Determine If You’re Financially Ready
Heres a checklist you can use to find out if youre ready to be a real estate investor.
You Can Afford the 20% Down Payment
Am I ready to buy real estate? This is among the first things to ask yourself when deciding whether buying a property in the Philippines makes sense for you.
Browse through property listings online, and youll see that its hard to find a house and lot for sale below 1 million. That means a 200,000+ down payment. If you have the cash reserves to make a down payment, thats one sign youre ready.
You Can Afford Investing in REITs
Is the down payment for a property purchase out of your budget? If so, most banks wont approve you for a home loan. However, you can still enter the real estate market without shelling out millions of pesos through investing in REITs.
You can start investing in REITs for as low as 5,000 on PSE-approved online brokers such as COL Financial, Alpha Securities Corporation, and PhilStocks Financial Inc.
You Have an Emergency Fund and/or Disposable Income
Maintenance and repairs are among a property owner’s responsibilities, and that costs money. Also, if youre a landlord and your tenants contract ends, you’ll be shouldering the mortgage and other associated costs until the property is occupied again.
Egypt Pakistan And Tunisia
The Middle East and North Africa are regions of the world that youll also need a strong stomach to get involved in as an investor.
That said, there are three capital cities where youll be able to find ultra-cheap property: Cairo in Egypt, Islamabad in Pakistan, and Tunis in Tunisia. All three capitals boast affordable real estate in the city core.
The main problem is stability. especially in Pakistan where there isnt much promise for the political or economic situation to become more stable in the coming years.
I was talking to one of my Egyptian friends about opportunities for real estate investment in Alexandria. Theres plenty of cheap options there as well as in Cairo, but issues with tourism and the Eygptian pound alongside other structural problems have not helped make the place an attractive country to explore for investment.
Tunisia has been an interesting choice for digital nomads in the past and could have some advantages when it comes to jumping into the real estate market. Its more stable than its neighbors and is in close proximity to Europe.
All have the ultra-cheap real estate were looking for but just wont work for many people looking to get into foreign real estate investment.
Rent To Business Owners
Another great property investment opportunity is to rent out your property to business and startup owners. If you have a spare garage, you can have the space rented out and let a business set up shop there.
If you have a spacious condominium, let startup founders rent it so they can conduct their business there. You can probably get freebies from them if you play your cards right.
Its a great way to earn passive income, mainly because you can see how theyre earning their payment every month. Its like youre part of their success, and you also benefit from it.
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Exemptions From Real Property Tax
Not all pieces of property come with taxes. These kinds of real estate below, for instance, are exempted:
- Real property owned by the Republic of the Philippines
- Charitable institutions, churches, clergy houses or convents, mosques, non-profit or religious cemeteries
- Machinery and equipment used by local water districts
- Machinery and equipment used for pollution control and environmental protection
Empty Lot On Main Roads
You see them everywhere. Pieces of land left unused, sometimes sandwiched between residential or commercial spaces.
Some of these empty lots have the potential to be profitable, you just have to identify which type of investment it will fit best.
Consider other factors such as price and safety, and be thorough in making sure you are obtaining legit paperwork from its seller.
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Wholesale Properties To Investors
Think about the amateur-looking signs on the side of the road that say, we buy houses or the postcard you get in the mail pitching, a lump sum cash payment for your home in 30 days with no showings or closing costs. As a wholesaler, you find motivated sellers and promise to buy their house for cash in 30 daysbut youre not the one ponying up the cash.
Instead, you negotiate a cash price in as is condition and provide them with an assignment contract which allows you time to get a cash buyer to purchase the house for the price you promised the seller and assign the contract to them.
To be successful, you need to know what cash price will make the seller happy while allowing enough spread for a rehabber to make a profit after he pays the acquisition price, renovations and repairs, holding costs and selling costs. To do that, you must recognize what rehab needs done, know the local markets, be able to accurately estimate the numbers and be a good negotiator. Wholesaler fees between $5,000-$15,000 per deal are typical. Some wholesalers make $25,000-$30,000 per deal.
To be successful, you need a lot of hustle and you will need a budget for advertisingmost wholesalers find motivated sellers through direct mail and cold-calling.
