Revenge home investing

The peso has weakened considerably against the dollar. But for our overseas-based kababayans, there is a silver lining.

An overseas Filipino worker’s salary that is dollar denominated is now worth more in pesos—a whopping 15 percent more (as of this writing), effectively increasing your purchasing power.

For many OFWs on the prowl for investments, the best bet to leverage your “stronger” peso is still real estate. If your goal for the family is to have a secure future with steady cash flow via a recurring income stream (rental of properties), your best bet is to pick the right asset to invest in. This naturally points to a housing unit whether it is a house and lot or a condominium.

Residential units are stable and solid, with a high utilization rate as you can use it as your primary residence, a transient/halfway second home, or purely as an additional source of cash flow that can self-liquidate, meaning it generates funds to repay the investment made to create it.

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Adversity to opportunity: Real estate investing 101

I know a very close friend who lost his job at the height of the global financial crisis in 2008.

He was so devastated when he realized that his cash flow and cash reserves were already running on empty. With no visible means to support his family and out of desperation, his last option was to sell his house. From the proceeds, he immediately settled some of his maturing loans and mounting debts and whatever excess he made, I told him to consider investing in a condo unit. He ended up buying two units in Makati. That was the tipping point.

From what was once a mom-and-pop rental business of two studio units, my friend has become a landlord renting out 16 condo units scattered in Makati, Bonifacio Global City (BGC) and Ortigas Center, and four houses in Biñan and Sta. Rosa in Laguna.

His monthly gross revenue can average anywhere from P800,000 to P850,000 a month. That is almost P10 million in annual sales of literally doing nothing. His take home income is more than enough to cover for expenses including a couple of loyal assistants tasked to service their tenants.

My friend would always tell me, “losing my corporate job was the best thing that ever happened to me, I am extremely thankful to my former employer for declaring me redundant and transforming me into an entrepreneur.” Now, his savings can more than provide for his family’s daily expenses plus the perk of regular foreign travels. He has also set aside significant savings that will cover his lifestyle and medical expenses well beyond his retirement years.

OFWs should thus take advantage of the current slide in the value of the peso. On top of the foreign exchange, the burgeoning population, the post COVID-19 economic recovery of many industries plus the resurgence of tourism, I am confident the Philippines, especially the growth areas found in Metro Manila, Iloilo and Cebu, will continue to bring in tenants, whether short or long stay.

And with online shared services like Airbnb, anyone with a condo unit, a house or even a room to spare can now be a landlord, and offer lodging to a market of local and international tenants in exchange for cash.

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Do your homework

To have a better understanding of real estate investing in the Philippines, the first rule of thumb is to do your homework. This will take a few nights of internet research and a few weekends of asking and interviewing friends and colleagues or those who have already invested in real estate. Their answers will probably be a cross between a happy, satisfied or a fuming, irate investor.

Whatever the outcome, the critical element is to research as much information as you can. Your next step is to make a shortlist of reputable developers that can offer the best quality, affordable homes and provide a seamless OFW-centric service process.

Again, these two metrics must be on the table. Once you have managed to collate these important pieces of information, you can then further granulate your options. Is it a condo in BGC or a house and lot in Cavite? Is it a preselling project or a ready-for-occupancy condo? At this juncture, you need to be objective and less emotional as the metric here is all about cash flow. Once you have made your choice, I encourage you to inquire and further detail your proposed investment decision factoring a number of items.

These include flexible payment terms; down payment and monthly amortization; unit size; turnover schedule; common area maintenance dues for condos or association dues for house and lot; transfer fees and taxes involved; procedure on how to pay for and accept the unit; and if there’s a need for a special power of attorney.

For many OFWs and US-based Pinoys, passive income in your home country is your ultimate goal and when done right, you will reap the enormous benefits of real estate investing. No need to wait for the tipping point. The time is now! I wish you good luck.

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The article was originally published in Inquirer.NET and written by Prof. Enrique Soriano III.

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