Pre-Construction | Photo from Nationalwhateveryday.com via Steve Derodar
We have seen it all. The catastrophe happened before you knew it: Coronavirus. Inflation. Passed Times – they are all unavoidable. Perhaps, it’s about time to really ask, what should have I done to prepare for these things? Well, on real estate investments, many have attested that having real estate would be a great way to prepare for uncertainties. When businesses are down in times of lost incomes, having earning properties can prevent us from any partial or total financial shock.
While capable, it would be prudent to take on investments that would be income-generating.
As many of us find that buying can be expensive with such a down payment, it doesn’t have to be. Many developers offer affordable payment schemes with monthly payments that are still within a fraction of disposable income. People need a place to live, from short-term stays to month-to-month rent when you think of it. Everyone needs a roof over their heads, and a condominium unit is a viable source of income.
In real estate, every square meter matters, and obviously, location, location, location. A pre-construction would be the best bet for investors. It gives you buying time as the price is locked in at an offering period, letting you choose units from the offering plan. You are lucky if you can choose the limited edition units or those with the best views of the building. Even then, all units are meticulously sized according to specifications.
In Manila, where many of us have business connections, a booming residential construction is on the rise, not only by the demand for housing population-wise but also because it continues to accommodate non-Filipino residents who choose to live in the Philippines either temporary or permanent. In short, there is a strong housing market. Especially reports have it that in Asia, the Philippines is the top country with a high yield of rentals and is among the three best countries to buy rental property outside the US, UAE, and Costa Rica.
“Pre-construction is an example offering you buying time. By securing an acquisition to purchase, you get ownership of a property sold at its offering value which could be quite different when it is delivered and occupied. “
Pre-construction is an example offering you buying time. By securing an acquisition to purchase, you get ownership of a property sold at its offering value which could be quite different when it is delivered and occupied. In a time frame from its construction to completion, you are paying the property way cheaper than it is ready. A thirty percent or more is significant enough that get you massive appreciation upon its delivery.
It is common knowledge that the most significant benefit of buying a pre-construction condo is getting the lowest prices by being early. Developers need to hit milestones early on and show progress to their lenders, and as a result, often have more flexibility on price for the earliest buyers. Developers also needed the funding to complete their construction as they also took financial sources in the life of the structure from capital lenders, etc.
Pre-construction condo buyers can take advantage of what’s known as Schedule A pricing, which is typically the lowest pricing available to the public. Obviously, the earlier you are from the launch of the building, the cheaper you get the property. Some known drawbacks to buying pre-construction include your deposit being tied up during the construction period and will be subjected to terms and conditions of purchase. Also, typically you don’t get to see what you’re buying until it is finished physically, and the unit might not get completed on time. Make sure you invest in well-trusted developers.
Having lived in Makati or, say, Manila, it would be auspicious to own properties in highly dense cities due to the increasing demand for condo units. Indeed, as some of us are pretty local, investments within your province would be an excellent choice. Leasing management companies would know how occupancy rates are fairing well with the demand in a given area.
“Buying pre-construction is a profitable short-term investment strategy if the property appreciates before the home is completed. While they say that prices from the past are lower than now, buying now is critical. Not tomorrow when options are limited, and prices get pricier.”
I am professionally involved in the real estate business in the Philippines, and I know that many Filipinos want to own properties. Check on your affordability as housing loans are income-based, as with other major acquisitions. I have seen properties appreciating so well upon delivery and continued to enjoy years after being occupied. Intending unit acquisitions for rental property is a wise way to earn passive income. Tenants’ rental income often covers the mortgage, and you usually make profits after covering insurance, taxes, and maintenance costs.
Buying pre-construction is a profitable short-term investment strategy if the property appreciates before the home is completed. While they say that prices from the past are lower than now, buying now is critical. Not tomorrow when options are limited, and prices get pricier.
Today is undoubtedly the right time to buy.
ABOUT THE AUTHOR: Stevenson’s experience in Philippine Real Estate spans more than 15 years. He has been involved in horizontal, vertical, vacation, and commercial properties. He has worked as an International Property Specialist in markets in Asia, Europe, and North America with Ayala Land, Federal Land, and Century Properties. Through PhilHouseHunters, he offers real estate investment opportunities, marketing, and consultancy with a key focus on Metro Manila and Mega Cebu areas. Visit www.philhousehunters.com. Email at firstname.lastname@example.org.