How to Invest in Real Estate in the Philippines

By: Marie Claire Lagrisola

There is no denying that most of us want to get to be rich, if not richer. Especially during this time of inflation, everyone is trying to find ways to dodge the drastic consequences and liabilities of inflation. But what is the best way to do this? The answer is to invest.

There is a saying that goes the poor spend, the middle-class saves, and the rich invest.

Investment multiplies, not add, money for those who use it wisely. And where do the people we want to emulate in terms of making money invest their bucks? Look at their investment portfolio-they take part in real estate investment.

Real Estate Investment Is the Best Kind of Investment

Sit down and ponder about it. Your real estate property is where your life and the lives of your family revolve and take refuge. It is a residential property where your family can rest, make fond memories, and distance yourselves from the outside hectic, stressful world. But, guess what? You are not the only one who feels the same thing when it comes to a real estate property called a home. Everyone around the world very much loves their house which sometimes is considered the foundation of their lives.

And people of wealth and knowledge know just this, and this is why you, too, should follow in their footsteps, and take part in real estate investing. Real estate investing works for steady income, may they be commercial properties, foreclosed properties, or rental properties, whether it be a house and lot in Cavite, in Laguna, or in the Metro.

The next question is, how to invest in real estate Philippines?

Real Estate Investors, How Do They Do It in the Philippines?

If you want to earn money by taking part in the real estate market by real estate investing, specifically the Philippine real estate market, by selling real estate or renting it out, here are a handful of specific steps that could help you in making the most out of your upcoming investment property:

Conduct Research Within the Area You Have Been Eyeing

Failing to prepare is preparing to fail, as the old saying goes. In real estate ventures, it is very important to conduct thorough research on how things go in the area of the real estate projects you want to invest on or the selling properties you want to put up for rent. You must take note that the value of any real property is highly dependent on its location and competitors.

Say you plan to invest in a house and lot in Cavite. Survey the landlords of the rental properties around the area. Check out their investment portfolio. You must take note of the rental income and the fair market value of the real estate property there. You must also know the real property tax of the country and the area of your real estate investment.

Ask yourself these questions: how much do they earn passive income from their real estate? How much do they rent out their residential properties? What are the challenges they face in the real estate market?

Additionally, you must also make sure that this area of investing in the Philippines property sector of your house and lot in Cavite is highly in demand. What are the risks involved in living there? Does it flood? What are the property assets? Real estate properties, no matter how grand they are, are useless if it is in the middle of nowhere. Real estate investments must have other investments, too. What are the natural resources surrounding your eyed property investment? Make sure there are educational and health buildings nearby, both universities and schools, clinics and hospitals. Do not forget about malls, fire stations, and major roads nearby of the property investment you plan to take a bite out of the real estate industry.

Check out the tax and financial concerns of the real estate market

Every investment has market value as it has its liabilities such as tax. This is called real property tax.

You need to make sure you get more passive income than the amount of money you have to spend in order to acquire and maintain the real estate properties you plan on getting. Whether it be condominium units, commercial units, foreclosed property, or even office spaces, anything and everything real estate has taxes, including capital gains tax.

When it comes to real estate tax from renting out the Philippines real estate market, there are some exemptions according to our country’s laws. It would be highly advisable for you to consult a taxation expert so that you would be able to know the ins, and especially the outs of capital gains taxes, and real estate tax so that you would be able to dodge legally some pricey taxes.

Such things you need to know more about when it comes to property tax are the rates, deductions/allowable expenses, bases of computation, due dates for payment, penalties for late payment, and the real estate documents needed.

You must also the VAT, also known as the Value Added Tax when it comes to rental properties. Taxes brought forth from renting out residential properties go up to 12% when landlords’ capital gains exceed ₱1,919,500. If the real estate investors earn anything less, only a 3% tax rate is applied to the gross rent.

How About Revamping your Real Estate Properties?

When it comes to real estate investment, real estate investors invest in the best kind of property. After all, even though real estate properties are highly in demand especially with our country’s population spiking up, no one would want to live in a dump. But, what a smart real estate investor does is that they are keen on purchasing real estate property at a low selling price, and revamp it at a low cost, but not so low that improvements could barely be seen.

Thus, as a smart real estate investor, you should consider making your way to repair, improve, and install other maintenance to your residential property that you plan to rent out.

To better manage this prospect, we highly suggest you plan again and set aside an estimated fund for the revamp of your rental property even though your properties are foreclosed properties. Take note of the how much the cost of housekeeping expenses and general home repairs. In fact, when it comes to the housekeeping bit, you can make a business out of this. You can inform your tenants of your housekeeping services and they can have a thorough clean-up every week or so in your rental properties for a price. This way, you have another business aside from your real estate investing.

To up the ante of the property value of your rental properties, make sure to add in the advertisement of your property sale that you have revamped and improve the said property. After all, potential tenants are always looking for something better, newly cleaned, and well-maintained residential property.

Team up with Real Estate Agents

You should never underestimate the power of advertising. This is the one bridge that would bring potential tenants to your real estate investments. A real estate investor teamed with real estate brokers, and a real estate agent will be unstoppable. You may also approach real estate developers to find potential tenants. After all, you bought their property, and the least they can do is add to their own advertising of their subdivision that people can rent out real estate, specifically yours. These real estate investment ideas will be a great boost to your real estate investments.

But, again, you can always just pair with a real estate agent. They are definitely more experienced than you when it comes to real estate markets and real estate investing, both in foreclosed properties and commercial properties, especially if this is your first time.

To add, they can take off the pressure and work off property owners when it comes to scouting the fair market value, property value, listing the rental property, the details for advertising, and the tripping and viewing of tenants to the real property itself.

To make sure this will go through smoothly, you can consider some legal help with a lawyer for contracts between you and your real estate broker, real estate agent, real estate developers, and even your tenants. This way, no one will be fooled, and you will be at peace that you are indeed just following the law.

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