House and Lot Investments: 4 Valuable Tips to Get Started

Things you need to know before diving into real estate investments.

Written by Fitz Villafuerte, RFP

Mention the word “investments” and two things immediately come to mind for Filipinos – the stock market and real estate.

However, among the two, it’s the latter that many aspire for. Aside from being a tangible asset, it’s also one of the very few types of investment that can provide both capital growth and steady income for the investor.

That’s why when it comes to planning for one’s retirement, investing on real estate properties is always among the top considerations because of two good reasons. First, its value rarely goes down, which allows an investor to sell and use the proceeds as a retirement fund.

And second, it can be turned into a rental property that can provide the investor a stable source of cashflow upon retirement. Additionally, managing a house and lot rental business, for example, is not as complicated and meticulous as running a traditional business such as a restaurant.

But how exactly do you get started in real estate investing? Here are four valuable tips for beginners.

Tip #1: Study real estate investing first.

As always, don’t invest on something that you don’t know or understand. Real estate investing is not just about buying properties, and then selling or having it rented out.

To illustrate, apart from using it as a future home, the lower cost of buying a pre-selling house and lot will allow you to sell it for profit once it’s finished. Meanwhile, ready for occupancy (RFO) house and lots are ready for immediate use, whether for personal use or earning from rentals.

Moreover, research about real estate developers. It’s a big investment, so you don’t want to give your money to a company with no track record and uses low-quality materials for their properties. Always buy from a trusted real estate developer.

Lastly, I encourage you to read books, research online, enroll in classes, attend seminars, and learn the ins and outs of the business. Know what are the fees and licenses that a buyer and seller incurs. Get acquainted with how loans work.

And most importantly, learn even before you’re financially ready to acquire your first property. This will save you lots of time in the future and allow you to seek opportunities immediately when you’re ready.

Tip #2: Choose and commit to a strategy.

Real estate investing is a broad subject. This means there are many ways to go about and make money from it. And if you want to succeed, it’s important to focus on and learn one strategy.

The first thing you need to consider is what type of property are you planning to acquire? For example, you can’t just buy a house and lot. You need to consider beforehand if you want a pre-selling unit or one that’s ready for occupancy (RFO).

You should also ask: Will your strategy be to buy and then immediately sell? Buy, fix or renovate, and then sell? Buy, hold, and earn from rentals? Buy and then sell as rent-to-own? These are just a few of the strategies you can do to earn from house and lot investments.

House and Lot Investments


Ready for Occupancy

Sold at a lower price, usually 30% cheaper than a finished unit. Thus, you can sell immediately at market value once H&L is turned over.

Sold at market price. Thus, you need to wait a few years for its value to appreciate before you can sell it for good profit.

You have to wait for it to finish in a few years before you can generate cashflow from the H&L through rentals.

You can generate cashflow from the H&L through rentals immediately after purchase. No waiting time.

If you’re an OFW who’s planning to go back home after 3-4 years, then getting a pre-selling house and lot can be a sound strategy. Because by the time you’re ready to quit your job abroad, it will be finished. You can then live in it with your family, or you can have it rented out and provide income for you.

Personally, I’ve also talked to busy managers and executives who prefer buying pre-selling units. That’s because they don’t have time to scout for rental properties, they just bought units from a reputable developer, which also provided property management services.

This means once the house is done, the developer will be the one who would find renters or lessors for the property, in exchange for a small portion of the income.

As you can see, there are many options and strategies in buying and making money from real estate. Choose and focus on the best one that suits your needs and financial capacity.

Tip #3: Make a business plan.

A real estate business is a business. This means it will do you a lot of good if you can develop and write out a business plan, which will serve as your blueprint for the coming years.

A business plan is where you will define your desired type of properties. You can also describe in there your target market and how you plan to reach out to them. And more importantly, it’s where you can do the calculations, which should prove the feasibility of your plan.

Buying a  property on impulse will rarely give you profitable results. And as a famous saying goes, “Failing to plan is planning to fail.”

Tip# 4: Work out your finances.

Acquiring a real estate property is one of the most expensive things you will do. It’s a big-ticket purchase that can put you into bankruptcy if you don’t plan it well.

One advantage of buying a house and lot from a developer is that your costs are conveniently bundled as one expense. That is, you only need to think of paying your housing loan.

Unlike building your own house, for example, where you need to think about the payment and costs of different contractors, sourcing out materials, fees from architects and engineers, among other things. Getting a loan also makes it easy to plan your finances as you have a clear amount and fixed schedule of payments.

Moreover, pre-selling house and lot units have flexible payment terms. And developers often provide many different payment schemes. On the other hand, while RFO house and lots are more costly, that expense can be offset by the monthly rentals that you can immediately earn.

Final Thoughts

It’s important to plan for your retirement. And the earlier you start on investing, the less money you need to save, and the bigger your wealth will be in the future.

When it comes to investing, it’s important to diversify to lower your risk. Don’t just buy paper assets, but also consider tangible assets, such as real estate. But ultimately, choose investments that will help you meet your financial goals.

Lastly, when going into real estate investing, always buy high-quality properties in strategic locations. These can bring consistent and long-term income from rentals and will have good value appreciation in the future in case you decide to sell it in the future.