What to consider in real estate
THe real-estate sector is a major contributor to the Philippine economy. As both the economy and the population expand, the role of real estate becomes more significant.
It helps provide more income and more opportunities. The supply of living spaces, therefore, has to keep up with growing demand. In terms of personal finance, real estate is a popular investment option for many Filipinos.
There are a number of factors though that have to be considered in order to make good real-estate investment decisions.
One factor to consider is the goal. every investment decision must be anchored on a bigger purpose like a goal. The goal has to be clear and ambitious.
For every Filipino, the ultimate financial goal must be the achievement of financial freedom. Real estate can be a powerful vehicle in helping one achieve financial freedom. To many, real estate can also mean an aspirational goal. Buying real-estate property should be planned prudently since this type of investment can tangibly represent the culmination of lifelong income.
One factor to consider is the type of real-estate investment.
There are different strokes for different folks.
Buying property should take into account personal and family cir- cumstances in the present and in the foreseeable future.
Buying property should also consider key personal and family priorities so that the relevant real-estate investment decision will be made. In the Philippines, there are quite a number of options available. The popular ones include land, condominiums, townhouses, apartments and condotels.
One factor to consider is location. This can be a relative factor since good location really revolves around the lifestyle of a person and a family.
There are those who would prefer the place of residence to be close to the place of work or business. There are those who would prefer the place of residence to be proximate to communities and institutions.
As progress in the economy is decentralized and as it extends to the countryside, the likelihood of having more prime real-estate investment locations becomes higher.
One factor to consider is the reputation of the developer and the broker.
There are many reputable real-estate developers in the country. Many of them have a reputable brand heritage, sound financial position, significant land asset base and good management.
W hat may probably differentiate one developer from another would be how a developer is able to effectively conceptualize and transform communities over time. Working with a professional broker can have the benefit of getting sound advice on property details.
One factor to consider is potential benefit. One key benefit of real estate is that the value of property can appreciate over time. For the long term, property can either be kept for personal and family usage, utilized for estate planning purposes or sold for capital gain.
Another key benefit of real estate is that there is the possibility of passive income through rental income. Unlike other investment types, rental income can be less volatile. Unlike investing in a business, real-estate rental income can be gained at less hectic effort.
One factor to consider is potential cost. A prime location may command high cost which may prevent many people from participating.
Real-estate investment is illiquid since it cannot be easily converted to cash to meet present expenses. This is where having ample savings and emergency funds prove to be handy. There are various financial costs related to buying property like registration, maintenance and tax costs. Therefore, it is imperative for one to effectively match cash inflows with the costs for sustainability.
There is simply no such thing as a perfect investment. Investing in real estate has its own set of advantages and disadvantages. Therefore, to maximize the investment in real estate, one has to be very clear on what it would be for, what would be the relevant real-estate type and how cash flows would fund the decision.
Gemmy Lontoc is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 80th RFP program this January 2020. To inquire, e-mail info@rfp.ph or text