Investing in Manila property is a bet on demographic trends. The Philippines has a young and quickly-growing population of skilled, English-speaking workers. Nonetheless, and despite its rapid urbanization rate combined with a growing middle class and the ongoing pandemic, real estate prices remain low.
Due to such strategic trends, Manila’s real estate market is booming. Property prices have been soaring in the past few years – yet values are still rather cheap when compared with the rest of Southeast Asia.
Given the country’s low costs, high rental yields, and strong appreciation potential, it’s arguably a prime time to invest in Philippines real estate. Buying a condo in Manila is a great way to get started. Today we will discuss the golden rules of real estate investing in Manila.
Buy Property in an Area of Strong Demand
We only ever buy property in an area of strong rental demand. If no one is going to want to rent that property, then there’s no point buying it. So, it’s got to be in an area of strong rental demand.
You can check this out by going online, you can see what the rental demand is in a particular area. You can also speak to local letting agents and ask them what they think the demand is like in the area. So it’s about doing your research and your due diligence to make sure this is a good strong rental demand area.
Take into account what’s happening in the area. Are they increasing the number of jobs? Are they extending universities? Are they building new hospitals? Are they creating business parks that will bring people into the area who want to work there and probably want to live in the area as well?
If you can buy in an area with a growing population you’re going to have much stronger rental demand. You’re going to also see better capital growth over the long-term.
Only Ever Buy Property That Gives You Positive Cash Flow
At the end of the month when you get the rent and take all the other costs away, there must be some profit left over for you.
- Mainly your mortgage
- The insurance you need
- The management fees
- Leasehold fees
- All the bills if it is a HMO or Serviced Accommodation.
If there’s no cash flow, no profit, then don’t buy the property. That’s not going be an asset, it could be a liability for the future. An asset is something that puts money into your pocket, a liability is something that takes money out of your pocket. Now with a rental property obviously you have a mortgage, but the whole point is you’re putting tenants in for more than just covering the costs. You want them to give you some of that profit every single month.
A lot of people prior to that used to buy property in their own name, now many people buy within a company structure because it’s more tax advantageous. But really you should get independent advice from a property tax specialist. They can look at your personal circumstance and give you the best advice and guidance based on your situation.
It’s always dangerous to try and get advice on Facebook groups. People might give you advice on what they’ve done but that doesn’t mean it’s going to be relevant and correct to you. This is why it is really important you get the right advice.
Buy Property for the Long Term
Now you can make money for the short-term in property. You can buy a property, renovate it, and sell it straight on. It’s called flipping property and it’s a great, very profitable strategy in the right market conditions.
Ideally you want a rising market to be successfully flipping property. You don’t want to be flipping property if it’s a stagnant or a falling market because there’s a good chance that you buy it, do the work, and it’s worth less than when you first bought it. So that’s not a profitable strategy. However, if you’re looking to hold property for the long-term that’s generally what needs to be done.
Holding property for the long-term, benefiting from the monthly cash flow and the long-term appreciation – that’s how you create real wealth through property. Obviously you could then pass that wealth on to your family, to their kids, and their kids, your grandkids, by buying property and structuring it in the correct way.
Have A Cash Buffer In Place
This is some money put aside. It could be on a credit card, it could be in a bank, it could be someone else’s money you’ve agreed to borrow in advance, just to make sure you can fix any problems that aren’t covered by insurance.
Now most of the things in property can be insured against, you know if your tenant runs off and doesn’t pay the rent you can insure against that. If the tenant causes damages, you can insure against that. However, sometimes things aren’t covered by insurance and it means you’ve got to spend several thousand pounds on your property to fix it and make it rentable again.
If you don’t have that money you can’t fix it, you can’t rent it, suddenly that’s a liability costing you money every single month. This is why you need to have some money put aside which you can use to make sure that even if there’s a problem you can fix the property. You can get it rented out nice and quickly to make sure it’s bringing in money.
Work With A Team
Before you start looking for a property, make sure you have a real estate agent, and a trusted brokerage firm on your side. The success of your real estate investment will depend highly on the quality of your resources and the knowledge your team brings to the table.
Having said that, you need to plan investing in Manila with the right kind of experts. If you’re ready to get started, consider inquiring with LYONS Realty Corp., a trusted brokerage firm in the Philippines dedicated to providing fresh perspective and ideas for a new approach in providing top-notch service to every real estate client. Contact us today and get your dream home in no time.