Investing in a condo for leasing

With the number of condos currently built and more to come, aren’t we heading for a real estate bubble soon? I get to hear the same question in realty circles; from people who have investments or are considering to invest in properties, vertical [developments] or otherwise. But really, will there be a real estate bubble soon?  Real estate is not immune to market conditions and like any business, it has its threats and that includes the threat of a real estate bubble.

But just because the threat is there, it doesn’t follow that you have to also ignore the opportunities. A business cannot move and succeed if it sits and waits for the threat to go away. The threat will never go away. What goes away is opportunity, that’s for sure. If you let go of opportunity, somebody else will grab that opportunity. 

But real estate bubble is not likely as yet in the near term. What is clear by far is that the economy is robust. Consumer spending is high, foreign investments are coming in hordes, industries have expanded, many people have jobs, Filipinos abroad are sending money, tourism is up and many other positive news. The conditions augur that business is vigorous and growing.  It is also during good times that people are buying or renting real estate for office or for residential use. So if you have the money to spare and want try your luck in real estate investing, like buying a condo perhaps then you’re in for a good business. 

Part of the reason that the property sector is not likely to burst in the near term is the fact that there is a huge backlog to meet which according to the Chamber of Real Estate and Builders Association (Creba) is somewhere between 3 to 4 million residential units. Meaning, all these residential construction that we see are nothing compared to the huge shortage in housing that the government and private sector need to address. Thus, those that have the inventory to offer will definitely be able to profit either from sale or through rentals.

If you’ve followed our column last week, I have shared the ways to take advantage of the real estate boom by simply flipping – buy low, sell high.  Condos, at their pre-selling stages, are usually offered cheap and can be resold at a higher price once they are finished or even halfway complete. Another way to benefit from the property boom is rentals. I figured it out that since we have a shortage in housing, it can be said as well that there is a strong demand for rentals. According to Anthony Leuterio, president and CEO of Rent.ph, a property rental search engine (www.rent.ph), they receive on the average two thousand inquiries a day from people who are looking for places to rent. Many of them come from as far as the United States, UK, Japan, Korea and locals.

“Now is the best time to invest in a property specially condos, apartments, and three-bedroom houses. The demand for residential spaces is increasing but the supply is not so much. We are hoping that developers will be able to finish their projects sooner. Tourists are also looking at condos as alternatives to hotels because they are cheaper. The market for rentals have already widen base on the inquiries we receive.”

Since we know already that we have a market for rentals, you may want to put your hard-earned money in a condo for investment and have it rented out once it’s finished. What makes condo investing very attractive and easy to own these days is that, the payment scheme is easy on the pocket. Many developers offer staggered downpayment which you can spread in two years. And once your condo is done, you can lease out your condo and pay for the remaining balance through rent. In a way, you’re essentially buying your condo for the price of a downpayment. In addition, rental prices go up by as much as 9 percent per year, which means, you can easily payoff your mortgage in a short period of time.  

If you need to know more or want to take advantage of the opportunities in property investing, you may attend the investors briefing on May 24, 2013, 6pm, 12th Floor, Apple One Tower, Cebu Business Park. If you’re interested, send me an email and I will register you for free.  Cocktails will be served after.

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