Despite the blitzkrieg of high rise condominium developments across the country, many Filipinos still prefer investing in a house and lot.
Most common reasons given by this segment include being able to own the property, and having bigger spaces to move about.
And compared to buying just a lot, a house and lot package is an easier, more practical option: you no longer have to worry about hiring contractors and architects as well as securing various permits, which could sometimes be a long and tedious process.
Some even believe that returns are more promising if you were to go for a house and lot.
The appreciation of land values, they maintain, is faster when you buy a lot that already has a house built on it upon turnover. And on the practical side, having a house could also mean you can easily have the place rented out.
OFWs like bigger spaces
“House and lots are still popular especially in the provinces due to the availability of affordable units given the relatively cheaper developable land,” one broker told the Manila Standard. “They are willing to invest in houses with bigger space.”
According to global property portal Lamudi, the house and lot segment appeals to the end-user market. And OFWs account for much of the take up.
“The house and lot market particularly in major urban areas outside of the country’s capital should be propelled by sustained growth in OFW remittances, a portion of which will continue to finance the amortization of the OFWs’ properties as owning a house is every Filipino’s aspiration,” a Lamudi report noted.
Hands down, real estate remains a good investment in the Philippines as it is a basic need, and land is a finite source.
But before you take the plunge with your hard-earned money, check out these tips for first-time homebuyers and investors:
Shop around
Follow the 100-10-3-1 rule. “Shortlist 100 properties. You can do that by searching online. Then visit and inspect 10. Narrow to 3 properties to bid or submit letter of intent. And buy one. The more properties you look at, the better your choice will be and the less the probability of buyer’s remorse.
Know what you want. Set criteria to help you determine what property you want. Where will your home be? Do you have plans to stay here or work or live overseas? What is your price range? Are you buying a single-detached, a mid-rise or a high-rise condominium unit, an office space, or an agricultural lot?
Know what you can afford
Spend within your means. The monthly amortization is not the only thing you need to consider.
Stick to the banks/lending institutions’ guidelines. Keep in mind that the maximum monthly amortization should only be 40% of your take home pay.
Get pre-approved for a loan. Getting pre-approved will help you determine your budget. Also get the longest term possible but pay the maximum you can afford at the lowest fixed rate to help you save on the interest.
Shop around and compare different home loan rates. The Pag-Ibig Fund rates are only good for low-cost housing. Collect leaflets or brochures of various banks and show them to your bank where you intend to loan. The banks will actually match the rates of the other banks and try to give you the best offer possible. All you have to do is ask.
Do the math
Focus on investment returns. Get comparables. Those rates you see online are mostly marked up from 10% to 20% thus factor such to avoid buying an overpriced property.
Negotiate for the best price. When you negotiate, the amount you negotiate downwards goes straight to your bottom line. It’s not bad to negotiate for the best price.
Buy from banks. If you are ready for your first home buy, you may buy from auctions, sealed bidding or negotiated sale through banks which only need to recover their investment so they can lend money again. Banks can also finance your purchase and give you long payment terms and low interest rates. They can also ask for low downpayment. Also, banks are generally reputable sellers.
Buy from motivated sellers. Those who are facing foreclosures and those who need to liquidate their real estate assets immediately either because they are leaving the country or needing to pay for their or their sick relatives’ medical expenses are examples of motivated private sellers from whom you can buy a property.
Buy from reputable developers. Make sure the developer and the project has a license to sell from the Housing and Land Use Regulatory Board.
Buy also from cities during tax delinquent sales or courts during sheriff sales.
Perform due diligence
Inspect the property. As part of physical due diligence, check the age, condition, safety and security, and vicinity and neighborhood of the property.
Bring a property inspection checklist covering all exterior (roof, gutters, walls, foundations, etc.) and interior (general, living room, dining room, kitchen, bedroom, etc.)
Bring a foreman with you to determine what materials you need to buy to repair or maintain a particular area of concern in your home.
Check for natural hazards. Determine a property if it is in a flood-prone area or an earthquake-prone area.
Get the certified true copy of the Transfer Certificate of Title or Condominium Certificate of Title (TCT/CCT). As part of legal due diligence, you must secure the certified true copy of TCT/CCT and check for accuracy of the technical description. The tax declaration must also be transferred as well. Also acquire the clearance to ensure that the property has no arrears. Check also if there are no illegal occupants.
Protect your family and your investment
Insure your property and yourself by being covered through a life insurance and mortgage redemption insurance (MRI). In case you or the breadwinner of the family dies, it is always good to have something liquid to cover the estate taxes.
Like any other investments, investing in real estate has its disadvantages like it is not liquid and it has carrying costs. As such, if you are considering investing in real estate now, check the following:
Buy low and sell high
There is always a real estate property, which is sold lower than it is worth.
Take advantage of very low interest rates
Banks give better interests than Pag-Ibig Fund since they are using market interest rates. Go for the lock in and stick to the longest possible fixed rate mortgage loan, like 9.25% fixed for 25 years.
Deal with risks
If the buyers are not the users and they expect that rentals will be able to cover the amortization payments and such did not happen, then foreclosure is not far-fetched, Those who choose to have a loan of 20 or so years, but the interest rate is fixed for only a year, may also have a hard time when interest rates suddenly rise.
Remember, all interest rates are negotiable, even equity. You just need to ask.
