You’re probably looking for opportunities to grow your money without getting too involved in the “process”. Or you could be someone who has a serious look on his face, determined to start a long-term quest to financial freedom, no matter what it takes. And then you turned your attention to real estate — more particularly, condominiums — because you noticed everyone’s gone crazy about it. There must be money in there, right?
Urbanization and rapid population growth have changed the face of real estate in the Philippines. Gone are the days when houses and apartments were the property of choice for Filipinos. These days, more and more people are opting to live in condos and the market is also attracting an ever increasing number of foreign investors.
Today, both high-rise and low-rise condominiums are being constructed in most metro areas. The demand for residential condos is increasing: between the third quarter of 2012-2013, capital values of existing residential condominiums grew by 3.4 percent. Pipeline supply for the next five years grew 12 percent in the same period.
To help you get started in this growing market, here are a few simple tips to consider before buying a condo.
Since you’ve taken an interest on this topic, you must have heard this mantra once or twice before. Everyone in the real estate industry has been told this and this is one of the first things they learn. The gurus say that there are only 3 things that matter most in this business. And those are location! location! location!
There are a variety of condominium styles to choose from in the Philippines. But as a buyer, you should pay particular attention to your condo’s location. As a general rule, condos are often located close to central business districts in metro areas. Many condos have been constructed near connected to or at least near MRT stations in Manila. But you should still consider its accessibility to major thoroughfares and public transport. To prevent any future problems, avoid areas which are susceptible to flooding and heavy traffic.
Do some research / Consider the developer of the Project
Before you even go to open inspections and condo tours, remember to do your research and conduct a background check on the property developer. This way, you’ll become acquainted with the company’s portfolio, client testimonials and the developer’s current projects. For example, check whether they have a history of finishing their other projects on time. Always remember to invest in a company that has an excellent track record and a good reputation.
Know your target market
Here in the Philippines, a common characteristic you can observe with condominium developers is that they build projects for specific groups of people. They already have specific targets before they launch their projects.
It's always best that you identify your market. If it's a condo near a school, then your tenants would be students. If it's a condo near some hospital, then maybe your tenants would be doctors or potential patients from abroad. Knowing which market your property will attract will help you prepare your unit so it could cater to the needs of your target tenants.
Set your timeframes
You’ve done your research and you’ve identified the right market for your to target. So now, the next thing you have to consider is when to actually approach people and offer him your property — whether you want to re-sell it for immediate and one-time profits, or rent it to him for ongoing monthly income.
Timing is also one of the most important elements in real estate investing. It is so important that if you mess it up, you could potentially end up stuck with a useless property. One that will never produce a return on your investment for the next decade! Part of getting the perfect timing is making sure that the condo property you buy will be available for your target market at the right time they are expected to need it.
Know Your Payment/Financing Options
This may sound obvious, but one of the final things you should do is calculate what you can afford and make sure the property fits your set budget. However, this is not limited to the price of the property: investigate what taxes you are liable to pay as well as any other costs, such as homeowners’ association fees and closing fees. Make sure you have a steady flow of income because you have to have at least the downpayment for the property. As a guide, expect to pay a down payment of between 10 and 30 percent.