Real estate can be a lucrative business venture, but investors are advised to practice due diligence and have a solid plan.
History has shown us that when the going gets rough in the stock market, investors turn to real estate as a safe place to park their assets. Indeed, the old adage “safe as houses” holds true, especially in light of recent events.
But this does not mean that anyone should just jump into real estate investing without a solid plan. The Philippine real estate at the moment may be buoyant and promises hefty capital appreciation in the long term, it is still a business venture that involves risks. And as a would-be investor you will due diligence.
Now, having said all that, there are tried-and-tested real estate investment strategies that can pay handsomely in the long term. Lamudi, an online property portal present in 33 countries, lists five of them.
1. Buy and hold residential properties
This strategy is quite simple and perhaps the most secure form real estate investment. As the term suggests, this involves buying a property, holding onto it, and hopefully reaping the benefits of capital growth, which is the increase in the property’s value over time. A property’s capital appreciation depends on a number of factors, such as its location, type, and the market’s property cycle. Hence, choosing the property you plan to invest in and its location are very important.
2. Buy residential properties to rent
This one’s quite popular in Metro Manila, especially in the high-end market given the Philippine capital’s buoyant leasing market. However, if you plan to purchase a buy-to-rent property, you have to make sure that the property you looking at is very attractive to would-be renters. Location here matters a great deal, as most of Metro Manila’s renters (especially expats) prefer places to where everything is within reach. Examples of these areas include the Makati CBD (including Century City and Rockwell Center). The property’s amenities, quality of finishing, and the developer’s reputation will matter a great deal.
3. Buy a foreclosed home, renovate, and then sell
This one involves flipping, which is buying a foreclosed home, making a few retouches, and selling it for profit. However, this should be done really fast as every delay increases your risk, so better sell a property quickly at a small profit and go on to the next deal. If you want to be successful, understand that not every location is ideal to flipping property. There may be plenty of foreclosed homes in, say, Caloocan City or San Jose Del Monte, but you wouldn’t find that many buyers who are willing to travel that far. Instead, check real estate websites likeLamudifor foreclosed homes within the CBDs of MetroManila (there are plenty), but foreclosed properties in these areas get snatched up really quickly so you have to be ready with your letter of intent anytime you see one.
4. Build a new home, and then sell
One way to make money from real estate is to think like a property developer; that is, to build and sell. This is something not for the faint of heart as this involves choosing the right location, studying the market segment you’re targeting, putting together a team of professionals (engineers, architects, contractors, decorators, etc.), getting all the permits, and then marketing the finished product (i.e., the house).
5. Buy an office space, and then rent
Metro Manila’s office real estate market is quite buoyant, and this offers an exciting opportunity for investors. As the Philippines continues to grow economically, more Filipino-owned small and medium-sized enterprises are entering the market, and all of them require offices from which to operate. As a property investor you’ll do well to carefully select the area to buy your office real estate investment—specifically where these companies are planning to base their business. Bonifacio Global City, Makati, and Ortigas are just three of these places. Property developers are now offering strata-titled office towers, which can be bought similar to residential condos, and be rented out to these firms.
