If you are looking for a stable and tested real estate investment plan for the Philippines, you came to the right place! We will cover every avenue of a real estate investment plan in the Philippines & also cover some extra handy tips and tricks at the end! Investing in the Philippines real estate is one of the hottest talked about subjects among locals and foreigners alike.
Free Real Estate Investment Plan Philippines
1. Create Rough real estate Ideas
Step one of our real estate investment plan Philippines may seem like a primary and unnecessary task, but brainstorming can help you put your ideas to paper. When we look at real estate across the Philippines, there is so much information when you think about it, but brainstorming allows us to write all our ideas down and focus on a few areas of this investment.
When I did this on my first condominium, I wrote down a list of over 20 different real estate questions and topics. I also left recordings on my iPhone to listen back to 7 days later to be sure this idea was still excellent and sensible!
Let your mind run wild. This stage is not about right or wrong answers; it’s about exploring every avenue of your investment and writing your thoughts down.
I recently re-listened to my recordings to share with you the thought processes and questions I had on my first investment, and I have also listed a few additional questions I would ask myself today.
- What Type Of Real Estate Investment Is This?
- How Can I Make Money Long-Term?
- Will I Have Control Over My Investment With My Other Personal Commitments?
- What Are The Local Laws And Responsibilities As A Landlord In The Philippines?
- Can I Leave The Philippines And Still Run This Investment?
- Would It Be Better To Buy A Hostel/Hotel Instead Of 2-3 Condominiums?
- How Can I Increase Profit And Maximize My Gains?
- Do I Know The History Of The Developers?
As you can see, there were questions about all different types of topics, most of which we shall go over later in more detail. If you have similar questions and are struggling to answer them, then do not worry. We shall dive into this in more depth shorty.
Try to keep the notes as simple as possible.
A final note on this stage is to share your ideas with people you trust and those who have experience in the Philippines’ real estate field. For example, “Does this mean I have to agree with them or change my ideas?”
No. But what this does is it allows you to gather other people’s viewpoints as we all had different experiences. For example, you may speak to someone who helps with a significant hurdle you face or someone who sees a hole in your plan. Often, we are so motivated for the investment and feel so excited that we often don’t listen to what people have to say.
2. Basic Information about your real estate investment
Now you move on to the necessary information. You will take your rough thoughts and ideas into reliable answers and attempt to build your real estate investment plan in the Philippines. As you know, a building cannot stand without a foundation, and investment is no different. Ultimately real estate investments, especially in the Philippines, will require an investor to have a dense foundation.
Basic information is the basics of your blueprint. For example, if you are unsure what to write, imagine you will have a meeting with the bank manager, and they will give you a loan for your investment, so they ask you to summarise your investment in 60 seconds. What would you tell them? Perhaps something like this.
- My Investment Is A 2-Bedroom House And A Lot
- It Comes With Two Parking Spaces
- It Has A 7-11 Next Door And A University 0.5 Km Away
- My Tenants Will Be Students From The University Or A Small Family
- My Bills And Expenses Include …
- My Profit And Gains Will Be …
Remember, these are solid pieces of information so try to be as specific as you can.
3. Market Research on real estate in the Philippines
What is market research in the Philippines, and how does it relate to a real estate investment plan?
Market research is finding out information about the areas your investment is in in the real estate world. These can include local laws, customer information, real estate costs & fees, local hostel/hotel price, and Wi-Fi coverage. The list goes on.
Market research is significant! I cannot stress enough, that many people avoid this step either because they have never done this before or feel they know the area well enough.
Say, for example, your ideal client is single occupancy, maybe a person in their 30’s. You discover in your market research there is an issue with WIFI coverage in the area your investment is in. You know many of your potential clients will need Wi-Fi to either socialize, run their home business, work from home, or merely watch YouTube…
…You can see this may cause an issue, so you go back to your ‘basic information’ section, and you change your target market from younger people to perhaps the older generations or change your location or hope the Wi-Fi improves.
Market research is helpful because if you don’t do market research, your options lessen. For example, you would find it challenging to change location or exit the investment, whereas if you decided to move location at the market research stage, you would have no issue as you haven’t invested yet. In other words, market research is excellent for many things and great for showing us potential problems before they arise (I hope this makes sense!)
So what areas of market research do we need to look into? Below we have put together a small list to guide you.
Location of your real estate
- What Is The Location Offering?
