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Building Wealth Through Real Estate Investment

As you know, investments can either make your money grow or make your money disappear.

Hence, you must choose an investment that is reliable and has high positive returns. One of which is Real Estate.

 

What is Real Estate?

Real estate includes houses, condominiums, lots, and commercial spaces.

Billionaire Andrew Carnegie famously said that 90% of millionaires got their wealth by investing in real estate.

It’s an asset that you may want to include in your investment portfolio because of its unique characteristics that outweigh other investments.

 

Advantages of Real Estate Investments

1. Real estate investment protects your money from depreciation.

Ask your grandma, and they will tell you that years ago, you can buy a lot of things with a 1 peso coin. At present, a 1 peso coin doesn’t go far as it used to.

Why is that? Because the currency’s purchasing power can decline due to inflation. And when that happens, your 1 million pesos savings right now will not be the same value over time.

But if you put your 1 million pesos in a real estate investment, your money will be protected from depreciation.

How? That’s because…

2. Real estate value appreciates naturally.

Property price surges up because it has a function of local supply and demand. With the continued need for housing and the finite supply of land, property price increases as time goes by.

Also, improvements and developments in the area will contribute to the increase in its land value. This is the reason why property price surges after developments of new roads, malls, offices, and other establishments.

This is what you called unearned increment wherein there’s an increase in property value due to actual causes rather than labor or improvement introduced to the property by the owner.

Take a look at this graph that shows the property appreciation of SMDC condos in Mall of Asia Complex, Pasay City.

smdc condo moa

Mall of Asia Complex started as an empty plot of land. But due to its aggressive infrastructure developments, it has now become a thriving business district that is home to several malls, offices, arenas, and convention centers. Hence, condo prices surge over time and tripled in value in a span of 10 years!

Currently, there is still a continuous increase in housing demand from tourists and employees in the area. If you would like to buy a property investment in Mall of Asia Complex, then you might want to check its newest preselling condo which is Sail Residences.

3. Real estate investment can generate income.

Aside from making your money grow on real estate when the property prices surge over time, real estate can give you passive income through rental yield.

Rental income is quite powerful because it never wanes and will go up overtime to compensate for inflation. In short, just like property prices, the rental rate appreciates over time.

And what’s good about the rental business is it does not require too much time and supervision. You do not need to do physical work or hire employees that are typical of any business. Once rented, you have guaranteed monthly income even when you sleep.

Because of this, many individuals invest in real estate as part of their retirement plan. By acquiring properties, you can make money passively and live comfortably in your retirement years.

If you wish to buy a property for rental purposes, then you may want to check the condos for sale in Pasay and condos for sale in Makati. Currently, there’s a high rental demand in both business districts. Hence, rental rates are ranging from Php 2,000 to Php 8,000 per day, depending on the unit area and its proximity to landmarks. (Source: www.agoda.com)

4. Real estate allows you to have direct control and management.

Compared to other investment choices, real estate allows you to have direct control and management.

When you buy a share of stocks, all you can do is buy and hold. But in real estate, you can freely act on it to improve its return.

For example, you can select your tenants or improve your interior to have higher rent.

5. Real estate is a finite physical asset.

Unlike stocks and mutual funds, real estate purchases give you something that has inherent value – land.

There will never be more land available on earth. As the saying goes “God stopped making land but continue to make babies.”

The land is a finite resource and, unlike many precious metals, it has an absolute value that goes beyond our currency system. It can be farmed, built on and lived on. A company that you own stock in can go bankrupt, and your stock will be worthless. Your land can’t just disappear.

 

How to Make Money and Maximize Your Real Estate Investment

Countless investors make a ton of money on their real estate investments. Their secret lies in knowing the limitless options they can do with their property. Recognizing this will help you also to maximize your real estate investment to generate profit.

Consequently, by acquiring property assets throughout your life, you can make enough money to live very comfortably until your retirement years.

Here are the common ways of how you can make money and maximize your real estate investments:

‘Buy and hold’ real estate investment.

Investors build wealth over time by using the strategy of ‘buy and hold’.

It’s a long-term strategy where you intend to sell the property in the future, but will usually rent it out to help with the financing.

As mentioned earlier, real estate investment can give you monthly income through its rental payout. Purchased in a good location, you are pretty much guaranteed that once you leased out your property, you’ll get a return on your money.

Most investors prefer the ‘buy and hold’ strategy because it can give them passive income that is continuously increasing throughout their lifetime, while they wait for the perfect time to resell their property.

Flip real estate for a profit.

Flipping real estate investment is done when you buy a property and sell it for capital gain. Investors who do this rely on property appreciation due to increasing demand, developments in the area, and labors and expenditures made on the property.

If you wish to buy a property for flipping purposes, then you may want to check condos for sale in Quezon City. Its property price per sqm is cheaper compared to other parts of Metro Manila, but it is expected to increase in value after the construction of MRT-7.

Also, you may want to check condos for sale in Alabang. The South of Metro Manila is offering Php 220,000 per sqm or less, which is half the price per sqm of condos in BGC, Makati, and Pasay. But the area is as progressive as the other parts of Metro Manila.

Pass down the property as an inheritance to their children.

Investors who want to maximize the benefits of their property hold their land title for decades and pass it down as an inheritance to their children. Because they know that land is a valuable estate, a finite resource, and there will never be more land available on earth.

Here in the Philippines, land title, commonly known as ‘Transfer Certificate of Title (TCT)’ will serve as proof of lifetime ownership of landlords in which you can hand down your properties to your descendants.

Similarly, condominiums for sale here in the Philippines have a ‘Condominium Certificate of Title (CCT)’ that proves the lifetime ownership of condo unit owners. This means that you are a shareholder of the condominium corporation, and your children can inherit your shares. The condominium corporation owns the land in which the condo sits, and shares are based on the future value of the land.

Although foreign buyers cannot own landed properties in the Philippines, they can purchase and own condominiums. Click here to read our foreigner’s guide in buying properties in the Philippines.

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