Earning your income just by working nowadays isn’t enough. You need to look for investment opportunities whenever you can as well.
There are many reasons why you should start looking for potential investment opportunities. Not only can it help you build your wealth, but it also helps you diversify your portfolio and reduce risk in the market.
There is no doubt that the future of investing is going to be filled with more and more possibilities for investors who want a quick way of making money or even just finding an opportunity for them to invest in something they might not otherwise consider investing in.
With that in mind, one of the investment opportunities that you can capitalize on if you have the budget for it would be property investment. However, since property investing deals with owning real estate or managing it in some way, people who haven’t tried it before might not know where to start.
If this is the case for you, then this article can help you by giving you tips on how to start investing in real estate in the Philippines.
What is Real Estate Investment?
Before we start, let’s offer a brief introduction to what real estate investing or property investing actually is.
Real estate investment is a type of investment that involves the dealing of real estate properties. It involves the purchase and ownership of real estate properties.
This investment is a stable investment, but that doesn’t mean that there aren’t any risks involved. Also, not everyone has the capital to invest in it. However, it offers the potential for huge returns on investments if you are able to identify good properties at the right time.
Nowadays, real estate investing can be doable for anyone who has some knowledge of finance and property development.
Why Should You Invest in Real Estate in the Philippines?
Now at this point, you might be asking yourself why, out of all the potential investment opportunities, should you invest in real estate in the Philippines.
Well, there are many benefits of investing in real estate in the Philippines.
The Philippines is the perfect place for real estate investments. It has a high population and a growing economy, which makes it an ideal market to invest in. Investing in real estate in the Philippines can be a lucrative investment opportunity because of its high population growth, economic growth, and increased demand for property.
It has a wide variety of opportunities for investors. The country has a growing economy, low property rates, and an abundance of natural resources.
The country is also known for its hospitality industry which provides good job opportunities for foreign workers who want to work abroad.
Different Kinds of Real Estate to Invest In
Now that you may have more interest and information about why it might be a good idea to invest in property in the Philippines, it’s time to see what your options are.
There are different types of properties that you can invest in and you can categorize them in general into these types: residential property, commercial or industrial property, or just land.
Residential Property Investment
Residential property is a type of real estate investment that refers to the ownership of a house or an apartment building.
The pros of investing in residential property are that the return on investment can be substantial and the risk is relatively low. The cons include the fact that it is difficult to sell a property and mortgage rates are high.
Investing in residential property is an effective way for people to accumulate wealth over time. However, investors should also be aware of the potential risks involved with this type of investment and know what they’re getting into before they start investing their money.
Commercial/Industrial Property Investment
Commercial property is real estate that is used for business purposes. Industrial property is real estate that is used for industrial purposes.
Industrial property can be found in manufacturing, mining, and oil and gas industries. Commercial property can be found in offices, retail spaces, shopping malls, hotels, and restaurants.
Investing in this type of property would usually mean that you need a higher capital or budget because of the nature of the property. Also, you will be dealing with businesses rather than your average consumer when dealing with this kind of property.
Land
Land is a good investment for many reasons. It has a low risk of depreciation and the government taxes it at a low rate.
Land investment is an asset class that has been popular with investors in recent years due to its low risk and stable returns. Land can be bought and sold, so it can be liquidated when needed.
With the property market booming in most major cities, land investment is becoming more popular among investors as they seek to diversify their portfolio with this asset class. It is also flexible in terms of what you can do with it as an investment. You can sell it as is or develop it into something else.
Different Types of Property Investment Approaches
Now that you know the different types of properties that you can invest in, it’s time to figure out what you’re going to do with them.
There are different ways for you to profit from the property that you are planning on getting. Here are just a few of the main approaches out there.
Buy-and-Sell Investment Approach
A buy-and-sell property investment approach is a strategy that is used to maximize profits by buying properties at a lower price and then selling them for more.
The buy-and-sell property investment approach requires an investor to have a large amount of capital in order to be successful. It is also important that the investor has a good understanding of real estate and the market.
You can do this on a short-term or long-term basis.
For example, you can buy the property and immediately sell it off, or you can buy the property, hold it for a few years or more, and then sell it off when the profit margins are higher.
Rental Property
Another common way that people are earning more from their property is by renting it out to the right people.
Renting is a great way to get into the real estate investment market. A rental property can provide you with a steady source of income and it is usually much more affordable than buying a home.
Renting a property can be an effective way to generate passive income. However, finding the right property for you is a difficult task.
With that said, here are different examples of rental properties:
- Converting your property into an Airbnb
- Renting a residential property to tenants on a long-term basis
- Renting office space to a business
- Turning your property into a transient rental property or a vacation rental
- Rent property out for events and gatherings
There are different ways you can profit from renting your property out and there are many different kinds of customers that you can cater to with it.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts or REITs are a type of investment that is similar to mutual funds. They invest in real estate and provide investors with a share of the income they generate.
REITs are companies that have been created to invest in real estate, typically commercial properties such as shopping malls, office buildings, hotels, warehouses, and industrial parks. They are classified as trusts and must be listed on a stock exchange.