- What Are The Crime Levels?
- Is There Going To Be Any Other Development Happening In This Area?
- Are There Shops, Malls, Or Hospitals Close By?
- Would My Target Customer Like This Area?
- What Local Facilities Are Available?
- Will This Area Change Much In The Next 5 Years?
Condition of the property
- Is Your Real Estate Investment New Or Old
- Will You Need To Renovate Your Real Estate Property In The Next 5 Years?
- Can You Extend Your Investment?
- Will I Still Be Able To Charge The Same Amount Without Renovating This Investment?
Costs of the investment/maintenance
- Are We In A Buyers Market Or Selling Market Right Now?
- How Much Will It Cost To Pay All The Bills Each Month?
- How Much Will It Cost When I Don’t Have Any Clients In The Rooms/Unit/Office/Hostel Etc.
- Is There Ways I Can Maximise My Return On This Investment?
- What Are The Current Costs Offered By Other Investors For A Similar Property?
- What Be Will My Profit?
- How Will This Investment Effect My Finances?
- Can I Cope Financially If I Can’t Find A Customer For A Long Period?
Responsibility / time
- Do I Need Any Agreements Or Hire A Attorney For A Legal Agreement? If So, How Much Will This Cost Me?
- Are There Any Landlord Laws And Taxes I Need To Be Aware Of?
- Do I Need To Inspect The Property Every 12 Months And Make Changes?
real estate Opposition
- What Is My Competitions Price For Their Real Estate?
- Do They Charge For Extra Services / Make Higher Returns? If So, How?
- How Much Do They Charge For Rent?
- Is Their Property On Airbnb? How Much Do They Charge On This Platform?
- What Does Their Property Look Like? Would A Customer Prefer Mine?
- Do They Offer More Facilities Or Provide Better Furniture?
We have several questions above. This will give you an idea of what to look for when doing your research. Like the first and second stages of your plan, the research aims to explore every opportunity and find things we may not have noticed on the surface.
4. Individuals Involved in your plan
Hopefully, we have a good idea of the people or groups involved in this investment. If not, here is a shortlist of people who may be involved. Below we have included a small list. At any stage of your real estate investment plan, I’d recommend you start networking and building your network full of professional and trustable experts.
- Real Estate Agent
- Electric & Water Companies
- Internet Services
- Internet Services
- Cleaners / Staff
Why is this important? It’s not always what you know. It’s who you know, which is especially true for real estate in the Philippines. For example, I once got offered a unit in a new condominium complex at 1.9 million pesos because I made friends with a person who works for the developer. Once the price was released to the public three weeks later, it was selling for 2,500,000 pesos!
Now is a great time to start building relationships with people who work on know this industry because you may need to call upon them. Additionally, having a stable relationship will give you the upper hand when negotiating costs.
It is often advised only to bring someone into the investment if they add value. It’s a hard thing to say and also a hard thing to accept.
5. Customers and income-generating methods
The next stage of your real estate investment plan is to target an audience. For example, if you are looking for long-term or repeat customers/tenants, you will need an audience. This will allow you to change your investment strategy to match your clientele.
For example, a small studio unit in a modern condominium in metro manila may be perfect for a young entrepreneur. Still, it might not be suitable for a family of 4, so many landlords try to spread their net and find anyone to fill their rooms, unit, office, etc. Even though this plan sometimes works for landlords, you will have a much easier journey to targeting a specific group of people.
This is the same with a business. For example, run a children’s shoe shop. Your target market will be young kids and their parents to sell cute, colorful, safe, and value-for-money shoes because you are targeting your product to your market, so why do we sell our real estate differently?
Those who target a customer rarely have issues filling their unit/ rooms/ office because they change their investment to match their needs. They are also able to find their customers easier because they have narrowed their market.
If you have read a description of someone selling something and mentioned something along the lines of “This unit is perfect for a small family as we have a mall 0.4 KM away and easy access to the highway, we also have two-car parking spaces, which are great for a growing family”. As you can see, the person above targeted a customer type (a small or growing family).
If you were part of a small or growing family and read-only those sentences without any extra details or pictures, then most of us would be interested in seeing more. Still, if you were a university student, this might not be suitable, and even though you managed to get a visitor to look at your real estate, this did not convert to a sale.
