August 17, 2021

Is Real Estate a Good Investment?

By: Melecio Martin G. Arranz IV

If you make a quick search on the Internet on where best to invest your money, you will find that real estate is a common and sound choice. It’s even regarded as the best investment option this 2021 in the Philippines.

However, much like placing your hard-earned money on savings accounts, stocks, and mutual funds, you have to make the necessary assessments first before you take the plunge on real estate.

If you have questions like “How doable is it?” or “What are the things to look out for?” on your notes, let this article guide you with pointers when weighing if real estate is a worthwhile investment for you.

What to Consider When Investing in Real Estate

Rewarding as it may be, there are many factors to consider when engaging in big investments like real estate. To get started, here is a checklist of things you need to review when deciding to invest.

1. Check your budget

Real estate investments are a financial commitment. Like any other type of acquisition, it’s a gamble, as it can take more than it can give back. So, before drawing capital, ask yourself: “Am I financially ready to pay for and maintain a property?”

Think about the now and the future. Go over your finances and check your credit score to see if you can get a realty purchase without breaking the bank. Then, make a financial projection and study your future statements. If your records show that you can be financially stable for the next six months, consider it a green light. 
Otherwise, you have to set your finances in order first before drafting any investment plans.

2. Choose a type of property

There are different types of real estate, so pick one that will best fit your needs. If you’re aiming to own a property for housing, go over the top residential picks in the country. However, if you want to manage properties that can host business activities and operations, assess the commercial and industrial real estate options available in the market.

3. Pick your location

It’s important that you find the right site for your property. For residential real estate, decide whether you want one in the urban, suburban, or rural space. Be sure to secure a spot accessible to essential facilities and not susceptible to natural disasters.

When it comes to commercial or industrial properties, pick a location that has the best potential for business development, all the while abiding by federal regulations.

Select with the future in mind, too. View your prospect with a long-term estimation of how it will evolve in at least three years. You may connect with the urban planning committee in the area to confirm that their plans won’t interfere with your goals for your chosen property.

4. Think about the title

Don’t forget to consider the status of the property you’re eyeing. If you’re on a tight budget, you can opt for a foreclosed property instead of a brand-new construction. Of course, verify the title and other documents that come along with the real estate. Only go for ones with a clean title to eliminate any legal issues in the future.

5. Monitor the condition of the market

Similar to stocks, the property market fluctuates from time to time. You have to be mindful of when it’s best to sell a house and when it’s the season for buying. Take a second to learn the real estate curve and leverage the state of the market to strategize your every move.

Benefits of Investing in Real Estate

Now that you know what to watch out for, let’s discuss the reasons why a property is an asset worthy of your investment.

1. Real estate appreciation

Whichever type you choose to invest in, the value of real estate only keeps growing. This creates a domino effect you can work in your favor—if sale prices in the market rise, the cost of rent will also increase. This means owning a property allows you to keep pace with inflation and not go against it.

2. Steady stream of income

If you’re hosting your real estate for regular tenants, may it be residential or commercial, your rental agreement guarantees you a stable source of income. Home properties are the easiest to market to renters since shelter is one of the basic human needs. So, open your property for business and match its rate with the demand, size, and quality of your lot.

3. Flexible and improvable

There is another way to increase a real estate’s worth in the market—renovation! Customize the structure or improve the aesthetics of your space to make it more attractive to the public. When you own a property, you get to call the shots at what it becomes. Feel free to tweak it for your target market and get creative!

4. Tangible asset to your name

Real estate is an investment you can physically enjoy and work on. Whether it’s a 50 sqm studio unit in the metro or 30,000 sqm raw land in the province, it’s a property for you to use or lend with proper title turnover.

5. Community improvement

Real estate properties are a vital part of a community that can impact its economy in more ways than one. For instance, you can support the housing needs and business opportunities in your area by maintaining rentals. Plus, your contributions through real estate tax can improve the region’s economy in revenues.
Think of it as a win-win situation. If the community evolves, so will your asset. This correlation can ultimately strengthen a cycle of financial security both parties can enjoy.

So, is Real Estate a Good Investment?

The final verdict is yes. Real estate is an excellent investment, but you need to prepare for the journey—from pre- to post-purchase. It also requires maintenance, so you have to be sure you’re up for the challenge.

If you want to start small, try condominium units. You can scroll through endless results of condos for sale in the Philippines on the web or partner with a realtor to help you find the property that ticks all your boxes.

To score quality condos in prime spots in the country, let Federal Land assist you in making a good choice for your real estate investment.