4 Tips in Buying a Condo for Investment

Tips in Investing in Condos

For the purpose of this article, I will focus mostly on project based properties- particularly condos, since their maintenance are managed and appreciation of these properties are easier to predict.

How Can I Earn in Real Estate?

I’ve been asked this question so many times, and having been in the Industry for more than a decade- and having worked for other developers, there are 2 methods you can earn in real estate, namely “Buy and Hold”, and “Flipping”.

Look for Deals: Buy and Hold

In Buy and hold, you buy a property while the price is relatively low- either in preselling stage or when the project is relatively new.  In other types of properties, you can take advantage or foreclosed properties or those that are about to.

And then you hold the property for a long time and rent or lease it out for a fee higher than the cost of holding the property- so that you have enough to keep for yourself.

Looking for Deals: Flipping

Flipping on the other hand, is more straight-forward. You buy a property at preselling stage, try to get as much discounts as you can, then you sell it afterward for profit.  There are couple of ways to maximize your profit: first, wait for turn-over.  Once the condo has been turned over, the property should have appreciated enough already.  Second, you can furnish the unit, make it more pretty- then sell it for a good profit.

Leverage Debt

Don’t do this unless you are very sure of what you are doing.  Experienced investors love to leverage debt.  Not only do they look for deals on the property or condo itself, they also look for the best deal for financing. Go loan shopping and get the best rates for your investment. And don’t just go for Major Banks, try the rural banks, credit cooperatives and compare them all to pag-ibig fund.

No need to worry too much, if you get a good rate- then its a good deal.  For every payment you make to the loan- your “equity” or the value that you own on the property- increases as well.  Plus if you are going for buy-and-hold, include the monthly loan payment in your holding costs, and mark-up on the rental amount just right- that you get some profit even after paying off your loan and monthly dues.

Your money will now work for you.  Your credit rating will go up- which means you get better loan deals in the future.

Mitigate your Risks

Don’t be lazy and do some homework.  Find out about the location of the project, find out about the developer, find out about different interest rates from different banks, if you are flipping- find out about the target market you will be selling to, if you are going for buy-and-hold do your homework on the target renters.

If you got a loan, dont worry too much on the length of the payment, worry on the interest rates. Even if it takes you 30 years to pay it off- you still own equity on the property for every pay-off you make so- slowly but surely you will get there. Plus, even if you havent fully paid off the condo yet, and want to flip it- you can. You can sell it for a profit and make your buyer assume the balance. So if you did your homework and got a good deal with financing- your new buyer will definitely appreciate you for that and it will be an easier sale.

Have a Plan

At the end of the day, investing in properties and condos is quite simple. Make a plan, do your homework, and execute. Having a plan and doing the legwork will ensure that your investment will be healthy and secure.