Overseas Filipino workers (OFWs) go abroad to earn money primarily for their children’s education – get them to the best colleges.
After, this, they focus on investing for retirement where they hope to generate passive income.
Renowned financial literacy advocate Randell Tiongson points out that among the best way to invest is in real estate especially in school and central business districts (CBD), where 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,” Tiongson said.
But before you go any further, consider this four-point validation, he said:
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.
2. 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.
3. 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.
4. 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.
The longest-running, most trusted and biggest Philippine investment event in the Middle East region, Philippine Property and Investment Exhibition (PPIE), is back. It has helped thousands of OFWs own their very own home. Be part of PPIE 2019 on April 26-27 at the JW Marriott, Deira, Dubai to reach your aspired home. Like @ppieuae on facebook to get tips and alerts on unbeatable deals.