How to Invest in a Condominium in the Philippines

Condo Investing Philippines

Thinking how to grow your hard-earned money?

Investing in properties is one of the wisest ways to create a stable income. Real estate investments in the Philippines offer opportunities for you to explore different types of assets which you can buy and sell.

Property developers are also aware of the demands of Filipinos, especially those who work overseas who may eventually either buy a property for living or investment.

There are an estimated 2.3 million overseas Filipino workers recorded in 2018. Most of them are from CALABARZON region, Central Luzon, NCR, and Ilocos region, making these key areas prime for property developments.

In a space of only 8 years, the Philippines experienced a massive housing boom according to Global Property Guide. Makati CBD prices, for instance, increased by 132% from 2010-2018 data.

As a result, you may be thinking it’s a good idea to get into the property market now by purchasing a condominium in one of these areas. And you may be right! But, there are many things to consider before you take the leap. Hopefully, this guide will serve you well and help you decide whether investing in a condominium is right for you.

Importance of investing in properties

Compared to other types of investments like stocks, forex trading, and Bitcoin, properties involve a relatively low risk. But it requires an enormous amount of investment and would even be an advantage for you if you pay in cash to avoid interest rates.

Properties guarantee a steady cash flow if you have a long-term plan, whether you’re leasing a condo, a commercial space or land.

In a nutshell, it’s a stable way to grow your money with potential profits that can result in financial freedom in the long run. If you’re young and you want to make sure you and your parents enjoy their retirement years, you can build a steady income for them too.

For example, if you purchase a 3-bedroom condo unit near a university belt in Metro Manila (let’s say in Katipunan) for about P5,000,000 and each bedroom cost P18,000 (3 x P18,000) you end up P54,000 per month gross rental income.

After ten years, you get P6,480,000. This computation doesn’t include taxes, inflation rates, rental yields and other fees. But to simplify how to get your return on investment (ROI), it means after 10 years you get your ROI.

Depending on the location, the value of properties increases especially if there are planned business or real estate developments. And it’s important to note that these kinds of developments are not relegated to Metro Manila, they can occur in other provinces as well.

4 Benefits When You Invest in Properties in the Philippines

#1 You Can Generate Passive Income

When you lease the condo you bought, you can generate a passive income that could be supplementary to your monthly income. While you sleep, money comes in as the lessee is obliged to pay you the monthly rent in a specific term (e.g. 2-3 years).

#2 Easy to Finance and You Can Buy More Assets

You can easily finance a condo unit as long as you have a good credit history. You can borrow money from banks or fund it via PAG-IBIG, and even in-house financing.

If you don’t have a PAG-IBIG account, you can get financing directly from banks so you can compare which among them offer the lowest rates instead of the in-house.

If you know how to handle your property rentals and decided to buy another unit, you can use positive leverage where you can purchase other physical assets and use them as collateral. This strategy is suitable for someone who’s been investing property for years.

#3 Invest in Other Businesses and Ventures

For beginners, leveraging your property to purchase other large assets might be too advanced a strategy.

Instead, if you’re able to cover all of your expenses (including your mortgage) through your existing salary, the rental income generated from your property can be used for smaller investments like stocks, forex trading, bitcoin or even a small business.

#4 You Can Take Advantage of Booming Markets Outside of Metro Manila

There are booming markets and cities outside of Metro Manila like CALABARZON, and Central Luzon. The government is also looking for other options for business hubs like Clark (soon there will be the Global City Clark) in the north. It’s expected to be larger than Manhattan, a $14 billion ‘pollution-free’ city that will rise over the next three decades.

The Clark International Airport is now servicing domestic and international flights regularly, and President Duterte is also looking at Clark and Bulacan for new airport projects to decongest Ninoy Aquino International Airport in Pasay.

The ongoing construction of roads and rail projects in the pipeline that connects north to south will provide opportunities for investments outside Metro Manila.

https://www.moneysmart.ph/articles/how-to-invest-in-a-condominium-in-the-philippines/