Business Ideas

Renting Out Your Condo Unit

We have witnessed the construction industry in the Philippines booming for the past few years. Condos are just sprouting everywhere in Metro Manila and other highly urbanized cities across the archipelago. The continuous expansion of the middle class also fuels this growth, and many Filipinos have grabbed the chance to invest in acquiring condo units for their own use or for lease to earn profits.

OFWs, who contribute the most significant chunk of the country’s GDP, are one of the primary consumer targets by developers. If you are an OFW (or their family) or any investment-minded Filipino, this article might be of use to you as I will tackle some tips on how to invest in a condo unit.

Anne Delfinado-Lucido has been an OFW for many years. Most of these years she spent working in Dubai. She is, in fact, a colleague at work and a very dependable friend. Her investment journey started when her parents suggested getting a property. In 2014 she was lucky to acquire a condominium unit in Santolan (Pasig City) during its pre-selling stages. I had a chance to interview her to obtain some tips on investing in condo units.

Anne Lucido during our interview

Why Buy on Pre-selling?

Pre-selling means the time when the developer is yet to construct the building but has already been selling the units way in advance. Pre-selling prices are way lower than the price when the construction is complete. In most cases, the prices rise after the building completion, so it is highly advisable to acquire a condo unit while on the pre-selling phase. In the case of Anne, as she bought the unit during the pre-selling stage, her unit’s current value rose to over a million peso higher. You may wait for 2-4 years for the unit turnover to happen.

Condo vs. House & Lot

When asked why she picked out a condo over house & lot? She said that as an OFW who lives overseas and cannot use the unit for some time, a condo is the best investment option. True to what she said, many OFWs who have acquired big houses in the Philippines while the entire family is living abroad have just left their house unused. Leasing a house & lot is not as widely in demand as condo units that are usually near workplaces and schools and situated within the city walls.

Profiting from a Condo Unit

If you can’t occupy your unit yet, you can quickly profit from it. There are two ways of earning a peso from a condo unit.

Short-term lease
Rentpad and Airbnb are the most popular condo unit rental booking sites catering to locals and foreigners looking for accommodation. Airbnb will make your unit available to tourists looking for alternative accommodation as compared to pricey hotel rooms. The rental duration is usually taking days to weeks only. Hence it’s just short term. A typical daily rental rate of a unit in the Mall of Asia complex starts from P2500/night. With the right choice of location, condo unit short-term leasing can be a profitable venture.

Long term lease
In longterm leasing, the tenant stays for months or years. If you own a unit, you can find a long-term lessee yourself from your friends or relatives. The easiest way to a hassle-free long-term lease is to allow the condo developer to manage the leasing. This is the option taken by Anne. Her condo developer is DMCI, who oversees the rental of her unit. With the minimum leasing duration of a year, Anne will not worry about whether it is vacant or occupied.

The Disadvantage of a Condo Unit

A building has a limited lifespan of 50 to 80 years. After that, it will be demolished as it would not be safe to use. The developer will provide the owner with a certificate of ownership.

Unlike a condo unit, a house & lot is an evergreen investment because the value of the land appreciates over the years. This property can be passed down from one generation to another. Here you will get a land title as proof of ownership.

Where to Find an Agent?

There are many new condo units available in the country, and real estate sales agents are scattered everywhere. You can find them on Facebook and any social media, giving flyers in the mall and on the busy streets of the city. Just make sure that you are dealing only with a legitimate agent. Message me if you want some recommendations.

Loan and Financing

If you can pay outright cash, then well and good. If you can’t, you can also pay in installments. You can obtain a loan from the bank where you will pay up to 10 years of monthly amortization. Your sales agent will help you guide the process of getting a bank loan.

Importance of a Right Location

The key to getting a considerable profit obtained from leasing a condo unit is the location of your condo. The best areas are of those near schools/universities, tourist spots, in the central business district, near the train stations, and airports, to name a few.

Let Money Works for You

The monthly rental that Anne is earning now covers 72% of the monthly amortization she is paying for the unit. If the lease continues for ten years until the loan matures, then she has acquired the unit by paying only around 30% of the total price. It is such a wise investment move.

Anne has expertly played her investment cards so cleverly and is making money works for her. Kudos to Anne Margret!

Disclaimer

EarnPeso holds no control over your financial fate. It is here as a guide. Exercise prudence in every investment or business you undertake, and success will follow.

I hope this article encourages you to start your own business/investment. Click the links for Business Ideas and Investment Options for more insightful essays.

Do you have any questions? I would love to hear from you. Please leave a message in the comment box below or follow and message me on Facebook.

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