Flipping Condos for Investment

by Steve Van Derodar

It’s almost unbelievable that some buildings, if not all-in central locations in Metro Manila, are sold out before they get completed. These buildings are sold to prospective residents and many real estate investors who buy multiple units. Some of them are flippers who hold on to the property for a short period of time.

The idea of flipping seems hard but the rewards can be very fulfilling. Flipping condo properties are for investors who are interested in cashing in from an investment timeline necessary to turn inventory into profits taking into consideration of the price increases, appreciation, and timing.

Flipping can be described as the practice of purchasing a property or an asset for a short holding period with the intention of selling it quickly for a profit rather than keeping it for a longer duration. We have always thought that flipping involves renovation after purchasing the property however, for pre-selling units it’s more on the holding of the property until it’s the right time to sell it through an exit strategy.

The idea of flipping seems hard but the rewards can be very fulfilling. Flipping condo properties are for investors who are interested in cashing in from an investment timeline necessary to turn inventory into profits …”

For those properties that are Ready for Occupancy (RFO), renovations or improvements are done so it appeals to the prospective buyers and can be sold at a higher price. Obviously flipping a pre-selling property versus RFO would have different profit margins and timelines.

In Manila properties, since condos are built on good locations with modern amenities, their demand continues to grow, and especially in desirable addresses, resale is typical. The better renovations made to the property and the overall building, the higher price it gets. There could be deals from inventories that are bank foreclosed as you could get it on a discount from the listed price; however, considerations to the building’s overall desirability are paramount when making decisions.

While it has been said that not all properties are for flipping, there are properties that would be ideal for flipping like those in middle-market inventories due to the bigger market share and demand. Imagine those Filipinos abroad and ex-pats looking for residential units in Metro Manila. Luxury buildings, while highly appealing would have higher price requirements though it’s not uncommon that buyers buy above Php 20 million or Php 30 million for a condo property.

“The idea of flipping seems hard but the rewards can be very fulfilling. Flipping condo properties are for investors who are interested in cashing in from an investment timeline necessary to turn inventory into profits .”

For seasoned investors, they have real estate investment companies that are into buying properties and sell them to market. Especially for pre-selling, there is no need for capital gains tax. For some, they buy properties by themselves and not through a company, would wait for prices to increase, and have achieved maximal appreciation before they are ready to sell the property.

I had one executive from Southeast Asia who bought a property for Php 15 million and after 5 years, sold his property for Php 21 million, a profit of 6 million. Without much capital, he only had paid for the down-payment, took a bank loan, and paid a mortgage to the bank. Later, found a buyer, paid him cash and made the title transfer.

Interestingly, as an investor or residential owner, you can acquire property through various payment options since condos are classified as residential real estate. Condo flipping can be achieved through various financing options: cash, bank loan, and In-house, It helps for you to be familiar with how condo flipping is done including how developers treat flipping, assignment of ownership, etc.

These days, as people are more informed about real estate investment opportunities, condo investing in the Philippines is such a booming trend, and homeownership is least restrictive as to citizenship in acquiring a property.
Flipping could be a great asset-building and you may want to familiarize yourself with the market conditions and trends. You may start off with a single property that you can own finance and flip. You could be finding the right return of investment that you have been looking for through flipping.

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(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 to 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 derodarsales@gmail.com.)

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