The Philippine real estate market is finally poised for recovery after two years of uncertainty and volatility due to the pandemic. In its Philippine Real Estate Outlook 2022 report, Santos Knight Frank claims that demand for residential properties may pick up this year thanks to the growing outsourcing sector, rising vaccination rates, re-opening offices, and easing travel restrictions worldwide.
The imminent real estate rebound will provide investors with opportunities to acquire properties before values return to all-time highs. During these times, it will be advantageous to know how to make money in real estate and maximize real estate investments. In particular, condo investing can offer you several ways to make money.
This article will discuss seven methods on how you can earn from a condo investment, as well as potential hurdles you might encounter for each and how you can prevent or overcome them.
1. Condo flipping
Flipping is one of the most common ways to earn from your investments. Flipping involves purchasing an asset with the intent of selling it for short-term profits rather than holding on for its long-term price appreciation.
Potential Hurdle: You might find it hard to get a buyer.
Solution: Network with sellers. A vast network of brokers, agents, and developers will allow you to get the hottest real estate deals in your preferred areas and help you flip your condo investment faster and easier.
Potential Hurdle: The demand could decrease.
Solution: Research short-term market conditions. Before investing in a condominium, look into the real estate market and general economic outlook for the next year or two. This will help you forecast the real estate sentiment in the short term and prevent you from unintentionally holding on to your investment amid unfavorable market conditions.
Hold-and-sell is a long-term real estate investment strategy. Here, investors buy, hold, and sell their real estate property following a relatively long timeframe. The hold-and-sell strategy promises long-term profits through price appreciation and short-term cash flow through rental possibilities, all while being lower in risk compared to short-term flipping.
Potential Hurdle: There might be no demand in the future.
Solution: Research the project’s long-term investment potential. Focus on the developer’s track record and the project details such as amenities, facilities, location, build quality, and future developments near the condo’s site. These factors can help you determine the potential long-term demand for your investment.
Potential Hurdle: Your condo’s value might not appreciate much.
Solution: Choose the right investment. With the right condo project investment, it could be easier to pull off the hold-and-sell strategy. Consider picking an asset from a location with high potential for development, like a condo for sale in Cebu. A condo project can provide high-value appreciation over time if built within an estate or mixed-use development like the prestigious Mandani Bay.
3. Rent out your condo
This list wouldn’t be complete without tackling how to make money renting condos. Renting out a condo is a popular way of getting passive income from your real estate investment. Based on your condo’s size and location, you can rent it out to students, families, professionals, and expatriates.
4. Rent out your parking space
Acquiring a condo parking space may also add to your revenue stream. Condo parking slots are usually limited. However, if you can obtain one, you may rent it out to your tenants or other unit owners who cannot afford one yet.
Potential Hurdle for 3 and 4: Expenses will pile up without a tenant. For instance, monthly association dues are an ongoing expense for all condominium owners. And without a tenant for your unit, these expenses will start to pile up. If you took out a loan to acquire your investment, you also need to account for the monthly payments.
Solution: Have a cash buffer of around six months to one year’s worth of expenses to help prevent you from unintended asset liquidation or foreclosure.
5. Buy pre-selling condos
You may also make money from your real estate investments by buying early. A pre-selling condo’s price increases almost every time a tranche of inventory has been sold. For example, the price may increase to about 5% for every 100 units sold.
Potential Hurdle: Reselling during construction may not be possible, as some developers may not allow you to resell your unit before turnover.
Solution: Before investing, choose a developer that enables early reselling and ensure it is written in their contract.
6. Buy foreclosed condos
By buying a foreclosed condo, you will be getting an affordable deal as lenders usually sell foreclosed properties with a discount or below market price for immediate liquidation.
Potential Hurdle: The property may come with existing liabilities or damages such as informal settlers, unpaid dues, or occupants refusing to vacate.
Solution: Study the drawbacks. Look into the added cost of settling potential liabilities, then determine if the acquisition will be a profitable investment.
7. Rent out your condo as a vacation home
If you only stay in your condo occasionally, then renting out your unit as a vacation house to short-term guests may also be an excellent source of income. This works especially well if your condo unit is in a central location with easy access to popular tourist destinations.
Potential Hurdles: No stay, no income.
Solution: Make your unit competitive. Many tourists, travelers, and people looking for a place to stay for short periods usually want a cozy home-like setup where they can cook and do laundry, as compared to hotel accommodations. Consider styling your unit and making it a vacation-worthy destination to make it more appealing to guests.
Rack Up the Revenue
It may be the best time in a long period to invest in real estate. Before the pandemic crashed the markets, real estate prices were only going up. Now, investors have the opportunity to acquire assets at more affordable prices before the market inevitably rebounds. Some investors are even indulging in revenge buying to take advantage of the real estate market’s slow uptrend in the second half of 2022.
Make the most of your investment budget by acquiring one of the most versatile income-generating assets. Buy, hold, flip, or rent your way to lucrative revenue with condominiums! For a premier waterfront condo living experience, check out Asia’s next urban landmark, Mandani Bay.