With the promising opportunity in the Philippine real estate, you’re probably looking for a condominium investment right now. But with the endless cascade of real estate advertisements in the market, you might be feeling lost because you don’t know how to start and what things to look for in a condominium property.
If you are this person, don’t fret. Here are guiding tips to help you get started in buying a condo investment in the Philippines:
1. Consider your budget
Since real estate purchases involve a significant amount of money, the first thing you should do is to determine your budget for property investment.
Condos here in the Philippines usually cost millions of pesos. And by determining your budget, it will help you in choosing where to buy a condo investment.
- You can buy from a property developer, or
- You can buy from owners who wish to resell their property
Buy from a property developer. If you do not have a lump sum cash on hand right now, then I suggest that you should buy directly from a property developer. Their pre-selling projects are offering low downpayment and flexible payment terms.
By paying its reservation fee, usually ranging from Php 15,000 to Php 50,000, you already secured three things – the condo unit itself, its current price and payment term. Since its pre-selling, the downpayment (usually 10% to 30% of the selling price) is payable on an installment basis with a 0% interest rate until its turn-over. Hence, by shelling out a small portion of your monthly income, you can obtain a condo investment here in the Philippines.
SM Development Corporation (SMDC) is a top property developer in the Philippines offering low monthly payments on their pre-selling condominiums ranging from Php 8,000 to Php 20,000. Click here to browse SMDC pre-selling condos, and avail up to 10% discounts.
Buy from owners who wish to resell their properties. Owners usually resell their property cheaper than the developer’s price. However, their payment terms are different from a developer. Often, they require spot cash payments to have their capital back as soon as possible. Since you are buying directly from a person and not from a company, be sure to check that the property has a clean title. For a secured purchase, be sure to transact with a licensed salesperson or a licensed real estate broker.
Lastly, it is essential to know that budgeting your money is not limited to the unit selling price. You also need to consider condo association fees and property taxes. The monthly association fees are calculated based on the costs of maintaining the common areas and its facilities. Currently, in Metro Manila, it’s more or less P100 per sqm. Moreover, all real property owners need to pay Real Property Tax (RPT) every year to the local government unit.
2. Determine your goal of buying a condo investment
Are you planning to utilize the condo unit for residential purposes? Or you intend to generate profit by leasing out the property or reselling it in the future? Knowing your goal will help you in buying the right real estate investment.
If you intend to resale the condo in the future, then you might want to buy in developing areas that will further jack up in value as the community progresses.
On the other hand, if you intend to purchase a condo for leasing purposes, then avoid the common mistake of buying low-priced residential condos in remote areas. Tenants are very particular to the property’s accessibility and proximity to specific destinations like malls, offices, and universities. Currently, there’s a high rental demand for condos in Pasay, particularly in Mall of Asia Business District.
For OFWs and foreigners who are always away from the country and cannot readily manage the leasing of your unit, we recommend condotel or condormitel units. It is a type of condo unit, but there’s a property manager who will handle the leasing operation similar to a hotel. Total rental income will be pooled together and distributed to unit owners. One great example is the University Home offering condormitel units located less than 1km away in 10 universities in Manila.
3. Research about the property location
You probably heard the saying before that ‘real estate is all about location’. Why is that? Because location significantly affects the property value and its potential rental yield.
The location determines the proximity and accessibility of your condo unit to transportation, hospitals, universities, etc. It also determines if you reside in areas that are prone to calamities such as floods and earthquakes.
Also, research future development in the area that will significantly affect its real estate value. New roads and infrastructures will lead to property appreciation and can give you substantial capital gain. So you might need to study the feasible growth of your preferred location.
4. If you want to lease out your unit, identify your target market and target rental yield
Here in the Philippines, you may notice that developers build condominiums meant for particular groups of people. They already have target markets for their condo project. So if you intend to buy a condo unit for leasing purposes, then do your research about the target market of the developer.
Let’s say, for example, you want a long-term lessee that can give you steady rental income with less supervision. Then, you might want to buy a condo near universities and lease it to students since they opted for long term leasing (usually one year to four years).
Meanwhile, if you want a condo enrolled through Airbnb with a higher rental rate, then you may want a condo in business districts such as Makati, Mall of Asia and Alabang.
Knowing your target market and target rental yield will help you in finding the right condo investment that suits your financial goal.
5. Know the building condition and its features
Is the property in good shape, and does the management duly maintain it? Its condition is critical because a poorly maintained condominium can quickly devalue the unit’s worth.
Moreover, as I mentioned earlier in this article, developers here in the Philippines build condominium meant for particular groups of people. Therefore, each condo differs in features, and it depends on the developer’s target market of homeowners.
Condominium for starting families usually have bigger unit areas and amenities such as playgrounds, barbecue pit, and kiddie pool. On the other hand, condos meant for students, have facilities such as study area and library.
Furthermore, the quality of the management service is an essential factor that may affect the convenience and comfortable living of homeowners. So do your research about its condominium rules. There are rules like no pets allowed etc. You should go over it one by one to make sure the condo doesn’t have rules that you can’t live with.
6. For pre-selling condominium, consider the turn-over date of the project
Timing is an essential element in real estate investing. The turn-over date or the completion date of the condo project can significantly affect your finances.
Once your unit is now ready for turn-over, you are obliged to pay the remaining balance on full payment or apply for a bank loan or PAG-IBIG loan. Of course, once your property is on a mortgage, all of your payments will have an interest.
If you think you are already ready for full payment or bank loan application, then you may want to purchase ready-for-occupancy units.
On the other hand, if you wish for a later turn-over date and enjoy the 0% interest rate payment, then you may want to buy pre-selling properties. With this, you have time to prepare for your full cash payment or bank loan application.