Walking in the mall and getting offered by a friendly agent with a pre-selling condominium unit? Getting cold calls from aggressive property consultants? Astonished by the ads you see in social media about a project in the city which has a huge potential to become the next popular spot?
Purchasing a condominium unit for the purpose of selling it out again can be a profitable investment technic once done right. Reports said that the Philippines’ current price increase yield is on a high at 10.1% per year, way higher than other neighboring countries.
Before diving in and taking those precious P100,000.00 minimum cash out to reserve a unit, take in mind these 5 considerations :
- Buy Low
Basic Investment Mantra. Buy low, sell high. As promising as a development’s potential price speculation is, timing is still everything. In this case, the best time is always upon property launching not when the building is already up. Aside from the chance to take advantage of the lower price, you have the liberty of choosing the best unit with maximum saleability points. Units facing the amenities, or unobstructed views is always a plus point. Developers increase their price at least every quarter, and the rate of increase gets higher when the project is nearing completion.
2. Match your investment with your current Income
The usual misconception of investors, especially the younger ones, is that they decide to purchase based on how much the monthly installment is. Opting the easy-pay schemes which is typically 5%-10% spread out in 2-4 years with a lump-sum prior the turn-over. (Contact me if you want these payment terms explained fully) After all, they don’t intend to keep it. They’d sell it by then. Here comes the what ifs: what if selling your unit takes longer than your target date? What if far more better properties are launched nearby and 90% of the buying market thinks the same way as you do? The rule of thumb is, only a maximum of 30% of your monthly net income can be alloted to your monthly payments, may it be bank-loan or in-house financing.
3. Understand the Market Trends
Identifying where the next big thing is, helps. Knowing where the major infrastructure and transportation plans by the government will lead the way to where you should invest. Great example is the Mega Manila Subway which is planned to be finished in 2025 connecting Quezon City, Taguig and all the way to Manila International Airport. Investing entails careful research. Instead of playing mobile games or sleuthing someone on facebook and instagram feeds, why not spend most of your time reading and analyzing Real Estate reports?
4. Know who to trust your investment to
A trusted and professional Real Estate accredited agent and a duly licensed broker assures security and lessens the risk of headaches. Some agents are tasked to close deals after deals with their training only done in 3 days to 1 week under a developer. They are measured by how many sales they bring in. You might have their full attention now, but in 1-3 years, you will be left at the mercy of the documentations group of the development company. On the other hand, licensed brokers were required to attend a 6-month licensure review, have a minimum experience and pass the excruciating government mandated PRC exam. You be the judge.
5. Wait for your investment to grow
Like any other investments, condominium purchases with the intent to resell requires time. Key determinants to sell include the basic supply and demand rule.
- the developer’s inventory should already be sold out
- market price have gone up to a minimum of 10%
- the building is already visible
- the expenses in the transfer of ownership is taken into consideration
What experiences did you have in buying condominiums in the Philippines? Share your stories below.
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