Investing in real estate in the Philippines is a great opportunity and investment for Filipinos planning to start or expand their investment portfolio. One of the key advantages of investing in real estate is it holds great potential for long-term value appreciation that comes with urbanization and the continued development of infrastructure. Owning and leveraging your real estate property is a win-win situation for real estate owners as they can possess an asset plus a potential source of income. However, just like any other investment, real estate investment comes with its own set of considerations and risks. In this article, we will delve into the topic of how to invest in real estate in the Philippines, the risks to consider, and how to profit from real estate. But first, let’s talk about the types of real estate investment you can pursue in the Philippines.
What is Real Estate
Real estate refers to land properties, structures, or improvements to a property. Real estate encompasses buildings, houses, apartments, and other structural properties, which is considered as a tangible asset that can be bought, sold, or rented for various purposes. Real estate can hold or multiply its value which offers potential property appreciation which can generate income through rental or lease agreements. Investing in real estate in the Philippines offers benefits such as portfolio diversification, potential tax advantages, and opportunity to hedge against inflation.
Common Types of Real Estate
Before investing in real estate in the Philippines, identifying the types of real estate property can help you choose your preferred investment on how you would utilize the property. Without further ado, here are the types of real estate properties that you can choose from.
- Residential
The most common real estate investment that can generate a source of income is residential. Residential real estate is a type of property for housing or living purposes. Examples of residential real estate are single-family housing, townhouses, condominiums, and apartments. Residential estate in the Philippines caters to a diverse range of lifestyles and budgets. Whether it’s a spacious single-family home in a suburban neighborhood, a modern condominium in a bustling city center, or a compact apartment for urban residents, the residential real estate market offers a wide array of options to suit different preferences and needs.
- Commercial
Commercial real estate are properties that are used for business use such as office spaces, buildings, retail spaces, hotels, shopping centers, warehouses, and much more. Commercial real estate has the potential to generate significant income through leasing or renting, making it a lucrative investment option. Due to commercial spaces requiring larger spaces and specialized design, commercial properties are highly sought after by businesses and companies for their operational needs. This increased demand often translates into higher rental rates and longer lease terms. By catering to the requirements of businesses and providing suitable commercial spaces, investors can capitalize on the opportunity to maximize their earnings in the real estate market.
- Industrial
Industrial real estate refers to properties specifically designed and utilized for industrial and manufacturing activities. These properties cater to businesses involved in production, warehousing, logistics, distribution, and other industrial operations.
Industrial real estate includes factories & manufacturing facilities, warehouses, and logistic centers.
- Land
Land as a form of real estate, refers to vacant or underdeveloped land or lot as a property. A land property is a flexible investment allowing you to create or develop your own property within the land property. Land ownership provides flexibility to the landowner, offering the freedom to choose between various options. They have the opportunity to sell the land to individuals or businesses seeking property, develop it for residential purposes, or even lease it to the government for agricultural use. This versatility allows landowners to explore different avenues to maximize the potential value and utility of their land assets.
So, How Do You Make Money with Real Estate?
The concept of making money on investing real estate is you buy low and sell high. The common ways to generate income from real estate are:
- Playing the long game
This strategy is when you buy a property that is cheap (there will be varying factors on the value of property which will be explained below) and sell it when the value appreciates in the long term.
- Fix and flip
This strategy involves purchasing a property, typically one that needs renovation or repairs, at a lower price, improving its condition, and then selling it at a higher price to make a profit. The goal is to increase the property’s value through renovations and strategic improvements.
- Fix then rent
Similar to fix and flip, you will be purchasing a property that needs renovation, fixtures, and repairs for a lower price. While you improve its condition, rather than selling the whole property, you rent it out to tenants looking for a place to live.
- Rental opportunities
If you don’t want to go through the trouble of fixing a property like constructions, renovations, and similar of the sort, you can choose to buy the property which already has value, then rent it to tenants that are interested. This option may cost more compared to fix and flip or fix then rent options since you might be paying more for property with established value. But nevertheless, you can still generate income while owning the property.
