Your first real estate investment: Decision time.

MANILA, Philippines - Today, investing in real estate is not just confined to buying a house to live in. A lot of people invest in several properties in different cities, or provinces, or even islands. And there are still a lot who have yet to make a decision on where to finally put their hard earned cash – in a home or real estate investment – afraid that their money would end up going nowhere.

Why real estate?

Aside from being a need for your home or business, real estate property has become a safe place to put one’s money. Land is so valuable but limited. As much as possible, one should aim to own at least a hectare and would build his/her own house in it. This is a crisis proof real estate investment because of limited supply and a guaranteed price appreciation.

What are the things to watch-out for in this investment?

Location

This should be your priority consideration when investing in real estate. A property’s location is a very good indication of whether your investment will earn or just be your virtual piggy bank for years. There are areas that have a very active property market, sometimes driven by speculation of programmed infrastructure projects, or by a mall developer putting up store. In these areas, selling prices have a tendency to sky rocket.

Price trends

Since you want to earn from the property, you should check how the real estate market has been moving for the past three to five years. Do your research on industry average selling prices and property rental prices before deciding on which development to purchase.

Property history

Many first time real estate investors are not aware of the importance of knowing property history. An investor can study property history by studying documents like title, tax declarations, and even the history of non-payment of association dues. It also helps to study the background of the real estate developer of the property.

Where can you seek real estate advice?

People you trust are the most reliable sources of advice. But to help you more, seek the professional help of a licensed real estate broker.

Where do you search for a good buy?

Advertisements

There are many properties advertised for sale in newspapers and magazines and most of the indicated asking prices are negotiable. Also be on the lookout for billboards and outdoor advertisements of properties offering ‘trippings’, which are essentially tours around the property conducted by licensed brokers.

During these trips, potential buyers are given a feel not just of the property, but also of the lifestyle that the entire development – whether it’s a subdivision, condominium, or leisure property, offers. It is also an opportune time to ask questions and get good deals from brokers.

Developments under pre-selling

Real estate companies offer units of properties that are yet to be developed, usually at a lower price. The value of the unit would then appreciate as the construction or development progresses. (A friendly advice, if you want a good return, do not buy on installment. Instead buy it cash to enjoy the big discount)

Foreclosed properties from banks, Pag-IBIG, SSS, HDMF

Foreclosed properties from banks and financial institutions offer a lower asking price compared to the market. Most of the banks would like to be unburdened with their non-performing assets. They also offer lower interest rates if you would go for installment payments. However, check the properties first.

What is the significant contract in this investment?

A first time real estate buyer has to realize that he would be entering into a contract. A Deed of Sale or Conveyance is the ultimate contract that the buyer and seller would execute. This is a notarized contract indicating that a real property has been purchased and would be transferred to the buyer.

What are the costs attached to such an investment?

Aside from the selling price, a buyer should also understand that there are other payments before the title could be finally transferred to his/her name. The BIR will block the transfer if the capital gains tax and the documentary stamp tax are not remitted. A registration fee should also be paid to the Registry of Deeds who would do the ministerial transfer of title. While local government where your investment is located would collect a transfer tax from you.

Jimmy T. Razon is the Business & Project Development Manager, Moldex Group of Companies.