6. Philippines real estate Locations, Laws, And Requirements
Location is so powerful in the real estate world. You could have a perfect piece of real estate, but if it’s in a bad neighborhood, you might have difficulty renting and selling. However, if you run an average piece of real estate in a quality area within the same context, you are much more likely to be making a good profit each month.
One of the most critical questions in your real estate investment plan is, what makes a good location? This will depend on your real estate. Most real estate investors will do well if the location is accessible and close to shops, food courts, convenience stores, etc. A friend of mine opened a call center, and his staff had to drive 20 minutes to the closest shop!…
…He saw that this was causing lateness with his staff. So I advised him to open a small café inside the building. After three months, he saw an 80% decrease in lateness so we can see that location matters, but if you cannot change location, try to add something that would make it easier for your visitors/tenants.
A good location Is also an area growing; in the Philippines, I feel expanding areas are Davao city and areas outside metro manila. These are two areas that I have been looking at recently. I always tend to feel more positive about a location when I see the business opening as they tend to bring in more people from either other parts of the Philippines or people from overseas both of these events typically result in higher demand for real estate, so I would advise you to research your area thoroughly before moving on.
Location can also provide you with extra income. For example, suppose you decide to open up a small hostel or hotel outside of a city or town. You could provide rental motorbikes or car hire, and these will be added value to your customers due to the location; however, this should only be applied when you have no choice but to set up in a more remote area.
Property Laws & Requirements
There are laws and requirements for landlords, and essential to know when looking at real estate investment plans in the Philippines. Each type of real estate falls under different rules. You can find this in your local office; however, we have found two detailed posts about different real estate laws from leading sites.
When investing, make sure you have all the legal documents and confirm they are legitimate as, sadly, people have lost money on real estate and land scams over the last few years.
When it comes to tax, it is recommended you speak to a financial expert who can assist you with your financial taxes. If you fail on your responsibilities as a landlord, there might be financial penalties involved and other penalizations.
7. Investment Strategy & return on investment
What is an investment strategy? In its most straightforward way, an investment strategy is your investment plan, but it covers a few external points such as…
You Investment Levels
This is your level of aggression toward your investment. A moderate real estate investment would consist of buying a unit and a car space, but an aggressive investment could be to buy all the units on the 2nd floor, for example. There is no right or wrong method. It depends on your financial situation. If you are aggressive on investment and it doesn’t pay off, you could lose a lot of capital. Still, if you are not aggressive with a good investment, you cannot make as much money as you want, so it depends on your situation and the investment.
Costs And Returns (ROI)
What expenses will be needed in 1,2,5 years, and how will this affect your profit? Your investment strategy should include how you will be paying for these costs and perhaps where you will be putting your profit/returns. More on costs later.
This part of your real estate investment plan Philippines strategy is to find ways to maximize your investment. For example, if you invest in a condo unit, could you offer your tenant a car space? If your investment is a commercial office space, could you include weekly cleaning? There are endless ways you can maximize your profit. This will be handy to write down for our ‘Cost section.’
When You Are Going To Exit (Cash In)
Could you sell your real estate investment in 10 – 20 years? Do you plan to give this to your children or family? Or is this your retirement fund? These are important because you will need to know if you can still make money in the future. Not all real estate is created equally.
Risks You Are Prepared To Make
This is where you decide how much or how little risk you are willing to take. For example, some people earn perfect money buying old houses to renovate and then flip, but the risk is high. In other words, The higher the risks typically, the higher the reward, so it depends on how much risk you are willing to take on this investment.
Your real estate Goals
What is your end goal for your real estate investment plan? Making money or making 2 million pesos is not specific enough. Use smart goals to help you find a more detailed goal.
S.M.A.R.T Goals and plan
S= I want to earn 5000 pesos a month in profit from my 2-complex condominium at the J tower in Cebu city. Both these rooms are two bedrooms, so 5000 pesos is enough to cover expenses and bills. Also, I wish to sell the unit after five years. I would have paid the loan off by this time so that I would be 100% debt-free.
M= I will measure my costs and prices from this real estate plan. Also, I will start to add any extra profits (After 5000 pesos) to a real estate emergency fund.
A= Yes, this can be achieved instantly with or without my direct involvement because we have an agreement with the developers and receptionist, so it’s very achievable whatever my situation is like.
R= Yes, it fits with my real estate side business, allowing me to find more tenants and build my experience as an investor.
T= This goal will be achieved after the first 30 days, and I will start 3-month reviews on profit and costs throughout the year. So the total period for this investment will be five years.
