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June 24, 2010

Condo Buying Tips - Things To Consider Before Investing In A Condominium – PART 1


On my previous post, I have presented to you the reasons why there is a demand for condominiums, today I will share with you the things that you need to check and ponder before making a decision to buy a condo.

Real estate is a serious investment and since most of us don’t go through this buying process more than twice in our lifetime, we can’t really understand how the market flows. (That is why we have real estate professionals..Ahem!) More often than not, we tend to easily get swayed by the marketing campaigns of the developers without considering some important things that can minimize if not prevent future problems or regrets.

You may have probably heard some scary stories about condo owners before. Bless them for their experience taught us many things and these things are to be presented to you right now.

Note: These points does not necessarily outweigh each other. It is still up to you to carefully analyze what matters to you most.

Identify your goal. Ask yourself, Am I buying a condo as a primary home or is it for investment (rental  ore resale). This will help you initially trim down your choices on what to buy. Buying as an end user or as an investor entails different preferences because the former is more concerned about their pride of ownership, being comfortable and they would want a condo that they can pass to their heirs. Unlike an investor who is more concerned on how he/she can maximize the return on investment. 

Freehold (perpetual ownership versus Leasehold. These are the two types of condo ownership .  As an end user, you would want a condo that you truly own and that you can pass to your heirs so it would be good to look for projects that offers Freehold type of ownership. Leasehold is the type of ownership wherein after a specified period like 50-99 years, the ownership will revert back to the developer. So in effect, it’s like a long term lease. This kind of ownership would be great for investors since they are usually priced lower, more strategically located and has more attractive payment terms.

Consider your current as well as long term financial capacity. Take time to analyze your current and long term finances to prevent foreclosures in the future. Don’t just buy because you fell in love with the property and become fatalistic by saying ‘Bahala na’ (Whatever will be, will be or As God wills it.). There is a rule of thumb used by lenders that you can use as your guide to know if your financial threshold is adequate for your desired inestment. Your monthly net income or joint net income for spouses should at least be equal to the monthly amortization times four. So for example, the monthly amortization is 20,000, your personal or joint income should be at least 80,000 a month to ensure the  coverage of your basic expenses even if an emergency arises.

Consider the location. Others say, it’s all about the location, but I say we should not stop there. We should investigate further and get to know the surrounding areas of the project, the actual location of your unit, its orientation (If facing North, East, South or West), your neighbors on the left and right as well as the units above and below your unit, flood level in the area and the flow of traffic. Why do you need to know these? Because if you plan to live there for a long time or if you want to rent it out, you would want to ensure that the environment is at least acceptable if not desirable and that it suits your lifestyle or the lifestyle of your prospective tenant or target market.

Continued on my next post...  (Click here)

Live a beautiful life! 


Ryan Rillorta

9 comments:

  1. Thanks for the useful post! I find it useful especially to the condo buyers. These are things that they definitely consider.
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    Pia
    condo in Philippines

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  2. Thanks for taking the time to visit my site and comment Pia. I hope you visit often.

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  3. Hi Ryan! I've read some of your posts and I'm learning a lot. Thanks for sharing! God bless you more! - Jen

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  4. Hi Jen, thanks for your comment. Glad to know that you're learning from my posts.

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  5. Hi Ryan, yes and I just availed of DMCI's condo recently, the Stellar place. Which I forgot to ask if that's a freehold or leasehold. hey, I am a regular attendee of the feast and a reader or Bro. Bo's books too, what a worthy books to collect! God bless- Jen

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  6. In buying any property, weather it is houses or condos, it is really important that a home buyer has a wide knowledge or basic information about this field. And your post would really help them a lot!

    Philippine Real Estate

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  7. It is really a good reading, my opinion is that there has to be a middle or common ground that we all can find. its really useful.

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    Replies
    1. Thanks for sharing the details through your blog and clearing the confusion

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