ARE you dreaming of having your own house or planning to invest through properties?
This pandemic, the real estate sector is one of the industries that have been affected. But still, buying a property is one of the most preferred investments of people because it is a tangible asset.
As the adage says: “The best investment in earth is a piece of earth.”
Being part of the real estate industry for eight years now since I graduated, I would like to share the ways on how we can earn through property investing.
1. Capital Appreciation. Due to the continuous demand for housing needs of increasing population and decreasing availability of land areas, real estate prices are consistently increasing on the average of 6 percent to 10 percent per annum.
This way, when you bought a property 10 years ago and plan to resell it, most likely your return of investment will be a good yield to even 100 percent to 200 percent depending on the location of your property. Properties near or within business districts are the investments that appreciated a lot in terms of valuation.
2. Rental Income. Owning a property is a dream for a lot of us and building a passive income can be a way to reach your financial goals. You can be working in your day job and have your condo and/or apartment unit rented out. This can help you prepare in building a family or preparing for retirement.
One of the challenges that we have in our country is retirement planning and I’ve seen how individuals with rental income was able to manage their expenses even after their corporate job.
For business people, leverage is important; creating multiple streams of income in order to have wider options in the way we do things. Creating a rental property portfolio can be difficult at first but if you can consult a real estate professional, you can also take advantage of their industry skills and knowledge.
3. Flipping. This refers to a strategy of purchasing an asset with a short holding period and then re-selling it for profit rather than long-term capital appreciation. Investors usually target properties that are in strategic location such as business districts to have a higher percentage of successful flipping.
4. Real Estate Investment Trust. Also known as REITs, this is suitable for investors who want exposure to the real estate without the usual real estate transaction. A REIT is created when a corporation (or trust) uses investors’ money to purchase and operate income properties.
REITs are bought and sold on the major exchanges, like any other stock. Like regular dividend-paying stocks, REITs are a solid investment for stock market investors who desire regular income. REITS are highly liquid because they are exchange-traded. In other words, you won.t need a real estate broker and a title transfer to help you cash out your investment.
All of these four opportunities take time.
I am an advocate of step by step strategies in building wealth and so we need to conduct our due diligence first before taking our first move. You may consult a professional, read blogs, watch vlogs from experts before arriving into a decision.
In every investment goal, diversification is key. If you have no capital yet, investing in learning is key so that when the time came and you are ready, execution will be your next step.
This pandemic, real estate prices went down due to various factors. Because of the community quarantine, companies shut down their operations resulting to lesser office rental demand.
The residential sector, on one hand, was also affected since there are employees who decided to go home to nearby provinces because of the work-from-home set-up.
On the other-hand, warehousing and logistics sector improved because of the e-commerce boom. Since majority of us cannot go to the malls, we opted to buy online and storage areas were, and still are, needed for the items being delivered to respective households.
Real estate has been a major contributor to our economy as it embodies the infrastructure of a certain nation. Analysts are optimistic in the recovery of the real estate sector once lockdowns are lifted.
Business process outsourcing firms are now diversifying their offices to provincial areas to prevent a major downtime in operations in case this kind of problem arises again in the future. Nearby provinces like Bulacan, Pampanga, Cavite and Laguna are the areas being developed now, which allowed for decongestion of areas around Metro Manila.
Karlo Biglang-awa is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 90th RFP program this June. To inquire, e-mail [email protected] or text at 0917-6248110.