According to the Global Property Guide, in the first quarter of this year, condominium prices in the Philippines dropped. They added that some units in the Makati area fell by over 20%. Many experts and real estate gurus have gone on record to say that the market will soon bounce back, but the latest statistics have got owers asking… are there extra ways to make money from a condo in the Philippines?
Table of Contents
How To Make Money From A Condo In The Philippines
1. Buying A Pre Selling Condo In The Philippines
When developers sell condominiums, they usually go through several stages. The first main stage is called L.O.I. (letter of intent). This will allow an investor to share their interest with the developers, and they will notify him/her of their first price.
The first price will help an investor make money from a condo in the Philippines because it is the lowest price this unit will offer, so it’s ideal to buy at this time if someone is looking to maximize their returns.
Once a price has been announced, the price window is frequently very short. For example, when I first invested in condominiums, I decided to invest in a Cebu Business Park condo project. They notified me of the price, and I responded 24 hours later, and to my amazement, the price had risen by over ₱250,000. Timing is critical.
Way back in 2020, I was informed of some projects in the area where condos have been offered at a much much, much lower price than the original L.O.I. price. This normally happens because of 2 main reasons…
The first being they know someone who works for the developer (which is always handy). The second reason is that the individual is a known investor & may wish to invest in numerous units. For example, a good friend once introduced me to a businessman who purchased a condominium project’s 12th, 13th, and 14th floors. As a result, he saved a ton of money and made millions through the condo real estate investment.
To summarise, you make your money when you buy and not when you sell. A critical statement to remember when looking to make money from a condo in the Philippines.
2. Earn From A Condo Investment Via Carparking
Car parking spaces are often an overlooked asset in the real estate world, but a small car parking space can be turned into a gold mine for the creative investor.
When you investigate car parking spaces, the location is the most important thing to review this one location could make or break your investment. But the good news is that there is an advantage to this kind of investment, which is very little maintenance and flexibility.
Always check the rules & regulations (If any apply) with the developer / local authority with this kind of investment.
Some sources believe that over 82% of successful investments into car parking spaces are within walking distance of large corporate offices.
When making money from a condo investment in the Philippines, it’s a good idea to note that you do not always need to sell or rent to tenants. In some cases, an external customer who desires a nearby space can be just as keen. But, as always, check the terms of the developer/landowners before investing.
3. Make Money From A Condo Investment The Traditional Way – A.K.A Flipping
Flipping is a common way for people to earn money from their investments. Below are the main steps to flipping that are useful for making money from a condo investment in the Philippines.
- Fully Research The Market & The Investment Itself
- Set Aside Your Capital And Investment Strategy
- Networking With Brokers, Agents, And Developers For The Best Deals
- Purchase, Change, Wait,
The 5-step process above seems very simple; nevertheless, there can also be a few hurdles on this trail. Below are a few ways you can avoid these common problems.
Potential Hurdle 1) Developer will not allow you to assume/resell the unit. Solution 1) Some developers will not allow an investor to resell the unit during the construction phase. Hence, it’s essential to find out and get this in writing. In addition, there have been cases of developers changing the rules during construction. Therefore, getting their official written confirmation at the start is vital.
Potential Hurdle 2) Investors can’t find a buyer. Solution 2) This is a fear of many investors in this field though, there are solutions. The best way is to hire a real estate firm as they have many clients on their books who could be your potential customers but remember they always charge a finder’s fee. Some charge a set fee, but most real estate agencies are now moving into a percentage fee. (around 5 – 7%). Remember to do the maths because this fee could eat away at any potential profits.
Potential Hurdle 3) Finding the perfect time to sell. Solutions 3) As mentioned when looking at how to make money from a condo investment in the Philippines, finding a buyer could be difficult due to their situation.
So, the questions remain, when is the perfect time to sell? Some agents suggest three months before turnover. Some agents say, one year, the answer is how much risk & reward are you looking for?
If you wait until the last few months, the price will rise, and you could make a more significant profit, but you do carry bigger risks as after the turnover, the developer will require the remaining balance (If paid monthly).
Additionally, Most new buyers are looking to move into their units A.S.A.P, so they will only be looking for units turned over or will soon be turned over. Therefore, if an investor still has one year left, it may be worth their time and money to hold to benefit their condo real estate investment.