Why You Should Consider Real Estate Investing
The biggest reason you should consider real estate investing is because of the potential for higher returns compared to other asset classes . In fact, real estate has had an average annual return of 11.42% since 1970. To compare, the S& P500 had an average annual return of 10.31%.
Real estate investing offers leverage over assets, control over the assets, and a substantial profit, if done correctly. You can even invest in real estate while you are still in college! Regardless of when you start, real estate investing is one of the many ways to grow your financial portfolio.
But it’s important to remember that comparing real estate to stocks is comparing apples to oranges. While there are some similarities, there are many differences that investors need to realize and understand as well.
Here’s what you need to do to get started.
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Rent Out Space In Your Home Or On Your Property
This is probably the easiest way to make money in real estate through direct participation. If you already own a home, you can pick up some extra income by renting out space.
Im saying space for a reason. Most people think in terms of renting out a room to a border. Thats one way to do it.
You can also rent out part or all of any of the following:
- An outbuilding on your property
- A corner of your land
Any of these rental arrangements can provide an extra income source, in the same way as renting a room to a border. People and businesses have all kinds of space needs. In a lot of cases, they just need extra space to store their stuff or vehicles.
This is easier to do in some locations than in others.
If your home is located in a rural area, an older downtown area, or in a community that has lax property use restrictions, this can be a real alternative.
But if you live in a suburban area, with tight property use restrictions, youll run into legal obstacles. And if you live in a neighborhood with a homeowners association , dont even think about it.
But if your house is located in the right area, and you have extra space, this is a pretty easy way to make extra money in real estate. Knowing where to invest in real estate is key to success in your real estate ventures.
Real Estate Stocks Mutual Funds & Etfs
This type of real estate isnt commonly known, however, it is a great way to take advantage of the interest rates involved with real estate without spending a lot of money buying the property to begin with.
ETFs can come in many forms, including investing in things like home builders, home improvement suppliers, construction companies all the way to supporting government help for first-time buyers programs.
ETFs often have REIT shares, which we have spoken about before, but they dont have to invest in one particular property to be used.
Regardless of which type of ETF you choose, these are all considered to be a stock type. This means they will rise and fall with the economy, and you will need to be patient and not react quickly if you see a dip in the stock.
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Putting The Property For Sale In The Market
The owner will provide the authorization to the broker to promote the sale of the property, who will then handle the marketing and all the appropriate steps to get a buyer.
Its good practice for the owner to discuss with the broker how the property will be marketed so they can be on the same page with regards to the method and budget for promotion.
Buying A New Build To Sell On
Buying a new build off plan, which means before its been completed by the builder, could make you money if its value has gone up from the price agreed at the outset by the time its finished. You can then sell it to make a profit. Plus, you may be able to add value to the property by decorating it.
This can be risky, however. You havent seen the finished property so it might not end up how you expected. The developer could even go bust.
You could run into problems selling the property and be stuck paying the mortgage until you do. The area its built in might also not end up being the kind of neighbourhood you hoped it would.
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Invest In Real Estate Through Online P2p Platforms
Account Minimum
$1000
P2P investment platforms are springing up that are based on real estate investing. The process is commonly referred to as crowdfunding. Thats where groups of investors get together to pool money for specific real estate-related investments.
These platforms provide you with a way to invest in real estate online through different types of real estate, and in different ways. Your investment isnt as liquid as it would be if you invested in mutual funds for ETFs, but its less complicated than real estate LPs.
Theyre probably closest to REITs, but you have more control over what it is you invest in. With a P2P platform, you can select the deals that you invest in.
This also gives you an opportunity to diversify a relatively small amount of money across many different deals.
Real estate crowdfunding platforms have been around for a few years now. But theres already a wide variety of platforms that give you the opportunity to choose how and where you want to invest.
Meanwhile, new platforms are coming online all the time.
If you are not sure what is the best way to invest in real estate for you, these next options are definitely worth giving a quick Google search.
Here are 3 of the best ways to invest in real estate online:
RealtyShares enables you to invest in either commercial or residential real estate projects. In fact, a lot of investors have titled RealtyShares as the Lending Club of Real Estate.
