For many, investing in a condo is an idea, a low-risk way to achieve one’s long-term gains towards financial independence, providing a tangible addition to your portfolio that’s infinitely easier to manage than say, one built on stocks and bonds. Whether you buy to live in, sell off, or rent out, condos will be a viable investment as people will always be in need of shelter. However, as with any investment, there are some things you need to keep in mind before diving headfirst into becoming a real estate investor. Here are some things to consider when making your choice:
In any kind of real estate, location is key to ensuring the kind of market you can attract with your property, as well as the potential returns. Luckily for you, most real estate developers have already done their homework on the best locations based on projected demand and spending capacity of potential buyers/renters. If you’re looking to buy a unit to rent out or sell off at a future date, it helps to do your homework and compare locations, as prime areas, such as those near business districts will naturally demand higher initial investment. This focus on location also goes towards the accessibility of the property with regards to conveniences within reach, such as public transportation, offices, schools, or malls.
If you’re buying a unit with the intention of selling or renting it out to tenants, a good exercise is to determine what kind of people you want to appeal to. If, for example, you want to concentrate on single professionals rather than families, you may want to get a unit near a business district, rather than one in a residential area that might appeal more to families. If you’re looking to take in student tenants, then developments near major schools would be worth looking into, but keep in mind that these units most likely only occupy the unit during active school months. As headcount is taken into consideration, so too must the size of the unit to invest in, with studios ideal for single professionals, and 1-2 bedroom units for newly-married or growing families.
According to Lamudi, condos in Makati and BGC appreciated between 5.1 and 6.3% at the end of last year, favoring those who pre-bought before ground was even broken on the properties in question. Thus, over the span of four to five years, it’s entirely possible to make 30-40% profit based on unit value alone, making it especially attractive to those who buy early, and excluding what you stand to gain should you choose to rent it out. Depending on the attractiveness of the location, the amount can be even higher.
Perhaps one of the most attractive aspects of owning a condo is that basic maintenance of the building’s common areas will be handled by the property management group, rather than the resident. The built-in peace of mind this affords is well worth the investment, with the owner only worrying about their regular monthly dues once the unit is paid for. These dues can be built into the projected rent.
STATE OF THE MARKET
According to a report by The Standard , the Philippine real estate market is set to grow this year, boosted by the current boom in the BPO industry currently generating an equal amount of money as our OFWs’ remittances. Such spending power is allowing people to become pickier about where they choose to live, thereby increasing demand for quality living spaces. According to Rick Santos, founder, Chairman and CEO of leading real estate advisor C.B. Richard Ellis (CBRE) Philippines, ““We are very positive on the way things are going for the real estate market,” he said. “As we have noted before, the transformation of areas outside of the central business districts are continuously creating more investment opportunities.”