In other words, your new goal is. “I want to earn 500 pesos a month from 2 real estate investments in a condo complex called J-tower. My units are 2-bedroom suites, and from data gathered in my costs and price, I can see that I will make over 5000 pesos, so the spare cash will be used to build a real estate emergency fund.
I have a special agreement with the developers, and I own side business in real estate, so both will tie in to help me fill my units each month. The investment will be for five years, so the total profit forecast is 300,000 pesos, and after five years, I will sell my units, adding to my finances.
As you can see from the example, using S.M.A.R.T is much more transparent and more specific, and we can use this goal to help with the other parts of our real estate investment plan in the Philippines.
8. Full Costs And Plans of your property
One of the essential parts of your Philippines real estate investment plan is costs. Therefore, it would help if you worked out what this investment will cost you at the start and during the investment. Below we have listed a few ideas.
- Starting Costs
- Land Cost
- Transfer Fee
- Registration Fee
- Architect Cost
- Advertisement Costs
- Real Estate Broker Fee
- Furniture Fee
- Fixtures And Fittings Cost
- Legal Costs
- During Costs
- Marketing (Again)
- Legal (Again)
- Bills (When Not Occupied)
These expected costs are just a few examples, and not everyone’s situation and investment will be the same, but I hope this gives you a few ideas.
9. Marketing Plan for your real estate investment
A marketing section in your real estate investment plan Philippines can be straightforward. However, a marketing plan is just a bridge between buyer and seller, owner and tenant so let us investigate this in more detail. What things should you cover in your marketing plan? Here are some examples.
How will you find your tenants/customers? – Websites, Facebook, Word of mouth, Airbnb, Groups, Google ads?
How much will this cost you? – Facebook can be free if I use Facebook groups, the website gets good traffic without paying too, but my most successful is Airbnb; however, they do have a commitment level to this.
Can you find tenants/customers another way or a cheaper way? – Yes, my friend is a real estate agent as she said she would help me find a suitable tenant for rental. We agreed she would get a 500 pesos commission for every 6-month contract that a tenant signed.
What are my marketing strengths and weaknesses? – I’m a bit shy talking to new tenants, so I will practice exercises to increase my confidence and take extra training on real estate. As I’m the face of my investment, I need to show confidence to my tenants.
How can I beat my competition?– I can offer an extended stay discount, plus I have targeted my real estate to a specific type of person, so I’ve changed the design slightly to match their lifestyle. Also, I have tour and motorbike rentals at my hotels. Hence, these things all add up and will help me beat other competitors in the area.
What’s going to change in my marketing plan in 3 months? Or in 6 months? – I’m going to review this and use more knowledge to target my customer instead of using money. Currently, my time is high, but money is low so I will use time instead.
What will be your actions if you fail with this plan? – I will speak to local real estate agents to ask for their advice to see why customers have not been impressed with my property. Also, I have a marketing fund of 50,000 pesos, so I will use it to boost my real estate property’s visibility after fixing any problems.
We have tried to include answers from all different real estate types in the questions above, giving you many different ideas and matching them to your investment. When a property is empty, landlords worry and act emotionally (give discounts away, etc.). So instead, write a marketing plan. This may help you find a client without having to discount or use other cash-killing methods.
10. Long Term / Exit Plan
When you look at your real estate investment plan, it’s essential to find out (Especially in the Philippines) what your long-term and exit plan is. Real estate can be a cash cow, and it can provide you and your family with extra income for many years to come, but sometimes it takes a few years to break even.
How long should a long-term plan be? That depends on your goal, which we spoke about a few sections ago. What is your plan for this investment? Would you like to leave this for your family, or would you like to sell this piece of real estate in 10-15 years?
When you look at your long-term plan, try to think about the following things.
- Will Supply Or Demand Be Higher In The Next 5-10 Years?
- Will I Have Enough Personal Finances To Keep This Investment For 20 Years?
- Do I Want To Be Involved, Or Do I Want To Retire And Live Off Another Country’s Income?
- With Supply Increasing, Will It Be Easy For Me To Sell This Investment?
These are the type of questions you could ask yourself to prepare you or your long-term plan better.
real estate Exit Plan
What is an exit plan? An exit strategy for your real estate investment plan is very straightforward. This section is only a small part of your plan, but it’s a fail-safe for your investment. Some exit plans include what will happen if you cannot continue investment or what your plan is if an emergency happens.
