Even if the Philippine economy isn’t looking stellar because of the effects of the COVID-19 pandemic, it is still essential to look at the investments, specifically in terms of real estate. The influx of vaccines and the start of vaccinations spearheaded by the local government and selected private institutions during the earlier part of 2021, helped to slowly improve the economy. Many real estate companies and organizations are predicting the end of the downward spiral of the Philippines’ economy.
As we’re obviously on the road to recovery, it is now the best time to look into real estate investments as the prices have greatly lowered. The reason for this is because a lot of us are afraid to invest in anything due to the confusion and uncertainty brought about by the pandemic. There is nowhere to go but up.
STATUS OF THE REAL ESTATE PROPERTIES IN THE PHILIPPINES:
Condominium units in the Philippines are the most preferred property because of their elegance, amenities, and strategic location near important locations such as markets, malls, churches, and most importantly, the commerce or business districts, etc. Condos may be considered the latest trend and has the strongest year-on-year price of about 29.1% in Q3 2019. The Second highest are the duplex houses which rose to 24.8% during the 3rd quarter of 2019. Townhouses rose to about 6% and the single-detached/attached houses had a 2.4% increase, all during the same period.
The International Monetary Fund (IMF) has maintained the growth forecast for 2021 at 6.5% to 7.5%, coming from a 6.4% growth in 2020. Despite the pandemic, things are definitely looking good for real estate investors in the Philippines. The House Price Change graph below shows the improvement of the House Prices in the Philippines. It dipped in 2019-2020 but rest assured that the movement will continue to go up.
GUIDE AND TIPS ON BUYING REAL ESTATE PROPERTIES IN THE PHILIPPINES:
Maybe you’re also looking into investing in properties in the Philippines. I am interested too, so I made this blog post to share some guides and tips to help you buy real estate in the Philippines.
Buying a property in the Philippines is a big deal for most of us as it signifies our independence and our desire to improve our status in life. However, we cannot just pick any property based on what is offered in social media shares, nor should we grab low-cost houses being offered on installment just for the sake of having an investment. Every decision should be strategic and beneficial to you in the long-run.
Don’t jump in the bandwagon just because everybody else is getting properties in a certain location. You have to analyze and take into consideration several factors. We all differ in terms of goals and reasons why we want to buy a property. Here are some tips and factors to consider when purchasing a property in the Philippines.
STEP 1: SELECT THE CRITERIA OR REQUIREMENTS FOR YOUR DESIRED PROPERTY.
Determine whether what you’re buying is for business/investment or for family use (retirement, vacation house, relocation).
If it is for family use, would you be okay staying or living there if we’re suddenly back to work normalization wherein office workers are required to go to the office rather than work from home? Here are just some questions you might ask or consider before buying a property:
- How far is the location to your work or your present home?
- How much does it cost and does it fit your target budget?
- What furniture and additional things are missing or needed and how much would these things cost you?
- How many rooms and space do you need?
- Do you need parking spaces?
- What type of property do you need? Condominium, Duplex, Townhouse, Single-detached house?
- If it’s in a condominium, what amenities are available?
- Do they allow pets and how many is the maximum?
- What landmarks, malls, supermarkets, groceries are available nearby?
- Does it fall under the fault line?
- Do the property experience flooding?
- How far is it from the nearest water dam?
- Is water a problem and do they require a schedule for using water?
- Is the property for normal work life or for relaxation?
- Would you rather be near the busiest cities or would you prefer to buy a vacation home in the province?
Since we’re still recovering from the pandemic, here are some relevant questions you might consider especially when you’re buying a condominium:
- Does the property have enough space to set up online work/study spaces?
- Does the building have a security guard and do they implement strict checking of temperature?
- Do the management monitor regularly and provide memos of residents that are affected with COVID-19 or do they keep this information “confidential”?
- What precautions does the management do to prevent the spread of COVID-19?
- Do you see people constantly wiping, sanitizing, and cleaning areas or spaces?
- How far is your location from the nearest hospital in case someone encounters any health issues?
- Does the building have CCTV?
- Is water or sanitization a problem?
- Does the building have emergency protocols when something unfortunate happens to its residents?
These are just some of the questions you might need to answer in order to narrow down your choices and be able to make smart decisions regarding buying any property. It would help if you listed down all your criteria and concerns, and make a checklist so that each time you encounter a property that interests you, you can use the checklist to give each property a “grade”.
The grading system can be determined by giving higher points to the criteria that concern you greatly and giving just 1 or 2 points for areas that you are still “negotiable”.
STEP 2: STREAMLINE THE LIST OF PROPERTIES BASED ON YOUR REQUIREMENTS.
Once you have a list of all the properties that made the cut, it would be easier to compare and analyze the pros and cons of each property.
