19/11/2021
โTop Five Reasons for Investing in Real Estate
๐1. Property value appreciates over time
The value of real estate property changes over time โ and it usually changes for the better. This is possibly one of the biggest benefits that you will receive when you start a real estate investment in the Philippines. While other big-ticket items such as cars and luxury handbags can depreciate easily, real estate has a potential for appreciation. Demand has something to do with it, especially if you have picked a property in a city or town where the supply for homes is low, but the need is high. But donโt get excited yet, as the rate of appreciation varies from market to market.
๐2. You can make money from it
real estate investment in the philippines - income generating
One obvious way to make money from real estate is to wait for your propertyโs value to appreciate and then sell it at a much higher price. But take into account that this may take a few years or so. If youโre creative enough or youโre willing to be hands-on, you can still monetize your real estate property as soon as you buy it. For one, you can have your condominium leased or rented. If the property is close to tourist destinations, you can turn it into lodging or an Airbnb space. Remember, though, that this will definitely make you shell out some money for renovation and adding value to your guestsโ arrival.[2]
Another way to turn your property into an income-generating asset is through full-on property conversion. For example, your corner lot house can be turned into a small cafรฉ or dainty restaurant. If you have bought a sizable property that can easily accommodate large groups of people, you can turn it into a resort. Just like the first route, this will require some money, so be prepared for it.
๐3. It diversifies your investment portfolio
Real estate investment in the Philippines will also help you stabilize your investment portfolio. You may already know that the value of stocks, mutual funds, and similar equities can go up and down based on the prevailing conditions in the market. To counter the effects of such fluctuations, you need to have a non-liquid investment, such as a real estate property. This is because the value of condominiums, houses and lots, and farm estates appreciate over time. In cases where the value of stocks and mutual funds go down at a given time, the worth of your real estate property is likely to remain the same, thus keeping you from losing a great deal of assets or money.
๐4. Your propertyโs equity has a lot of uses
Home equity is not just a buzzword in the real estate industry. Simply put, home equity is the value of your ownership over a real estate property.[3] Say for example, you bought a house worth PHP 1.5 million and you have made a down payment of PHP 700,000; you automatically have equity of PHP 700,000. As you pay off your mortgage over time, the value of your ownership also increases. And because the value of property appreciates, you may also expect that your equity will also follow that trend.
In addition, your home equity can be used in many ways. You can use it to apply for loans that will help you fund personal expenses, even the major ones. For example, you can tap into your property equity to renovate your home.
Nook, a leading online mortgage broker, explains that you may also use your home equity to fund other purchases or expenses such as a new car, a vacation abroad, or a new home! To easily build equity, you must never miss a monthly payment. You may also revamp and improve your home, as such efforts will also help you increase your propertyโs value.
๐5. You can maintain control over it
When youโre investing, you donโt only take into account the money that you will make in the future. You are also considering the potential losses. In this regard, you may count real estate as a relatively low-risk investment. This is because the propertyโs value tends to stay the same or increase, especially if the demand for homes and lands increases. And unlike investing in volatile instruments like stocks, you have assurance that real estate can stick with you when times get tough, as it is a tangible asset. This means that you have control over it, and if youโre creative, brave, and willing enough, you can turn it into a money-making asset.
Real Estate Investment Tips for OFWs
Becoming a first-time real estate investor can be nerve-racking, especially with the jargons thrown around by brokers. Here are key considerations that you need to keep in mind before making any decision:
