Condominium as investment?

[Kent_210]

If you have over flowing money, it is OK. But if it's a hard earn money, better go for Mutual Funds or Investing in Stocks (Long Term).

At least the latter won't give you much headache.

[BeerhandBop]

the latter will only make you jump buildings when you lose 35% of your portfolio. LuLz.

[Kent_210]

That's why, the money that you should invest should be from an excess money which you can afford to lose and not the money that you will use for your retirement.

Oh, I forgot that it takes knowledge to gain, and if you do...buying stocks is essentially buying a share of business. You're entrusting your money to, say for example, Henry Sy and his family I guess... he grown SM from a shoestore to all supermalls today. So i don't see it as a bad idea.

[jay_c]

If I were to invest in a condo and decide to have a property manager handle it, where would I be able to find one? Are there any associations of property managers or groups that can handle residential condos specifically?

[hooyanghooya]

it could be a good investment naman. what people fail to realize is that they won't get even 1/8th of what you see in the model units. and that all they get is a piece of white box with a window.

that's that.

anyway, you have to spend atleast 300,000 to turn the condo into a livable/ rentable position. that is 300,000 cash that most of the condo buyers do not HAVE, lalo na yung mga naghuhulog lang na employees.


pero, let's say you paid for the condo in cash, and did some basic upgrades.. and a 2 bedroom condo... will set you back maybe 7.5 Milliion.

you can rent it for 30,000/ month. rent it for 5 years (60 months)

that is 1.8Million. repaint/ renovate/ update the place for a few hundred thousand, you can then turn around and rent the place for 35,000 for the next 5 years again. that's 2.1 Million.

so.. in 10 years, you got 3.90M for something that costed you 8 million.

now... you then spend a few hundred thousand to re update nd everything.. and then put the condo up for sale for 5.5 million.

in 10 years, you got 9.4 million from your total invest of about 8.2 million.

that's 1.2 million in 10 years. that's more money you can earn than if you leave it in the bank. and all you need is to worry about the place every 5 years or so. and i used 5 years as a conservative amount.

multiply that by 2 if you have the money to spare. and that's 2.4 M.

you have to realize a few things, however.

1.) your income cannot rely off the condo's rental. it's merely extra money that you have on the side that you want to grow. and nothing more.

2.) you have to sell the condo at less than 'market value'. and you have to realize that condos depreciate in value. If you just want to buy a condo, leave it as is, and then sell it again in a few year's time. e talagang LUGI ka.

3.) as i previously said, YOU CANNOT RELY OFF IT AS AN INCOME. otherwise, you will be running in the negatives if you do. talagang kulang ang kikitain mo. and mauubos lang ang pera mo and you'd be forced to sell at a loss.

so you did all that work for nothing, and at the end, lugi ka pa.

A lot are speculations:

1st: no guarantee that it will be rented out for 30K for 5 years straight, you need to consertively compute number of months it could be vacant.

2nd: the next five years at 35K is another wish list.

3rd: You just can't check the place every five years, a lot of things happen with the place and its tenant. At least twice a year.

4th: Marami di na compute, like realty tax, income tax, other taxes, insurances, assoc dues plus other cost (gasoline / fare going to and from condo) You can pass the assoc due to the tenant but will make the place less attractive.

5th: Selling it at 5.5 million after 10 years is another speculation. It will depend on the market price, sa dami ng condo ngayon mahirap e forecast ang market price after 10 years.

[BeerhandBop]

"A lot are speculations:

1st: no guarantee that it will be rented out for 30K for 5 years straight, you need to consertively compute number of months it could be vacant.

2nd: the next five years at 35K is another wish list.

3rd: You just can't check the place every five years, a lot of things happen with the place and its tenant. At least twice a year.

4th: Marami di na compute, like realty tax, income tax, other taxes, insurances, assoc dues plus other cost (gasoline / fare going to and from condo) You can pass the assoc due to the tenant but will make the place less attractive.

5th: Selling it at 5.5 million after 10 years is another speculation. It will depend on the market price, sa dami ng condo ngayon mahirap e forecast ang market price after 10 years."


Everybody else agreed that my forecasts were already more than pessimistic. the 5.5Million price i gave out, is already 45% less than the purchase price.

If everybody agrees, why can't you?

i can go on great lengths as to explain why you can charge more on the 5th year and up, but i'm not gonna bother explaining to you. well. here's a few words: upgraded, updated, and rent increase.


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"If I were to invest in a condo and decide to have a property manager handle it, where would I be able to find one? Are there any associations of property managers or groups that can handle residential condos specifically?"

what? and share your already small earnings with someone else?

[propatlink]

Help naman oh, I'm am not really sure if i'll take the offer of southforbes here in laguna, they offered me 33 sqm, 1 bedroom condo unit worth 1.5 m. Pre-selling pa lang naman and the turn over will be on 2010. Is it ok to invest my money to that condo unit?

[yajluman]

Help naman oh, I'm am not really sure if i'll take the offer of southforbes here in laguna, they offered me 33 sqm, 1 bedroom condo unit worth 1.5 m. Pre-selling pa lang naman and the turn over will be on 2010. Is it ok to invest my money to that condo unit?

Sinagot mo ang iyong sariling tanong! When in doubt, stop and think it over 2-3 times.

Danger signs:

1. Pre-selling - how will you know that the developer will finish it in 2010?

2. THE PRESENT GLOBAL ECONOMIC UNCERTAINTY DICTATES CAUTIOUS PRUDENCE! INGAT, INGAT AT INGAT PA!

3. Consult a lawyer before signing anything!

4. Research the area, neighborhood, proximity to shopping malls, grocery, gas stations, schools, public transportation, etc.

5. If you're planning to rent it out, check the feasibility, rental market, etc.

6. Get a reliable RE broker...or a trusted relative to over see the transaction, propert and offer a second opinion.


Good luck!

[nuss]

^I've got a friend who's in that situation. Presell, turnover at 2010. The location is in Mandaluyong near Makati na raw.

She's now planning to sell the unit para may sasalo nung natitirang installment. The thing is, she'll use the money to buy a car or go on an Asian tour.

[wickedcc]

Hello Pexers! I've been a big fan of everyone's advice, especially Kuya Danny's, and you all actually helped me out a couple of years back. I hope you can help me out again.

I currently have about 100k in a coop account, 10k+ in a time deposit, and 50k in stocks. I earn about 40-45k a month, after taxes. I have about 60k in credit card debt (40+k in one card, and 20+k in another).

I would like to invest in a studio condo unit in the Makati CBD that costs 20k a month for the first 16 months. Although the property is the first condo for the developer, it seems legit and will be ready for turnover by February/March 2012.

Given my situation, do you think it would be wise for me to invest in a unit? I feel that 20k a month for a brand new condo in the Makati area comes along only once in a blue moon, and I really want to take advantage. I want to withdraw all my coop money and use it to pay off my credit card debt and advance payments for the unit.

Also, would you recommend bank or Pag-Ibig financing for the balance on the unit?

Thanks in advance, everyone! Would really appreciate your advice.

[carlo_andrew]

I'm not really in the right position to give any advice, but I cannot help but react. Maybe you need to do your research first when it comes to investing especially in Condos - honestly, your 20 ka month will go a long way in other areas (other than Makati). But I guess you have to enlist what are the things you are looking for

1. Accessibility (location - do you wish to get a condo because you work in makati?)
2. Size - how many sqms will your unit be?
3. Price - how much is the total selling price of the unit - the there others less expensive but will offer just the same pros?
4. Necessity - will you use it as an INVESTMENT / BUSINESS / RENTAL/ OFFICE/ or is it just for your money to be put on something, and maybe use it in the long run and make an income from it?

[wickedcc]

Hi carlo! Thanks for your reply. I've tried to do as much research as I can, but looking forward to your advice.

To answer:
1. Yes, I do work in Makati. I currently ride with my family to and from work or take my own car and we spend a small fortune on gas, toll, and car maintenance. If I do get the condo, I will mostly walk to work, with the occasional cab ride here and there. I also have to be at work early, and leave rather late, and it is becoming inconvenient when I have to ride with the family.

2. It's a shoebox: 22.5 sqm. But liveable. And it's the only size I can afford comfortably.

3. It's about 2.1 or so million. For a new development within Makati CBD, I think it's the best price I can find. But I'm open to any other suggestions!

4. Really an investment that I can use for the meantime, and maybe earn from when I don't need it anymore.

[adiposethoughts]

I wonder how much would it cost you AFTER 16 months?

[michymichymoo]

According to Robert Kiyosaki, buying a house/condo is not really an investment, but rather a big expense. After purchasing that condo, you will just keep on spending money: for the bed, the sofa, the appliances, etc.

[wickedcc]

adiposethoughts: After 16 months, I can opt to either get bank or Pag-Ibig financing. If bank, it'll be around 20k a month for 15 years amortization. Not sure yet what the rate will be from Pag-Ibig.

michymichymoo: I agree! But that's why I'm here trying to get a second opinion. If not into a condo, I'm trying to see what would be the best place to put my money.

[jacaranda]

@wickedcc: how old are you? ideally, a person should commit to a real estate purchase for personal use at age 35 and up. prior to that, you should build your nest egg first. believe me, mahirap na sa monthly income mo kinukuha ang monthly amortizations because you never know when an emergency will strike. so you should first have your income-earning machines running, before you commit to a liability (it becomes an asset only after you've fully paid off the purchase price).

[wickedcc]

Thanks jacaranda for the advice! I just turned 28. I think part of it is impatience and pressure on myself to prove that I can.

What you said makes a lot of sense. Would I be better off saving what I would have spent on the monthly amortization, and then later using that to pay for a sizable downpayment? Maybe then I can afford a larger place.

[KuyaDanny]

I would not "invest" in that condo at this time, for the simple reason that you should always diversify, and buying this condo will mean putting a lot of your eggs in one basket.

[wickedcc]

Thanks, KuyaDanny! I think it might do me some good to put the money I would've spent on the condo into paying up my credit card debt slowly and saving the money to put into a UITF account or something. Would you have any suggestions?

[KuyaDanny]

Paying down the debt is always a good idea. You would be left with P40K in the coop.

I would work to have P50K in the coop and another P50K available for investing, at which time I would look for a bond UITF (not an equity or balanced fund - you already have investments in equities).