When Age Matters in Investing

by Steve Van Derodar

I have had my share of condo living in Makati. I learned from the rental agent that the owner was a medical doctor in his 80s. I immediately concluded that what he is making from the rental are all income as he owned it for more than 25 years. It is one of his few other rentals in the area. Perhaps, he started much younger by accumulating a few properties. No doubt, he must have taken advantage of his prime.

There is timing to everything even with real estate. It was reported that for the US population, people own a property at an average of 25 years old. This seems to be not the case among Filipinos however, it does not seem unachievable to start investing young. Some of us are lucky if property ownership is through an inheritance. In any case, if one decides to own a house and lot, townhouse or condominium units, there are payment terms subject to one’s affordability and credibility. Age is a particularly important factor next to income if purchases are dependent on mortgage/bank financing as loans are capped at the age limit of 65. If you need to negotiate with lenders, you must provide financial records, very few offers up to 70 years old.

Age is a particularly important factor next to income if purchases are dependent on mortgage/bank financing as loans are capped at the age limit of 65.

A housing loan is a financing program that provides funds for buying residential properties and can also be for house construction, house renovation, and reimbursement of acquisition cost. Anyone should consider a housing loan as lenders offer competitive rates. For many of us that are outside the Philippines, we comprise a big chunk of the housing market as a secondary home.

In Philippine real estate, especially with financing options, usual terms are at 10-15 years, some up to 25 years, Pag-Ibig offers up to 30 years, conditions apply. The terms offer fantastic leverage for your money in buying a property which is purely for investment purposes.

For the most part, I have been handling accounts from clients in their late 40’s to near 65. For those in their 40’s, they still have ample time paying for their bank loan while those at the age near 65, they are still able to purchase though at a very limited term so they would resort to paying from their 401K or other financial sources for their balance.

I have also encountered accounts where buyers have younger co-borrowers to benefit the long-term balance payment structure. In this case older purchasers need a co-buyer whose age can fit a longer term with a combined income verification, especially on the available disposable income.

Real estate ownership is one great source of life’s fulfilment, giving us a sense of pride, ownership, and a proof of hard work. While you are still young and could pass to the disposable income qualification for a loan, why not take advantage of your age?

Real estate ownership is one great source of life’s fulfilment, giving us a sense of pride, ownership, and a proof of hard work.

There are few benefits to investing while younger though, also consider your affordability for an investment. Developments that are under construction are more lenient as to down payment with creative financing while some even offer a ‘no outright down payment’ or the down payment is stretched from 1 to 4 years before the actual balance takeout. There are ways to pay-off the balance: lump sum, bank financing or in-house financing. In in-house financing, the developer assumes the balance usually at a shorter term than bank but at a higher interest rate and varies from each developer.

Anytime one can buy a property for as long as you have the cash but for prospects relying on financing, careful planning is particularly important especially it takes a few years to pay up the purchase commitment.

Like the doctor who owns few properties, how awesome would it be for us to collect rental income regularly? Every one of us could be different. Some are eager to the opportunity as an investment by aggregating a portfolio, others, just wanted to acquire as a residential extension. Your decision still depends on your goals. But whatever the case, property ownership is fundamental. If income from work and business is no question and taking risks is bearable, starting young is key.

(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 also 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 to Metro Manila and Mega Cebu areas. Visit www.philhousehunters.com.)

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