4. Offering Multi Occupancy Space to Make money
How can I make money from real estate in the Philippines? The answer may lay with multi-occupancy. Many condominiums next to schools are thriving with this setup.
Suppose an investor has a larger unit and he/she is struggling to rent out to a family or any other customer. In that case, they may decide to turn the unit into a multi-occupancy condo real estate investment.
Students find this set up easily on their bank accounts as they split the costs between their friends. A few areas investors need to check when it comes to multi-occupancy is their insurance on the unit. Are they covered for this many people in the unit? Has the insurance company been informed of this setup? Most of the time, it’s not a problem, but it’s always best to be safe on this kind of venture & the second thing to remember is developers’ rules & regulations, mainly do they allow this.
5. Hold & Sell Your Condo Investment Philippines to earn
How to earn from a condo investment In the Philippines? Lastly, let’s meet Lucie. She has a unit, and now it’s been ten years, so she decides to sell, commonly known as the hold & sell strategy.
This potential moneymaker has been popular for many years, but my view is slightly on the fence regarding Lucie’s hold & sell plan; let me explain.
10-20 years ago, condominiums were being built at a much slower rate, so if you wanted to move into a condominium, you had less choice. Still, now you have a much greater choice, every day in the Philippines‘ main cities, you need only look out the window and see the city’s growth through condominium developments.
As I’m writing this, I’m on the 18th floor overlooking the city, and from my view, I can see eight projects being built. This is excellent news for the city, but it can be a potential drawback for Lucie, who has had a condominium for 10+ years and wants to earn money from her condo investment but, why? Simply because this unit is much harder to sell than a new one.
Of course, there are exemptions; if the unit is a very luxurious development or is in a prime location (E.g., near festival areas, business parks, etc.), this may draw potential buyers but remember, owners always value their unit higher than potential buyers.
Unfortunately, some developers neglect their responsibilities to uphold excellent and clean amenities, which could affect your unit’s sales. But as we mentioned above, there are some rules to this type of investment so think carefully before deciding as the real estate world is ever-changing and will be different in 10 years than it is now.
What To Consider When Making Money From A Condo Philippines
First principles thinking is beneficial in this situation. Those who make many pesos from real estate investing in the Philippines tend to take steps others do not. Once you know the facts from your opinion, you can better build a profitable strategy with your investment.
There are several areas one needs to consider in earning additional income from a condo in the Philippines. But the main areas are 1) The law, 2) The timescale, and 3) The market. We have included some additional details of these areas at the bottom of this page, but it’s vital to find the facts and opinions in whatever direction you are going in. Unfortunately, many investors limit themselves and their investments.
How To Start Making Extra Cash From Your Condo Philippines
So at this point, you are most likely wondering how to make money from your condo. The first step is to gather some ideas together and treat your next move (AKA your strategy) as a business plan. What do I mean by this? Well, with a business, you research the market, find out the local laws, calculate the capital, and so on.
The great thing about making money from real estate in the Philippines is that many of these tasks can be outsourced!
It’s okay if you have many different options and ideas at the start. Once you have a few ideas that you feel would work best in the current market and location, you can take the appropriate steps. Speaking to an independent financial advisor or property expert in this situation is recommended for more guidance.
Earning Money From A Condo In The Philippines: Key Points
If an investor is smart and calculated about their condominium unit investment, it has the potential to be a significant money-making asset. It’s always recommended that investors read the developer’s rules and regulations, affecting their business strategy. With this kind of endeavor, timing is essential.
- Buying A Pre Selling Condo In The Philippines
- Earn From A Condo Investment Via Carparking
- Make Money From A Condo Investment The Traditional Way – A.K.A Flipping
- Offering Multi-Occupancy Space
- Hold & Sell Your Condo Investment In The Philippines
Real estate Extra Resources
- REPUBLIC ACT No. 4726 – https://lawphil.net/statutes/repacts/ra1966/ra_4726_1966.html
- REPUBLIC ACT NO. 7899 – https://boi.gov.ph/ra-7899-the-condominium-act/
- Extra reading – https://filipinohomes.com/blog/condominium-act/
- Consideration – https://filipinowealth.com/7-things-to-consider-when-buying-a-condo-in-the-philippines/
- Real estate tax – https://www.lamudi.com.ph/journal/real-property-tax-in-the-philippines
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