11. Personal Questions (Philippines real estate & You)
Hopefully, you now feel more well-informed on your real estate investment plan Philippines. At this point, we are going to ask some hard-hitting & personal questions. These are not to make you feel uncomfortable or set a tone but are designed to open your mind to new possibilities.
- Do You Have The Ability And Skill Needed To Make Money From Real Estate?
- Are You Going To Take On Any Extra Skills Or Learning Which Will Benefit Your Investment?
- Do You Understand This Is A Investment And Not Your Home?
- Can You Still Afford This If An Emergency Happened?
- When Do You Want To Start?
- Have You Checked All Legal Documents And Laws Surrounding This Investment?
- Can You Expand And Grow With This Kind Of Investment?
- Are There Any Better Areas Around The Philippines For The Investment?
- Does This Investment Have To Be In The Philippines, Or Can It Be Overseas?
- Why Are You Making This Investment? What Is The Main Purpose?
- Are You Investing At The Right Time? Is The Market On Your Side?
- Who Do You Have For Support Both Professionally And Personally?
- How Long Will This Investment Be For?
12. Tips for real estate investing In The Philippines
If your investment is a hostel or hotel, the location can make up 80% of your booking rate. This is because people are more likely to stay in an area with a good location that is more essential than a remote, more luxurious location.
- In real estate across the Philippines, there are quite literally thousands of ways you can maximize your profit in real estate. This can be through cutting costs or by offering more. I once stayed in a house that offered a dishwasher, and it cost 5 pesos every time but saved a lot of time for me. Every six months, the landlord came to collect her extra income from 6 different houses she owed.
- When running an office, decide what style you are going for. It might be better to aim for a primary office than expand. Looking into market research will help you gain an insight into the market and see what is missing.
- The tighter your customer group, the easier it will be to find them. If you have a small studio unit and you planning to rent this out to a foreign visitor who is a single male or female, you won’t advertise this on streets or markets because the people who see this will most likely be Filipinos. You would target platforms such as Facebook and Airbnb etc. We said “the tighter your groups” tightness doesn’t mean smaller in the situation. It just means you have more control and a more specific view.
- Maximizing your returns is excellent for added value to your bank and your tenants but don’t go overboard!
- Always have an emergency fund for real estate. This is not your emergency fund for personal use but only for this investment.
- Buying a condominium? Prices are lowest at the L.O.I. stage (Letter of Intent), but if you have friends who work for the developers or are looking to buy more than one unit, you may be able to get a discount that’s not given to the general public.
- Save for the downtime. In any investment, there will be good and bad investment times, You may find that you are fully booked in peak season, but in low season it’s quiet, but sadly you still have to pay your bills during low season ☹ So try to save profit to cover you for these months.
- Investing is a game, making money is a game, and even life is a game. Try not to get too emotionally connected. Remember, some things are a blessing, but they may not seem like it at the time.
- Starting small is fine. Most successful investors started small if a small unit or a small office is all they can afford. That is more than enough to get you started. Trust me. Once you start to grow, it will be a snowball effect.
- Build the foundations. As we mentioned, foundations are essential in business, and many people forget to build the foundation and go straight into investment. This is fine, but if an emergency happened, they could face a more significant issue.
- Be open to everyone but don’t trust everyone. I have a lot of friends who are in real estate. They are excellent and accommodating, but I quickly spotted the ones who are selling me something because they get a higher commission.
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Real Estate Investment Plan: Resources & References
- Real Estate Tax Guide – https://www.lamudi.com.ph/journal/real-property-tax-in-the-philippines/
- BIR Tax Philippines – https://www.bir.gov.ph/index.php/tax-information/estate-tax.html
- Smart Asset Investment Plan – https://smartasset.com/investing/how-to-make-an-investment-plan
- Real Estate Marketing – https://www.lamudi.com.ph/journal/10-marketing-ideas-real-estate-brokers/
- Other Marketing – https://www.agencylokal.ph/real-estate-digital-marketing-philippines
- Home Loan – https://www.landbank.com/loans/personal-loan/housing-and-mortgage-loan-program
- Pag-IBIG Fund – https://www.pagibigfund.gov.ph/Availmentofnewloan.html
- Home Loan Calculator – https://www.bdo.com.ph/personal/loans/home-loan/home-loan-calculator