9 Questions Foreigners Should Ask Before Investing In A Condo In The Philippines
The Philippines offers more than just the beauty of an island surrounded by a rich marine ecosystem and pristine beaches. Resorts have been a very lucrative business opportunity since time immemorial, however, the metro has also been keeping up with the ongoing demand for residential spaces. Even neighboring cities and provinces are now being utilized to fill in the fast-rising need. If you’re a foreign investor looking for viable investment options such as purchasing a condo unit in the Philippines, here are some of the questions you must ask before availing one.
- What is your reason for purchasing a condo?
This will help you determine the type of condominium you will purchase as well as its location. Some of the common reasons for buying one is having a passive source of income if you will have it rented out. Another reason is having a convenient place to stay for you and your family every time you’re here in the country for a visit.
- What are the laws governing the condo purchases of foreigners?
There are several laws you have to be familiar with if you plan on purchasing a condo unit in the Philippines. It is generally prohibited for foreigners to own a property in the Philippines, however, this has changed when “The Condominium Act” was implemented. Republic Act No. 4726 entitles foreigners to buy a condo in the Philippines given that they have no ownership over the land it was built on.
- How much is your allotted budget for the condo you plan to buy?
If you have a specific budget in mind, you can compare prices of condo units available in the market through real estate online platforms such as here in Lamudi. You can filter your search results by typing in your desired amount regardless of the location and the type of units.
- Where is the most suitable location to buy a condo in the Philippines?
You will commonly see a high demand in and close to the central business districts most especially in Metro Manila. These areas are Makati City, Rockwell Center, Eastwood City, Ortigas Center, and Bonifacio Global City. Townships are also on the rise in Pasig-Cainta areas, Taguig’s Arca South, Vertis North in Quezon City, and the Circuit in Makati.
- What are the different types of condo units available in the market?
These are the studio-type, two-bedroom, 3-bedroom, and loft-type condominium units. These units are inclusive of the dining area, living room, bedroom, kitchen, utility room, and the bathroom. You might also want to look into purchasing a unit that is ready for occupancy (RFO) or is under pre-selling.
- What are the income opportunities of having a condo unit?
If you plan to have your condo unit for lease, it can be a source of passive income. You can also sell it after a couple of years once its market value appreciates more than the initial capital you’ve invested. However, the former is more of a suitable option when earning a consistent profit given that you can increase rental rates every time there is also an increase in property values.
- What are the loans that foreigners can avail to buy condominium units?
Foreigners aren’t given the privilege to apply for a loan in the Philippines unless married to a local. You may, however, do so if you plan to set up a company in the country under the construction loan. Your company name will be listed as the borrower and the terms of said loan fall into two categories – the revolving credit line with a period of one year and up to 25 years when renewing every year term.
- What are the fees involved upon purchase as well as the monthly or yearly dues?
Upon purchase, you need to pay a reservation fee and the agreed price of the unit. All other fees involved such as property taxes and for documentation, the developer will consolidate them for you, which you can pay later on. The unit price doesn’t include the taxes and other miscellaneous charges. You can ask your seller about the breakdown of these fees and if there are other regular charges aside from the monthly association dues required for the general upkeep of your building’s facilities and amenities.
- Does owning a condo unit means earning a high ROI or it’s just “break-even” upon deduction of expenses?
This will depend on your market strategy to earn a higher profit, the terms for buying, the mortgage payments, and the location. If your budget will allow it, you can purchase several condo units most especially in locations where there will be an expected flock of renters such as those situated near university belts and central business districts. You can also lessen your expenses by managing the property on your own instead of hiring a property manager.
Investing in condominiums here in the Philippines has its own pros and cons if you’re a foreign investor. However, studying the real estate market well and conducting due diligence prior to buying a condo will help you establish a lucrative business that will allow you to generate a solid ROI in the long haul.
SOURCES: Phil Property Expert, Philpad, Your Home in the Philippines
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