What to consider in buying an investment property?

By Randell Tiongson on March 28th, 2016

 

House-Facades-Design-Ideas1 in 6 Filipinos owns real property other than the primary home. This is according to the 2012 Consumer Finance Survey of the Bangko Sentral ng Pilipinas (BSP). While others may use the second or third properties either as a halfway or vacation home or for the rich a ‘pamana’, others use additional real estate as an investment opportunity.

Especially in school and central business districts (CBD), there’s no shortage of rental properties. This is because continuous demand directly relates to the flow of income. If your property is near a university, every four or five years, there’s always a new batch of students looking for a place to stay. You can expect there’s always an individual eyeing a home near one’s workplace if your rental property is in a CBD.

Are you thinking of buying an investment property? Here are four questions to ask when buying an investment property. If you answer ‘yes’ to the following questions, you’re on the right track in becoming a real estate investor.

  1. Is the property location strategic?

Easy access to malls, parks, hospitals, and accessibility to public transportation increase the profitability of university towns and central business districts.

Quezon City, Makati City, and Paranaque City are the three most searched cities in the Philippines according to Lamudi’s 2015 white paper report. Why?

  • Quezon City has many universities and colleges, research institutes, and commercial developments.
  • Makati City is the financial center of the country with the highest concentration of local corporations and multinational companies.
  • Paranaque is close to Makati City and Pasay City but offers more affordable housing options.

Ask yourself how close is the area from schools, offices, hospitals, malls, and main roadways and public transport if you are planning to buy a property investment.

  1. Will the area develop and grow in the coming years? 

The search traffic for properties in CALABARZON, Central Luzon, and Central Visayas continues to increase in the same Lamudi white paper report. Search traffic in CALABARZON surged 130% from the 4th quarter of 2014 to the 1st of 2015. The reason for this is current and future developments in the region, namely in Cavite and Laguna.

The developments in these two areas show no signs of stopping. Nuvali, in Sta. Rosa, Laguna, has easy access to numerous commercial establishments, schools, leisure areas such as a wakeboarding park, and residential properties where the price per square meter is starting to match Metro Manila’s. Ayala Land, Inc.’s vision for Nuvali is to make it the next financial district south of Makati. This area will continue to grow and thus makes it a strategic location to invest in.

The area is a good investment opportunity if the area is situated in a less developed area that is primed to grow and progress in the future. Don’t join the race when it has already started; invest in properties in the early stages of development.

  1. Can you handle the monthly amortization?

Having enough to make the downpayment is one thing, paying your monthly amortization is another. Your payment terms, interest rate, and timeframe varies on your personal preferences. The only thing that stays permanent is the necessity to keep up with the monthly payments. Avoid late payments as this leads to paying more in interest. Do the math first and ensure you can afford the monthly amortization before you decide to invest in real estate.

You can use MoneyMax.ph’s comparison portal for housing loans to give you an idea at how much you can expect to pay on a monthly basis depending on your time frame and loan amount.

  1. Do you have savings for emergency situations?

As the landlord, you are liable to cover for unnecessary situations that may arise (unless otherwise stated in the contract). You should shoulder expenses for water leaks, roof repairs, and floor re-tiling among many other repairs. You’ll also be covering for utility bills and the homeowner’s association fees f your property is left vacant for several months.

The importance of having savings or an emergency fund is to cover for emergency situations in relation to your rental property.

You’re on the right track in buying a profitable property if you find yourself saying ‘yes’ to the questions above. Remember that when you invest in real estate, your intention is to earn and make money because you are investing. Make sure that the property you’re eyeing is profitable before you make a down payment.

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Learn from the experts at iCon2016 this May 28, 2016. Hear the country’s leading experts: BSP Deputy Gov. Diwa Guinigundo, Rex Mendoza, Marvin Germo, Paulo Tibig, Dodong Cacanando and Reina Pama.

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For details, visit HERE

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4 thoughts on “What to consider in buying an investment property?”

  • Hi sir randell. I just wonder if you can still cater to those who cant attend the ICON 2016 for whatever reasons but want to learn more? If i may suggest, can you video the whole seminar and put it on sale? Pls think about it. Thanks a lot. Blessings

  • Nice and fully loaded information and learning. Thanks for the tips Sir Randell. More power! God bless you always!

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What to consider in buying an investment property?