What is the best property for you?
A very basic question that somehow so many people actually fail to ask themselves first before signing on that dotted line on the contract and committing themselves in a major and long term obligation of amortizing their purchased property. Most of the time mesmerized and emotionally overwhelmed by fancy presentations and colorful brochures, the binding agreement is usually clinched by throwing in a discount or some extra freebies. Prominent addresses matched with captivating amenities promising a swanky lifestyle allures the prospective buyers and make them forget about their investment objective (which they may not have actually thought of in the first place) then proceed with their engagement with the sweet talking, quota pressured salesman.
After a day, a week, or a month, some buyers just realize that they cannot really afford to proceed with the investment and come up with all kinds of reasons not to proceed and demand a refund. There are also some who will continue until they can even if they are always on the edge and pay their amortizations with heavy hearts. The good news is that there are still more buyers who either really know what they are doing and with very clear investment objectives, and those who were properly advised by experienced professionals. Just in case you have made a property acquisition in recent years, you may be able to identify yourself with any of these three types of investors.
The key is really simply knowing your clear investment objectives based on your needs, reasonable wants, the appetite for risks, financial capacity and length of holding period. Actually, it is only you who can answer all of these or you may seek the assistance of a professional adviser as long as you provide them with truthful facts.
When identifying a project, you can match all of these mentioned items then determine the single most important factor, the Market. What and who will be your market if you decide to cash in your investment by reselling your property with a handsome capital gain or if you prefer to generate positive cash flow through rental income. It is equally important to consider the time when the property will be ready for turnover. Will there still be a sizeable market at that point. What will be the price range or the rental rates that will be affordable to a bigger number of prospects? What are the projected supply and the trend of taking up of similar units by your target market especially if you are considering to lease out your unit? What will make your building stand out among the other projects? What are the other expenses that should be considered in your ownership like property taxes, insurance, share in the taxes of the common areas, association dues, broker’s commissions, and minor repairs? While projects with a lot of luxurious amenities are really perfect for end-users who will enjoy the use of the facilities, it may not be very advisable for projects which are intended for lease at competitive rates.
If you fail to carefully take all of these into consideration and just get carried away by your emotions aroused in excitement in the course of the impressive presentation, chances are you will end up having your unit included in the numerous vacant units in some popular areas waiting for buyers or tenants while continuing to pay your interest-bearing amortization and monthly association dues.
With the continuing growth of the Philippine economy, we can still expect the property sector to ride with the boom. Two major contributors to the supply of money in circulation are the OFWs and the BPO sectors. These two Dollar generators play a very big role in the production and absorption cycle of the real estate industry. The former comprise most of the buyers and the latter providing the lessees for their units. The buyers of right-priced projects who can lease out their units at lower rates and still get very good returns are enjoying high occupancy from the BPO workers.
Another growing and very promising business are renting out your units on a daily, weekly or monthly basis. One popular model of this is the Airbnb which is fast gaining acceptance worldwide. I will be writing about this in the coming issues.
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