Investing in real estate is one of the best ways to create passive income in the future. More millenials, and surprisingly, many women are now interested in buying properties for investment purposes. "Real estate investment provides multi-faceted investment returns," according to James Kimmons.
Now that for certain job categories of professionals and for investors the UAE will allow 10-year residency visa, many prospective real estate investors may consider buying their own.
I passed the real estate brokerage exams in the Philippines and was able to sell some condo units, house and lots, and memorial park lots.
In 2007-2008 I managed to pay for a condotel unit in our place for some months from my salaries and commissions but stopped during the crisis. It so happened that the developer also did not continue the construction, and asked me to choose between a unit in the existing hotel or another for a new development plan. I chose to refund it and after many months of persistent requests I was able to receive it, less some deductions, about 10%.+ but it was better than nothing so I could get through during one of the darkest moments of my life, that worst recession. I was just thinking then -- I deprived myself of many things in life to pay for monthly equity installments, and then the value of my money decreased. Things happen for a reason. Maybe it did, yes, so my children and I could get through those trying times.
When we buy a property on off-plan or pre-selling plan, it is important to know more about the developer and get updated with the construction progress.
Here in the UAE there are many real estate agents / sellers from the Philippines who conduct wealth management seminars among the overseas Filipino workers. I was surprised to know many young professionals buying not just one but two or more units. How do they do it? Some apply for loans here. After the equity is paid and the unit is turned over, they rent it out so it is self-liquidating. The monthly payable is sourced from the lessee's rental fees. There are ready-for-occupancy (RFO) units and when 5% is paid, the investors can transfer already after meeting all the requirements. Others are wise as they register also as sales associates -- so if one successfully closes 30 units with all buyers paying dues responsibly, his own unit is covered.
I attended some wealth management seminars here. Most of the speakers say the same highlights. Investing in real estate is a solid, safe investment as it is tangible. Normally it gives a yield of 10% per annum so the value doubles after 10 years. The value appreciates yearly -- even after 12 months of payment the value increases based on the total contract price. If you rent it out, it will give you a you a passive income of 6% - 10% per annum.
Now that there are many infrastructure projects and the peso has a value of PhP14.31 per dirham, it is best to invest in real estate in the Philippines.
Most real estate companies sell condominium units with no big down payment -- low reservation fee and equity payable in two (2) to four (4) years if on off-plan or pre-selling plan.
Under Condominium Act of the Philippines, Republic Act 4726, foreigners can buy condo units and shares for up to 40% of the total capital stock of a Filipino-owned or controlled condominium corporation.
For OFs (overseas Filipinos), it is wise to check the amount to be financed (this is the remaining balance after paying the equity in full) if your salary or your combined salaries with co-makers will meet the financing institution's minimum required salary. That is one of the challenges faced by a buyer, which is not discussed by other sellers.
Another is when along the way they encounter unexpected financial problem and cannot continue payment. I hope there will be some amendments in the policies of some real estate companies when the buyer cannot afford to pay anymore due to circumstances beyond control.
Friend A paid reservation fee and four (4) months monthly equity payable. Friend B, reservation fee plus ten (10) months for MEP. Both cannot refund anything. Agents say payments are forfeited. It is really frustrating as it is not easy to earn money here considering what an OFW has to sacrifice for the value paid. Some real estate companies in other countries have the buy-back offer but I don't know how effective and reliable they are.
For some here who can make it through the rains, they are excited with the key turnover. OFWs proudly say the investment is "Katas ng OFW" (means from blood, sweat and tears, like a juice, of an OFW). They purchase quality but affordable appliances, furniture and fixtures in the UAE and send the items home by cargo. (By the way, Ikea will soon rise at SM Mall of Asia so it brings delight to real estate investors near SM area, particularly SMDC residences.) They rent their units out and even while sleeping they earn money.
Innovation in real estate industry is exciting, with key players targeting many prospects to co-own a slice of cake in property investing, so instead of one person owning 100%, 100 people can own 1%. Take a look at SmartCrowd.
I am passionately motivated to promote real estate investment. What property are you looking for?
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Photo credits: Pixabay
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