan should be to generate regular cash flow. Keeping yourself updated with the latest news and trends in the industry will help you make good decisions and appropriate moves to keep the cash flowing.
7. Keep Yourself Updated
This will keep you “in the know” of what’s currently hot and what’s not. Part of keeping a good long term plan is updating your plan as you go along. Make your plan adapt to the changes in the market.
If you want to keep the cash flowing, you have to offer what’s currently being asked by the market. When you hear that BPO’s will be expanding to the smaller cities in the Philippines, you should position yourself accordingly.
When you hear about some bad news (like unemployment) on a city where you have rental condominiums, you could lower your rates temporarily rather than suffer long periods of vacancy. When you learn that minimalist interior designs are becoming mainstream popular, it would help make your units attractive if you fully-furnish them with this trend in mind.
These are just some examples and there can still be lots more. But you get the idea of how important it is to stay on the cutting edge.
One of the ways you can stay updated and connected is by subscribing to our email updates. You can also follow us on Google+, Twitter and Facebook to catch our latest posts!
So there you go. You should now be well on your way to get started with investing in condos here in the Philippines. And not just condominiums actually, you can use the same principles in other types of real estate as well.
10 Reasons Why You Should Invest In A Condominium
By: Jaz Mendros, www.Propertier.ph
In-spite of the huge number of rising condominium buildings seen everywhere in the Philippines, still a majority of Filipinos have no idea or has a wrong concept of condominium investment. For example, they think that it is only for the rich and “sosyal”, and so many more. But let me teach you otherwise and learn how you can benefit from this booming industry.
10 Reasons Why You Must Invest In A Condominium
1. Condominiums normally APPRECIATES IN VALUE at a rate that is almost consistently higher than the inflation rate.
2. Condo investing is considered a SAFER area of real estate INVESTMENT and is perfect alternative for more risk averse investors.
3. Condo investing is also great for long term investors, since on average, the longer you hold it, the GREATER your RETURN ON INVESTMENT will be.
4. FINDING an OCCUPANT for a condominium apartment IS also relatively EASY, as vacancy rates are extremely low in many major cities in the Philippines like Davao, Cebu and Manila.
5. Condo investing is extremely convenient as many of the management and maintenance PROBLEMS are TAKEN CARE of by the condominium corporations which enables investors to focus more on the investment facets of the property and NOT TO WORRY about maintenance and upkeep.
6. Individuals investing in condos are PROTECTED by the bylaws and regulations set up by the condominium corporation.
7 Condo investing is GENERALLY a CHEAPER alternative than investing in a house because houses of similar sizes in the same neighborhood cost even more.
8. It also gives individuals investing in condos the ability to purchase an investment property in a BETTER NEIGHBORHOOD.
9. Condos offer a CONVENIENT AND LUXURIOUS LIFESTYLE because its buildings are located near shopping and transportation centers, equipped with services and amenities like gym, swimming pool, 24/7 security and many more.
10. Best of all, YOU DON’T NEED TO PAY ALL OF THE TOTAL CONTRACT PRICE. Because condo developers only asks investors to pay a certain percentage of the total contract price, usually at 20% (serves as down payment) which if often in deferred/divided payments in 24 to 36 months. After that paying period, investors went into bank financing that is stretch most likely up to 10 to 15 years. Within that period of time, you can start putting your unit into rental which makes it a self liquidating asset. (Note: Make it sure that your rent price is higher than your bank amortization)
Simple Formula: Rent Price – Bank Amortization = Money in your Pocket!!!
Example:25,000 php – 16,000 php = 9,000 php
(more or less you get the idea)
Therefore, individuals investing in condos are on the right track of purchasing an asset that is both rising in demand and value. Also, you get to have bragging rights because you are now like Mr. Henry Sy, into real estate rental/leasing business (lol). Seriously, I want you to grab this opportunity to start investing. Other countries in Asia like Malaysia were once in this status that we have in right now, but look at how the prices of their condominiums and other real estate appreciates in value. We are heading in this direction like Malaysia, Singapore and other 1st world countries, so take action and invest now.