If we talk about suitable investments in the country, you'll see many options, including stocks, mutual funds, small businesses, and real estate. Real estate investments remain among the best investments not only in the Philippines but also in the world. Residential real estate, apartment or condo investing, commercial real estate, Raw land, REITs, Industrial real estate—there are many types of real estate investments to choose from, and we have to pick whatever we think will work best for us.
In this article, we'll discuss further what real estate investment is, its state in the Philippines, and why it is worth it as an investment in the country.
What is Real Estate Investment?
Real estate investing is purchasing real estate as an investment rather than a primary residence. It can be defined as any piece of land, structure, infrastructure, or other tangible assets that are often immobile but transferrable.
When you hear real estate investing, one of the first things that may probably pop up in your mind is your home. That is indeed correct, but real estate investments don't only enclose its variety to our home. There is a wide range of other choices for real estate investors aside from physical properties. Remember that there are many alternatives to purchasing, financing, and managing physical properties if you want to invest in real estate. Options include real estate partnerships, real estate crowdfunding, real estate stocks, and REITs.
Now that we have briefly covered what real estate investment is let's move on to the next question: Why invest in real estate in the Philippines?
Why Invest in Real Estate in the Philippines?
Is real estate investment in the Philippines worth it? The short answer is yes.
Over the past 50 years or so, real estate has gained popularity as a means of investment. According to the Statista Research Department, the Philippines' real estate market contributed over 126 billion pesos in gross value in the second quarter of 2021. This information highlights the real estate sector's importance as one of the main engines of the Philippine economy. Because more Filipinos are relocating to urban areas in search of better prospects, stimulating the need for additional housing projects, it is important to take note of the rise of middle-class households. Demand for condos and townhomes is expected to surge significantly as early as the second quarter of 2020, which is why there has been a lot of condo investing and rental.
Here as some of the reasons why you should consider investing in real estate here in the Philippines:
Less Expensive
Real estate in the Philippines is less expensive compared to other countries.
The Philippines has a relatively large number of well-funded developers, which improves the investment. What is also good is that investors with or without licenses can take part in the real estate market. The pre-sale option is also open to unlicensed brokers, so they don't need a license to purchase and sell residential apartments or condos. This turns into a good strategy for having an excellent rental income.
Low-Risk Investment
Real estate investing might give you assurance and peace of mind in an uncertain environment. Even though there are now some setbacks, you can still anticipate it to grow in the long run.
One of the reasons you should engage in the beneficial ripple effect of real estate investing is that, although it may move more slowly than their investments do, the stability of your investment won't be jeopardized. Because of this, it is regarded as one of the safest ways to double your money eventually. Furthermore, the need for real estate properties, including homes, buildings, and other items on and above the ground, persists even in the worst economic conditions.
Value Increases Over Time
We all know that investing in real estate is one of the ideal decisions you can make for your future. If you plan to live in your house for an extended period of time, the property's value will often rise and provide you with a sizable return on investment.
When you spend money on cars or other items, their value typically falls when you acquire them. However, in the case of real estate, it is the opposite. Real estate gains value over time. In the Philippines, real estate assets benefit from increased value, especially in urban regions with a growing population. Given that you made the right location choice, you may expect the value of your investment in real estate, including townhomes and condos for sale, to increase over time.
Can Produce Passive Income
You don't have to work daily to get the much-desired passive income investment properties to provide. Businesses and rentals are two examples of this. There are several places where the monthly amortization payment is lower than the rent. If you're running a business, investing in real estate will also generate passive income as a supplement.
Selling a home for more money is a simple approach to profit from real estate. However, it can take a while. Because of this, renting or leasing the property makes sense. The property can easily be converted into housing close to a tourist attraction or an Airbnb. However, let's keep in mind that in order to give your visitors more value, you need to upgrade and renovate more frequently.
Available Tax Benefits and Deductions
Real estate investors are eligible for tax benefits and deductions, resulting in tax savings. The reasonable expenses associated with operating, caring for, and owning the property are bound to be deducted.
The cost of purchasing and expanding your investment property decreases during ownership. This means you can gain from years of deductions that reduce your taxable income. Additionally, some loan discount points and closing costs may be tax deductible. These tax deductions can, in one way or another, significantly increase the amount of money you have back in your pocket.
A Source of Leverage
Utilizing financial solutions to increase your prospective ROI implies the term "leverage." For example, leverage might be available to you if you put down 30% of the mortgage balance. Real estate leverage refers to the act of buying properties with the assistance of other people's funds. In this scenario, you would borrow money from banks, mortgage companies, or credit unions and gradually pay it back. With this, you can increase the real estate you possess without paying the full price.
Real estate makes it simple to obtain financing since it can be used as collateral because it is a tangible asset.
The Philippines is a good place to invest in real estate, especially given how profitable and booming the industry is. Furthermore, real estate investments are a great strategy to increase wealth due to the nation's strong economy and ongoing growth.
Of course, it's not all good, and this sector also has drawbacks, so we cannot guarantee 100% success—that's just how an investment works. However, compared to bonds, equities, and other investments, real estate offers competitive risk-adjusted returns, and it is one of low volatility in general. For real estate investments to work well, you have a lot to take note of—from choosing a good location to observing the possible cash flow. You can reduce the potential risks by studying and properly analyzing the real estate market and rental property. Diligence is also a key to an excellent investment!
For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and YouTube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.