Ways To Be A Millionaire In The Philippine Real Estate Market
- 18 Ways to be a Millionaire in the Philippine Real Estate Market
You’ve probably heard lots of success stories of how people raked in millions from a real estate venture. And these are usually ordinary people who stumbled on a good idea, invested on the opportunity, managed it well, and succeeded. Now, while some of you may be doubtful to whether or not these stories are true, some are already on their way to becoming successful, well, millionaires.
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Online Real Estate Deals
- The taxes incurred by these investments can vary depending on exactly the kind of investment you make.
- Some investments are technically REITs and so will be treated according to that tax setup , while others may be debt or equity investments.
- In general, any income such as a cash distribution from these will be taxable in the year its received, while any tax on capital gains will be deferred until its realized.
Types Of Real Estate Investments
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There are several types of real estate investments, but most fall into two categories: Physical real estate investments like land, residential and commercial properties, and other modes of investing that dont require owning physical property, such as REITs and crowdfunding platforms.
Investing in traditional, physical real estate can offer a high return, but it also requires more money upfront and it can have high ongoing costs. REITs and crowdfunding platforms have a lower financial barrier to entry, meaning you can invest in multiple types of real estate for far less than it would cost to invest in even one traditional property. These alternative real estate investments also offer the distinct advantage of not having to leave your house or put on pants to start investing.
If youre looking to invest in real estate, here are five types to consider:
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The 5 Cheapest Ways To Start Investing In Real Estate
Youve heard it time and time again, Real estate is the best investment you can make. But, for those of us who dont have millions of dollars in our bank accounts, investing in real estate can feel like a distant dream. I mean, how am I supposed to buy an apartment building with a couple of thousands of dollars? Unfortunately, you cant, but there are still ways that you can start investing in real estate and generating some serious returns.
Forget about crypto, stocks, NFTs, or whatever you got your money in right now. Lets talk about the ways that you can start making some serious dough off of real estate today. These are 5 easy ways to start investing in real estate! Lets go!
#1: Invest In REITs Mutual Funds for Real Estate
So, you probably wont become a real estate tycoon overnight and its really tough to get to the point where youre managing and generating income from several investment properties. But, guess what, if you have an investment account with Vanguard or Fidelity or even Robinhood, you can still get in on the action. Thats right, Im talking about REITs!
Now, there are several types of REITs that you should be aware of. There are public and private REITs. But, if youre new to the game, you should probably focus on the publicly-traded REITs, which are listed on the major stock exchanges and can be invested in right through your Robinhood app or Fidelity account, just like a stock.
#2: Crowdfunding Sites Dipping Into the Private Sector
By Owning Shares Of Real Estate Investment Trusts
A REIT is a real estate investment trust. REITs have several advantages, the foremost being liquidity. If you own 20% of an apartment building, you cannot get your money out unless someone else buys your share or the property is sold. When you own shares in a real estate trust, it is generally as easily sold like shares of stock. You can buy targeted real estate investment trusts such as those in firms that build medical buildings, nursing homes, malls, and industrial parks. It is easier to diversify your holdings by owning a variety of REITs, and you never have to manage anything.
The modest downside is that they take a chunk of the profits in administrative overhead before distributing the remainder to shareholders. A related financial product is the real estate mutual fund. These mutual funds are more liquid than REIT shares. They are more diversified, too. They may invest in REITs, the publicly traded shares of homebuilders, and companies that sell building supplies. Real estate ETFs are simply ETFs that invest in the same sorts of businesses. A REIT ETF is an E TF that invests in REITs. You’ll have lower returns, but there is less risk than investing in a REIT. In every case, you don’t have to invest in real estate directly, much less manage it.
References
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Pick And Buy Your First Investment
When is the best time to invest in real estate? Not tomorrow or next year, but nowas long as you’re financially capable and sure about where to invest your money.
If you’ve decided on buying your first property, start looking at property listings online. You may also know your options in the market and purchase through a real estate agent.
Want to invest in REIT stocks instead? Open an account with stockbrokers like COL Financial, BPI Trade, or FirstMetroSec. Using a stock trading platform with any of these online brokers enables you to buy and sell REIT shares in the Philippines.
If you’re investing in stocks, which means you already have a stock brokerage account, all you have to do to start buying REIT stocks is to place an order as you would with a regular stock.
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