Why real estate investment makes perfect sense

Exploring potentially profitable investments is essential for long-term financial growth.

Real estate, when approached strategically, can offer steady rental income, long-term capital appreciation, and tax benefits, while also providing a hands-on approach and portfolio diversification.

The Philippines, in particular, presents an attractive opportunity with affordable entry costs compared to neighboring countries. This makes it an ideal time to invest in Philippine real estate, with its young market and diverse options.

Here’s why investing locally makes sense, along with key tips from trusted sources.

Evaluate your budget, intentions

Rizal Commercial Banking Corp. (RCBC) recommends asking yourself if you have an emergency fund ready for shouldering the mortgage in the worst case scenario, whether you have all the necessary financial documents prepared for this type of investment, and if you have enough for the property’s downpayment.

Beyond the financial requirements, ask yourself, too, if you are mentally prepared to shoulder the responsibilities of being a property owner. Once you’re ready, you can start planning.

Do you research

As with everything, the first step is to do your research. Familiarize yourself with the current state of the industry and its potential prospects. Look into the reputable developers who can help you find the right properties for your needs.

Make sure to understand as well the different types of properties. For residential properties alone, you have single-family homes, townhouses, vacation rentals and condominiums, which provide stable rental income flow and opportunities for long-term value increase. There are also commercial properties like warehouses, retail stores, and office spaces, which can yield higher rental returns but require larger investment capital.

Find the right location for you

It’s important to choose the right location for your property investment. Fortunately, the Philippines has numerous locations offering potential investment opportunities.

Metro Manila, Makati, and Cavite alone offer good prospects for real estate investment, being ideal locations with their populated, bustling areas, while Pasig and Taguig are reportedly popular rental destinations for property seekers.

What’s good also is that almost every region and area in the country has something to offer when it comes to maximizing your investments in real estate. Be it in a rural or urban setting, there’s always room for sustained growth when it comes to real estate.

Identify your investment goals

Understanding your objectives before delving into your investment plan will help you navigate through the types of investments and discern which ones would not only best fit your needs but would also make the best use of your money.

Create a budget

You can also develop a reasonable and fitting budget that will suit your goals and capabilities. Consider other factors as well, such as down payment, monthly mortgage, property taxes, maintenance expenses, and other additional expenses needed for your property.

Examine your financial options

Once you have chosen your property and identified your investment goals, it’s time to examine your financial options.

There are several funding options available in the country. Some local banks offer competitive interest rates on housing loans while certain real estate developers provide internal financing solutions. Members of the Home Development Mutual Fund (Pag-IBIG) are also eligible for loans for affordable housing.

Be prepared

Finally, always be prepared for the worst case scenario. Have a long-term view in mind when making your investment, and ensure that you have a thorough exit strategy that will help you in making future decisions, regardless of your goals or intentions.

The market is ever changing, so be prepared to sell, reinvest, or adapt your strategies based on current conditions and other possibly unpredictable factors.

As always, regardless of whether you will need to have an exit strategy or not, keep a close eye on the market’s evolution to help keep your investments and plans stable.

Real estate investment is a long and possibly winding journey that requires much preparation, both financially and emotionally.

While it may seem intimidating at first, and though the pitfalls and losses may be great, with proper planning, you can reap its many rewards. Keep your wits about you, stay alert and ready, and know the market well, and you can find success in this field.

Sources: creit.com.ph, securitybank.com, pse.com.ph, metrobank.com.ph, forbes.com, rcbc.com.ph