Are you currently interested in investing in real estate and wondering what the pros and cons of buying a condo in the Philippines? Today’s focus will be on this very question as we will be looking at the advantages and disadvantages of buying a condo in the Philippines.
Additionally, for investors looking to purchase real estate, we will also be including the average life span of a condo in the Philippines and if owning a condo in the Philippines is a good idea. However, before all of this, let’s take a look at the pros and cons of buying a condo in the Philippines.
Pros Of Buying A Condo In The Philippines
The Condo Market Is Increasing
The condo market in the Philippines is continuously changing and increasing. At the time of the writing, real estate is a fantastic idea in the current market. We have spoken about Davao real estate previously. This is, of course, 1 area out of many. Still, when looking at the pros and cons of buying a condo in the Philippines, it’s important to note that the market is increasing overall.
Global Property Guide spoke about this in detail, sharing analysis over the last few years. To summarise, some areas have not increased as expected; however, certain areas and real estate types have seen tremendous growth. More on this below.
One Pros of owning a condo in the Philippines is the overall area development. The Philippines is still seen as a developing country. Even though many parts of the country are very developed, some areas remain in the developing stages.
This is not a bad thing after all. On the contrary, it’s one of the main areas investors focus on when looking at the pros and cons of a condo in the Philippines because a developing area may be a worthwhile investment in years to come.
From an entrepreneurial point of view, buying a house, condo, or land in the Philippines gives investors financial leverage. This is the same whether the investor is a foreign investor or a local citizen.
Owning a condo in the Philippines often gives investors some level of financial leverage. This leverage can sometimes be used to grow an investment portfolio and many other wealth-building assets.
Increased Buying Power
Very similar to financial leverage, buying a condo in the Philippines increases your overall buying power. I can personally testify to the increased buying power an investor has when they own real estate.
Some investors grow their portfolios and, in turn, capitalize on the developing real estate industry. This is much more achievable when an investor has buying power. On average, investors, loan companies, and banks are more willing to support your financial endeavors if you own a property.
Additional Income Sources
Many investors know that investing in a condo in the Philippines is a good idea as the rewards often overpower the risks. But one area that’s not always considered is the additional income sources that investors could earn when investing in real estate.
For example, many property owners who rent out their property for short-term clients offer additional services at a premium rate. This could include anything from dry cleaning to motorbike rental. This is also a very powerful income source if you are investing in a tourism area.
The last and most obvious pro of buying a condominium in the Philippines is a source of passive income. Buying a house in the Philippines or condominium is not 100% passive; however, if you are willing to allow a company or agent to run your investment, you could turn this into 99% passive.
You make your money when you buy, not when you sell. In other words, buying at the right time at the right price is key when looking at earning passive income from a condo in the Philippines.
Cons Of Buying A Condo In The Philippines
The Taxation And Hidden Costs
The taxation rate for condominium complexes in the Philippines Stands at 1%; however, this is increased to 2% if the condominium is situated in Metro Manila. Unfortunately, late payments will incur a financial fine. Lamudi has put together a FAQ section on real estate taxation for the Philippines.
The next thing to consider when buying a condominium in the Philippines is hidden costs. When buying a condominium, specific fees are negotiated. Sometimes buyers or sellers pay any extra fees. Hence, this is a critical area to consider at this negotiation stage as it can affect the overall costs.
Reduce Maintenance And Upkeep By Developers
Some developers have a track record of keeping their condominiums well maintained and prestigious. Still, in some cases, developers neglect specific condominiums. An investigation into this is attributed to weak management.
This neglect is not always visible, but it can impact your condo if you are looking to rent or sell your condo in the future.
For example, in five years, you may have somebody interested in renting your room; however, they are turned off due to the lack of maintenance. I say this example as this has happened several times in my own experience.
The Unforeseen Future
Another disadvantage of buying a condo in the Philippines is the unforeseen future. A classic example of this started way back in 2019 when the world was starting to discover COVID-19.
An example such as covid shows us that many unforeseen futures can impact a real estate investment in the Philippines. A wise man once said – you cannot always predict the future, but you can always plan for it.
Locked In Period
One consideration when looking at the pros and cons of buying a condo in the Philippines is the locked-in period of your investment.
There are ways that investors can exit their investment; however, it is not always possible in this current economy, and it may be several months before a willing customer comes your way. In that time, you may be locked into an investment that you no longer want or, even worse, an investment you cannot financially uphold.
We spoke in great detail about starting a real estate investment plan when looking to invest in real estate in the Philippines. In this guide, we mentioned that having a surplus of cash for emergencies is often a brilliant idea and even though many investors know this to be true, very little put it into practice.
Rate Of Condo Developments
The rate of condo developments in the Philippines has skyrocketed over the last ten years. This is mainly due to the developments in certain cities as well as government leaders in specific industries.
As mentioned above, the real estate world has been impacted by COVID-19. However, many see this as a blip and believe that real estate will continue to grow post-COVID-19. Others predict a real estate bubble that has or will soon burst and believe that the buyer’s market ceased to exist.
When looking at the disadvantages of buying a condo in the Philippines, it’s always wise to look at availability, in other words, the supply and the demand. At this moment in time, there are many available units. This is great if you are looking to live full-time in your condo but looking to invest, then knowing this information is a consideration to consider.
Declining Location Developments
A declining location development can also be a disadvantage when investing in real estate in the Philippines. This can impact how customers see your property and your overall property value.
If you own a standard condo in the Philippines, but it is in a fantastic area, the property would likely be considered valuable. However, if a standard condo was placed in a declining area, one highly inaccessible area, the same is true.
Similar to running a business, market research is fundamental when investing in real estate in the Philippines.
What You Need To Know When Buying A Condo In The Philippines
It would be best to consider many different things when looking at owning a condo in the Philippines. Investors should always focus on their financial goals. If you are purchasing real estate for non-investment reasons, you also need to consider your desired outcome before purchasing real estate.
We tend to get asked at Filipino Wealth … What is a condominium’s life span in the Philippines?
In regards to Republic Act 4726, which is also known as the Condominium Act of the Philippines. The official life span of a condo in the Philippines is 50 years. After 50 years have been reached, the contract can be renewed. In other words, The building itself could last many years, but the contacts will need to be renewed after 50 years.
Should I Buy A Condo In The Philippines?
So, after looking at the pros and cons of buying a condo in the Philippines, investigating the life span of a condominium in the Philippines, and overall investigation of owning a condominium in the Philippines, you may come to ask the most obvious question, which is should I buy a condo in the Philippines?
There are many advantages of buying a condo in the Philippines, and there are also many disadvantages. If an investment is deemed good or bad depends on the individual goals and outcomes.
Owning a condominium in the Philippines is not always profitable. But in some cases, it can be a good investment either in the future or for personal and family needs.
After carefully researching an investment, including in-depth market research, and looking at the foreseeable future, you believe that a real estate investment will meet your financial and/or personal goal, then investing in real estate in the Philippines may be suitable for you.
The Philippines market is continuously changing. Even though there are several pros and cons two investing in a condominium in the Philippines, earning a profit is still possible. Those with significant real estate gains often focus on strategic actions before owning a condominium in the Philippines.
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