If you’ve ever considered investing, then at some point you might have thought about buying properties. One of the most common investment advice or wealth management strategies is to invest in properties. If you have saved enough personal funds or aren’t in any huge debt, you could see the value of buying land and renting them out to tenants.
In the Philippines, aside from investing in the stock market, acquiring houses and lots and renting them out is a common way to earn passive profit and substantial income. Long-term wealthy Filipino businessmen have made money through stocks and passive income through rental property investments.
But not everyone can make a successful business out of renting out properties. It takes patience and lots of trial and error. There are lots of factors, such as paying property tax that you need to learn before you can get the hang of it.
What Are The Do’s and Don’ts of Investing in Real Estate?
At an early age, you learned to crawl before you can walk. Property investors must first learn how the market works before putting any cash or down payment on any property. Learning about property taxes, what’s your financial budget, or calculating your cash gains is one of the basics you must do before diving into any investment. And that includes paying a minimum of 20% down payment upfront of the total cost of the property.
Calculating your monthly expenses and checking your mortgage options can help manage your debt or long-term costs. For example, using the 1% rule you’ll be able to analyze your cash flow and property costs or tax expenses on any property that catches your interest.
Suggested Read: How Does The 1% Rule Work In Real Estate Investing?
You should also be aware of your personal savings goals. If your goal is to earn a passive income of at least Php 25,000. You’ll need at least several rental properties to reach your target goal.
Here are the dos and don’ts in property investing:
Do your research on the property and similar properties
Before you decide to buy a property, you need to do your research and compare them with similar properties. You might want to look around the neighborhood. Is it well-protected and in a moderately safe location? Is the community great? What is the average tax bracket in that location?
Some rents may be higher than others so do some sleuthing to get the best deal.
There are different types of properties to invest your money on. Here’s a blog that talks about condominiums, townhouses, and house and lots in the Philippines.
Don’t invest without a physical inspection
In the property market world, you are responsible for doing a physical inspection on any house for sale in the markets. This gives you an advantage to personally check if the house’s condition because sometimes sellers will cover up houses issues by applying a band-aid solution. So you won’t know about it until after the deal is over.
If you can afford the costs, you can pay for the services of a house inspector to inspect the house’s condition for you.
Do ask for legal advice and professional assistance
If you’re unable to decide how to go about in investing properties, there is always the option to use the services of a professional investment advisor. Although their services are costly, they are paid to help guide you through the investment process. Whether it’s tax or mortgage inquiries, as an advisor their services are invaluable and come with great benefits.
Looking for a real estate broker? We have brokers in the Philippines and abroad that would happily assist you. Talk to our real estate professionals today!
Don’t easily trust sellers or advertisements online
You’d expect sellers or advertisements to be upfront with their information but let’s be honest, some of them can be clever when phrasing property descriptions. You need to read between the lines such as “as is”, meaning the house might have old plumbing or a leaky roof. You might end up buying the house along with its problems and end up paying more money than you’ve anticipated.
Always ask questions and learn the 3 P’s When Browsing Through Online Property Listings.
Do diversify your real estate portfolio
Aside from rent, most successful investors have more than one type of investment in their portfolio. You can even say that’s the secret to their wealth. It can be in the form of mutual funds, investing in stocks, or being a shareholder in some companies.
Have you heard of Real Estate Investment Trusts (REITs)? Read this article to find out more ways to diversify your portfolio.
Don’t rely on one investment asset
One great thing about investments is you’re not limited to certain types. As long as you have the budget, you can choose whatever assets or services are available. Aside from property rent, you’ll find many experienced financial experts to hold and own different assets. Because if your rent investments don’t do well, at least you’ll have another type of investment to back up your losses.
Why not try investing in memorial lots in the Philippines? Yes, you can use it for investment purposes too! Check this article out.
Do invest for the long-term
When it comes to property for rent, you’re playing the long game. It’s fairly common to see little to no profit during the first year and it may take a while for your property rent to become profitable. Fortunately, the price of real estate can only go upward which makes it one of the most secure ways to earn passive income- as long as you have a tenant, of course.
So if you expect huge profits in a short amount of time, there are other investment options to take note of.
Did you know? As early as your 20s, you can already start investing in real estate. There are several benefits that await!
Don’t take too many risks
If you’re new to investment property, it might not be a good idea to take too many risks. For example, to better manage your finances, you can stick to low-risk stock market options, or take a low-interest mortgage payment.
Finance can be tricky to manage especially if unexpected events happen such as loss of employment or a death in the family. Or if you’re unable to pay taxes, you’ll most likely fall into debt. That’s why it’s critical to manage your money closely while you’re still in the early stages of your journey.
Learn the risks and challenges when investing in real estate in this blog.
Learn more investing advice and tips with Vista Land International!
At Vista Land International, our property advisors are happy to get you started with your first journey in property investment. Our company has a roster of several properties that may fit your needs. We value our clients by providing them with quality services and valuable insight into today’s market trends. So contact us today!
Vista Land International was primarily created to bring OFW closer to their dream of finally acquiring a home in the Philippines. And with the rising cost of living in the country, OFWs and their families are looking for ways to earn extra cash flow to support their daily needs. Luckily, you can also join the global network of Vista Land International as a real estate professional and earn a commission!
Vista Land International Marketing, Inc. (VIMI) is the international marketing division of Vista Land. Aiming to provide OFWs and migrant Filipinos a home in the Philippines, VIMI has established long-lasting relationships with brokers and clients around the world.
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