Key Factors to Consider When Investing in Real Estate
Before you start investing in real estate in the Philippines, it is paramount to consider varying factors that will determine and affect your investment’s overall value and appreciation value in the future. Without further ado, here are some key factors to consider:
- Purpose
What is the purpose of your investment? Is it to generate cash flow? Long-term appreciation? Or both? Understanding your end goal with your investment should be a determining factor that will guide your decisions throughout the investment process.
- Location
Another major determining factor of real estate valuation is the location of the property. When looking at a property, look for areas with strong economic growth, low crime rates, good amenities such as schools, pharmacies, grocery stores, markets, transportation, and other infrastructure that would secure the area’s potential opportunities for value appreciation.
- Property Value
Just like any investment, you wouldn’t want to lose money in the long run. Property value doesn’t only refer to the current value it holds, but also the potential appreciation value of the property. Consider factors like the condition of the property, its size, layout, and any unique features that may affect its value.
- Accessibility
Accessibility, together with location, is an important factor for tenants when looking for a place to rent. Take into account the property’s accessibility to essential services, such as public transportation, major highways, shopping centers, and healthcare facilities. Properties with easy access to these amenities tend to be more attractive to tenants or buyers, enhancing their value and potential for rental income or resale.
- Rental potential
If you are considering a rental property, analyze the rental market in the area. Look at vacancy rates, rental rates, and the demand for rental properties. Calculate potential rental income and expenses to determine the cash flow and return on investment.
- Financing Options
Explore different financing options such as house loans, in-house financing (if planning to buy from a company), or bank financing available to you and consider the impact of interest rates, loan terms, and repayment schedules on your investment. Understanding your financing options will help you determine the feasibility and profitability of the investment.
Where to Find Properties to Buy in the Philippines
- Enta
Enta is an end-to-end real estate marketplace in the Philippines that aims to be a one-stop-solution for everything real estate related by helping real estate brokers to have a digital presence and professionally connect and match properties for buyers needs without difficulty.
- Lamudi
Lamudi is a large player in the online real estate market with a marketplace with operations in 34 countries. You can find a wide range of properties from housing, land, condominium units, and even commercial properties for sale or for rent.
- DotProperty
Started in 2013 in Thailand, and landed in the Philippines in 2016, another real estate marketplace online in the Philippines where you can buy, sell, or living spaces (especially condominium units) and commercial properties is DotProperty is also one of the top players in the real estate market in the Philippines.
- Hoppler
Hoppler is another real estate marketplace in the Philippines where You can buy, sell, or rent residential, industrial, commercial real estate for your needs. Interested property buyers can connect with a real estate broker that will lead you to the right property for your needs and requirements, making it a seamless property buying, renting, or selling experience.
- ForeclosurePhilippines
ForeclosurePhilippines offers foreclosure properties to interested buyers. Their website is a hub between owners of foreclosed property owners and buyers, making it easier for buyers to connect with foreclosed property owners.
- Banco De Oro (BDO)
Banco De Oro, or BDO is a bank in the Philippines that also has properties for sale. From cars, housing, and condo units that are either foreclosure, repossessed, or first-owned, BDO can provide you with properties you need.
Disclaimer: This article serves to provide general and basic information about how to invest in real estate in the Philippines and does not constitute financial advice. For personalized financial guidance regarding your investment, it is recommended to consult with a certified financial professional who can tailor their advice to your specific needs and circumstances.
Conclusion
Responsible financial decisions are key in assessing the success of your investment. Investing in real estate in the Philippines is a huge financial pressure and responsibility. It is also to keep in mind that investments aren’t a straight path to success, some investment won’t go your way, but some investment will lead you to the right track. Without a back up plan, the risk of your investment is always greater.
If you’re looking to start a business as a backup plan, then join Shoppable Business, a B2B eCommerce platform, that would assist you in digitizing your business, reach customers and businesses nationwide, and help you achieve business and financial goals.