These REITs are just like stocks or bonds but they also have certain requirements that they need to meet before they can list their shares on the market.
Shared Ownership
Shared ownership is a type of investment in which the unit owner shares the property with other people. This means that each owner has an equal share of the property and is entitled to one vote on decisions related to the property.
This type of ownership is an increasingly popular way for people to invest in real estate. It is also a great way for people who do not have enough money to invest in real estate outright, but still want to own a property.
However, that also means that you’re going to share the profits with the co-owners.
Property Flipping
Flip property is a type of real estate investment where the investor buys a property at an affordable price and then sells it for a higher price after they’ve renovated or developed it.
Flipping properties is not easy because it requires a significant amount of capital to buy a house or apartment at an affordable price and then sell it for a higher price.
The idea behind property flipping is that the market for real estate will always be there and people will always need places to live and work. The key to success with this investment is being able to find properties that are worth investing in, have the potential for quick returns and have solid demand from potential buyers.
This type of investment can be risky if not done correctly but it can also be lucrative if you do your research and know what you’re doing.
Build-and-Sell Investment Approach
A similar approach to property flipping would be the build-and-sell investment approach.
The build-and-sell property investment approach is a strategy that allows investors to buy a property, fix it up, and then sell it for a profit.
You can do this type of investment with both residential or commercial properties depending on the investor’s needs. The key aspect of this strategy is that it takes time to build up the value, but once it reaches a certain point, the investor can then sell their asset for a profit.
The difference between property flipping and this approach is that you aren’t buying a property that already has a development on it when you are flipping houses. Here, you are starting from scratch and building the property that you want to have.
Tips on How to Start Investing in Real Estate in the Philippines
Here are a few more tips that can help you get started as a real estate investor in the Philippines.
Check Your Finances
When you are thinking of investing in property, it is important to take a step back and check your finances. There are a few things that you should look out for before doing so.
- Check your credit score and make sure it is good enough for an investment.
- Get an appraisal from a professional appraiser to see if the property is worth the investment.
- Find out how much the downpayment is and whether you can afford it.
- See if you have enough disposable income so you’re not dipping into your savings or emergency fund.
You should also see what financing options are available to you.
Financing Options for Property Investment
Here are some of the financing options that you should look into if you’re going to invest in real estate in the Philippines:
Paying With Cash
This option offers discounts for being able to pay off the entire property in cash. However, the return on investment can take a while.
Bank Financing/Other Lending Institutions
Expect higher interest rates and more stringent requirements, but at least you can have higher loan amounts.
Mortgage Brokers
They serve as the middle-person between you and loaning institutions, so they have a higher chance of getting a loan approved. However, they come with a service fee.
In-House Financing
You can reach out directly to the property developers when buying property from them to get a loan. They aren’t as stringent compared to banks, which is great if your credit history isn’t good.
Pag-IBIG Housing Loan
This housing loan is great for people who are employed since you are likely paying for this every month. Take advantage of this so that you don’t have to worry about a heavy financial burden when investing in property.
Each of these financing options has its requirements, advantages, disadvantages, and more that you should know about, so make sure that you educate yourself on them first.
Don’t Forget Property Tax in the Philippines
Don’t forget that you should also be able to handle the future costs of owning property. For example, you have to make sure that you pay the amilyar or property tax in the Philippines. Aside from that, maintenance costs, repair costs, renovation costs, and more are things you need to keep in mind.
Research The Philippine Real Estate Market
As the Philippine real estate market is developing, it’s important to understand how the market is changing and what factors are influencing it. This understanding will help you make a more informed decision on whether or not to invest in property.
The Philippines’ real estate market has been growing steadily over the past few years. The government has been making efforts to improve the country’s infrastructure, which means there are more opportunities for investors looking for property in urban areas.
The importance of researching the Philippine real estate market before investing in property cannot be understated. It will help you make an informed decision on whether or not to invest in property and also give you a competitive advantage over other investors who don’t do their research first.
Figure Out What Type of Real Estate You Want to Invest In
There are many ways to find out what type of real estate you should invest in.
- You can ask a professional to help you with this process and explore the different options.
- Do your own research online.
- Don’t forget your financial situation/capabilities.
- Figure out what types of properties are available in the area that would suit your needs best.
- Identify a property’s potential value.
These factors can help you figure out which type of property is worth your money, time, and effort.
Search For The Right Property
Just because you have a good idea of what kind of property you want to invest in does not mean it’s going to be easily available to you. Therefore, make sure that you are patient and don’t go with the first option available to you since a better one might pop up when you search for longer.
You can use tools and a platform like Carousell to help you find the right property for sale for you. That way, the search process will go by a lot faster.
Start Investing
Once you do find the property you want and have prepared the requirements and done your research, that’s when you can start investing.
Some investments require more of your efforts than others, so make sure that you are fully committed to them. That way, your properties have a higher chance of being profitable.
In Summary
Investing in real estate is one of the safest investments that you can make in the Philippines. However, it still requires your care, time, attention, and efforts to ensure that you are getting your investment back from it. Therefore, make sure that you do your research thoroughly before investing so that you don’t regret anything at the end of it.
