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Tips in Buying Your First Condo Investment




If you dream of an ideal “work-play-live” lifestyle, the closest you can do is to live in a condominium. This is not surprising considering that in most key cities where they are – the convenience and comfort of having all your basic needs is present. Being close to your work or business is also a plus. This type of lifestyle attracts a lot of buyers who have these priorities. Buying a condo unit can be a good investment, too. It helps that before you make that important decision, do your research and think of all the available options.


Below is a checklist that will help guide you in your purchase of your first condo investment:


1. Location

If you are a first time condo unit buyer – what you consider first is the location and the neighborhood. This factor will determine the value and ease of selling it in the future (in case you decide to do it later on). You consider the area’s accessibility and availability of basic conveniences like schools, hospitals, supermarkets and transport terminals. Don’t get quickly lured to the property’s attributes as location affects the price appreciation. As an investor, this must be the most valuable insight you need to know. For example, the Makati City is easily the best investment area being the business center and so is the emerging Bonifacio Global City. The prices of real estate in both locations have skyrocketed in the last few years so it really pays to tag location as a priority in your options.


2. Developer

If you’re thinking of buying a condo in its pre-seliing stage, then you need to consider who the developer is. A developer’s credibility and reputation are valid inputs for you. Do they have timely delivery of the unit as committed? What is their track record? Ask around or check for yourself the quality of workmanship of units they deliver. No one wants cracked walls or loosened bathroom tiles within a few years from turnover. Although a unit is priced lower, it doesn’t mean that your developer can just take shortcuts to cut the price while quality suffers. As a good investor, it is your responsibility to be on top of all this so that you get the most value for your money, more so if what you’re spending is a loan from the bank. Be on the lookout for the best developers around and be wary of those causing perennial problems to buyers.


3. Size

Do you prefer a studio unit? For condo buyers on budget - usually the singles and young professionals, this is the most common choice. The unit’s size is generally at 18 sq. m., with integrated kitchen and bathroom or living and dining areas. Some studio units come with a loft – perfect for those who have no babies and seniors in the family. But for those who enjoy open, spacious areas – this can be a good option. Or you may like a 1-, 2- or 3-bedroom unit. The price depends on the floor area but mostly, units with 2 or more bedrooms have more than one bathroom. Would you go for a penthouse unit? They’re usually at the topmost floors with the best views. Whatever you need – take this into account as you narrow down your search for the perfect home. Make sure the unit will suit your lifestyle well.


4. Budget

How do you stand financially? This is one question you need to determine before you invest in a unit. You are good to go once you know you have funds not only for the unit itself but for other related expenses such as: utility bills, association dues, cleaning fees, etc. You must have a steady source of income if you want to purchase a condo - as it requires at least 3-5 years of active financing. Or, if you have enough cash to pay it in full, you may do so. The most practical option though is to apply for a housing loan. Choices are: bank financing, in-house financing and housing loan from government institutions like PAG-IBIG. You need to determine which among the options is best for you - one that will present more advantages to your current financial status.


5. Returns

Is purchasing a condo a wise property investment? If we are to consider the real estate industry boom today, it brings out a good opportunity to make money. When you buy a low-priced condo at pre-selling and you sell it high, you can realize a fairly good profit. But if you’re after a steady cash flow and not a one-time profit, you can have the condo rented out. People will always look for a place to live since it is a basic need. Investing in it is less risker than you would do in bonds or stocks. How do you get the ROI or Return of Investment?


An illustration below simplifies the ROI computation but please note that rates here are arbitrary and used for illustration only:


Cost of condo 3,500,000

Estimated rental income/yr. (45,000/month) 540,000

LESS:

Taxes & Other Costs 85,000

NET Rental Income 455,000

ROI:

*Net Income/Total Cost of Unit x 100 = 13% per year or about 7 years, 8 months


We can see that buying a condominium is a smart move, whether we will live in it or use it for investment. The country’s flourishing economy, rapid growth in the real estate industry and high demand for rental properties makes investing in condominiums an appealing option for you.

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