Rather than looking at what each property can offer, Look at what things they don’t offer that you cannot live without or you just can’t compromise. You can also visit property portals and real estate websites that will allow you to go on virtual tours. If that is not an option, you can just video call each other.
Your goal is simply to shortlist and make that list smaller so decisions can be made easier based on other factors such as which is more aesthetically pleasing, more strategically located, more comfortable to live in, etc.
STEP 3: USE A MORTGAGE CALCULATOR TO COMPUTE FOR YOUR BUDGET.
The most important part of the decision-making process is that each of the ones shortlisted should be within your budget. Unfortunately, not everyone has the means to pay properties in cash, so we do need to compute for ourselves.
Computing for a mortgage is very essential since you really need to know much to loan from the bank and/or at PAG-IBIG, and you need to estimate the needed budget when you factor in things such as interest rates and repayment terms and how these can affect your monthly payment.
For this, I use the mortgage calculator at https://www.mortgagecalculator.uk/, it really does the trick and it makes computing so easy. Just fill in the required details and you can immediately see how much you need to pay monthly. Since it is from a UK site, please ignore it and don’t be confused by the monetary sign. Instead of spending time computing manually or using a spreadsheet, the mortgage calculator helped me to compute everything instantly.
STEP 4: SUBMIT REQUIREMENTS, ACQUIRE A COPY OF THE SAMPLE COMPUTATION FROM THE BANK/PAG-IBIG AND PAY FOR THE DEPOSIT FEE.
Submit your requirements and make sure that these are complete. Before paying the reservation or deposit fee, make sure that you have a copy of the actual monthly amortization and it somehow matches with the figures you for when you used the mortgage calculator.
Note that there are documentation, legal, transfer, and miscellaneous fees that are required to paid and this will add up to the cost. Once you’re done reviewing the papers and everything is complete and clear, you can pay the reservation fee.
Usually, the reservations fee is deductible from the contract price. Paying the reservation will give you more time to decide on your payment scheme, whether you want to make a bank loan, if you want an in-house loan, or if you want to get a loan from PAG-IBIG.
STEP 5: COMPLETE THE REQUIREMENTS AND PAY THE DOWNPAYMENT
Make sure that your requirements are complete and valid. Incomplete or fraudulent requirements might hamper your buying properties plus these might cause more trouble legally. So always present complete and valid requirements as required by the developers. These mostly include an accomplished and signed home loan application form, photocopy of government-issued IDs, community tax certificate, TIN (tax identification number), your most recent ITR (income tax return), certificate of employment, and for some, they may require the latest three months payslips.
Use the mortgage calculator to check how much you want to pay for the downpayment, which should be the same or higher than the required downpayment set by the owners/developers of the property. Usually, the downpayment is 20% but there are those that charge a smaller amount for a downpayment. Downpayment can also be payable up to 24 months depending on your agreement.
Once you have submitted the requirements and paid the downpayment, you can now read the fine print before signing any of the documents. The important docents that you should receive are:
- Proof of ownership.
- Contract to Sell
- Deed of Absolute Sale
- Certificate of Title
Note that everything should have a copy. The original document will be for the owner, and the other copy should be submitted to the REGISTRY OF DEEDS (ROD). The transfer tax depends on the location of the property but normally it is 5%. Make sure that the transfer documents are complete and in your name.
FOR FOREIGNERS WHO WANT TO INVEST IN REAL ESTATE IN THE PHILIPPINES:
If you’re not a Filipino citizen and you still wish to invest in the Philippines, there are still several options that you can choose from.
Although foreigners cannot own any land property, they can still buy a house. However, the house would be in their name but the lot would still be owned by a resident/citizen of the Philippines unless the foreigner wishes to undergo the naturalization process in order to acquire lands. Otherwise, they can rent or buy a lease of land, which can be extended up to 50 years, with the renewal of up to 25 years. Foreigners can also own a condominium unit or apartment from high-rise buildings as long as the building’s foreign proportion would not exceed 40%.
Buying a property in the Philippines may seem like a lengthy process but the most important part of which is the SELECTION OF PROPERTY which you should not overlook because once you buy a property, it is difficult to sell it off to buy another property. Aside from the selection of property, computing for your budget is very essential because you do not want to make an over-budget or under-budget the required money needed. This is the reason why a mortgage calculator like that one I showed earlier does wonders in helping us decide what route to take n buying a property in the Philippines.
SOURCES:
https://www.imf.org/en/Countries/PHL
https://www.globalpropertyguide.com/Asia/Philippines (March 2020 data)
https://www.arcasouth.ph/complete-guide-buying-property-philippines/
https://ihsmarkit.com/research-analysis/philippines-economy-hit-by-rising-covid19-wave-Apr21.html