Eric Maguan and Enrique Fausto —Contributed photo
Young people considering investing, rather than just saving, the extra cash they have may want to start thinking of real estate.
In a recent seminar organized by IFE, a management consulting firm, on “The Real (E)state of the Markets (2023 Investment Outlook and Real Estate Insights),” resource person Eric Maguan of ECM Realty discussed the potential of real estate investing for millennials.
The certified public accountant and real estate broker raises the possibility of young people becoming financially independent by putting their money in real estate as soon as they can.
“Real estate investment is key to financial freedom,” Maguan says. “It is safe and can be done by anyone …”
But prospective investors have to know the risks and find ways to eliminate them. He gives the assurance, however, that most risks can be controlled.
Maguan stresses that real estate will continue to increase in value over time.
He points out that despite the disruption caused by the COVID-19 pandemic that slowed most businesses, even killed some, real estate has been “quick to bounce back.” Prices are still rising today.
“Real estate is resilient and a powerful driver of wealth,” he says, adding it is also stable.
Maguan says it can be a source of additional passive income too. The owner does not have to use the property but can rent it out, even for short periods. He cites the growing number of people who are earning additional income by listing their property on Airbnb Inc.
When to buy?
To make real estate purchase more manageable for young professionals and others with spare cash that they want to put into something reliable and stable, he suggests buying when a property is at the preselling stage. Prices will then be at the lowest possible, repayment terms will be lighter and there might be no interest to be paid during the preselling period.
Investing in real estate that will continue to rise in value is a much wiser proposition than buying things that will depreciate, Maguan stresses.
He lists the three Cs that young prospective property buyers should consider:
• Capacity: They should be able to afford the amortization while being able to cover the usual expenses and having something set aside for emergencies.
• Credit: They may have to allocate at least 30 percent of monthly income for bank loan amortization.
• Cash flow management: They must track carefully how much money is coming in and how much is going out.
Discussing the general investment outlook, Enrique Fausto, IFE chief financial architect, expresses optimism that things will be better this 2023 despite the persistence of some challenges like inflation.
To cope with uncertainties, he suggests creating a diversified investment portfolio. Diversification, he says, will be the most important thing to do to invest well and wisely.
Marvin Fausto, IFE chair and founding president, stresses that investors could not control the market. He advises seminar participants to “just worry about the things you can control” and seek expert help in navigating the financial world.