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What to keep and What to flip

What to keep and What to flip

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Real estate is a long-term investment and you should be prepared to keep this long term commitment. This should always be the mindset of anyone who is investing in real estate, period. No matter what the agents tell you especially those unscrupulous unlicensed and inexperienced salespeople promising incredible returns in a very short time, always do your due diligence. Unless you are an expert and experienced investor with deep pockets and have access to advance information that will eventually affect the price of the property that you are eyeing, stay prudent and conservative.

The term “Flipping” has been misinterpreted and used by some sellers just to convince most first time investors into buying what they are offering. This is very common now especially with salespeople selling condominiums or even horizontal projects to prospects and sadly, mostly OFWs and foreign investors who do not really have access to full information, who tell their clients that the units that they will buy now will double in just a few years. Some even make promises of flipping the unit only after a few months in able to convince the buyers to put a big downpayment, (just to get their commissions immediately) and then disappear when they leave the developers that they work for.

While flipping actually works, it really requires not only knowledge and experience in acquiring the right property at the right price at the right time but also some expertise in enhancing the features of the property to hasten the appreciation of its value at a much shorter time. A simple example of this would be Flippers who hunt for either distressed or foreclosed properties that they can buy at a very low negotiated price, put a minimum downpayment, fix up the property and sell it immediately at a much higher price. Cases like these are more realistic because they technically have a direct influence on the factors affecting the value of the property like the way they will improve it, decorate it, and market it, especially if the foreclosed property is in a very good neighborhood. This is what really makes the difference. You are in control. On the other hand, if you just purchase a unit of a pre-selling project from a developer and have absolutely no hand in the pace of its construction, manner and time of delivery, velocity of their sales, prices of their units, it will be very difficult to be very successful in flipping unless you are in this business and would know when to get in and out. Recently, some Chinese have been very aggressive in buying pre-selling properties from the big developers in major cities but more especially in Makati, the Entertainment City and in the Bonifacio Global City. Their preferred units are the smaller ones, at least one or two bedrooms since these are easier to unload. The bigger and super high-end units may have some appeal but you really have a very limited market for this. These are the units you enjoy, you keep, and possibly unload at your desired price. They are buying in bulk to negotiate for better discounts and in the easiest possible terms with the intention of re-selling the units ideally just before the turnover.  Some are also prepared to hold the units until most of the developments in the area are completed for better appreciation of the property values, giving them higher capital gains. I think they know something that most people don’t. They are actually expecting more Chinese to be coming here and investing in properties that they can actually own, unlike their policies in the mainland. They are also expecting more investments to flow in more in the coming years once the relationship between China and the Philippines is more stable and there are more positive news about the Philippines. They find our prices here still relatively lower and presents very high potential for appreciation.

I can say that I have been very blessed with my previous investments but it is mainly because of my experience, the information that I have and most importantly, the timing when I get in and out. Opportunities like those do not happen everyday that is why you should grab one when you see one. My wife trusts me fully on this since I have been in this business for quite some time that is why all of our real estate investments were acquired even without necessarily having to ask for her permission. Last year, I was even able to acquire a very prime, ready for occupancy condo unit in Makati at a great price and at a very special payment term. I am already leasing it out now with a rental income enough to cover the monthly amortization and the condominium dues. While I can actually sell it now and enjoy a handsome capital gain, we have decided to keep this for our children’s future use in case they will be working in Makati.

I have already advised several readers on their real estate investments and received quite a good number of positive feedbacks from those who found my tips quite useful.  Incidentally, there is a non-selling website that provides very useful information to all property buyers most especially our OFWs working all over the globe and foreign investors who might not know anyone they could ask for professional advice. The site (www.Iamrealestate.ph) provides information about your rights and privileges as well as your responsibilities and obligations as property buyers. It is really very important to know all your benefits and protection as real estate investors or simple homeowners.

So, while it is a nice idea to invest in a house or a condo unit for flipping, just make sure that you are prepared to make that long-term commitment to your investment just in case you will not be able to unload it according to your projected timetable. Otherwise, if you are not able to pay your amortizations on the property, you might just lose your investment.

Editor’s note:

Alejandro Manalac

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11 months ago
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