Monday, December 26, 2011

Buying Real Property For Investment

Generally, or most of the time, people buy a real property because they wanted to move from renting to owning their house. Instead of collecting rental receipts without any house at the end of, say, 5 or 20 years, buying a house through a housing program can make you pay for your house in an installment basis, just like you are renting, but in the end you get the property to yourself.

One of the reasons of a real property buyer, though, is investment. He or she does not necessarily need to live within the house but he or she sees the opportunity of buying another one so that later the property can be sold at a higher price hoping to earn some out of the cash that was paid and the time that will pass. How much interest one can earn after five or ten years will depend on the market value at the time it will be sold.

The general idea is, the land you buy appreciates in value while the construction on it depreciates. Even without anyone using the house, it also has its wear-and-tear, thus, it devaluates as time goes by, whereas the land, regardless of what you do with it, like build a house on it, plant a garden, or simply let it alone as it is, appreciates its value over time. When the time comes that accessibility becomes easier to reach that land, the more the value appreciates.

There used to be hectares of land which used to be valued at 600/sqm. After a decade, when an exit to the expressway was built, it shot up to 25000/sqm. There is another place where a subdivision developer was the reason to pave the way to an exit to the expressway, the land started at 4000/sqm. After 5 years, it is already at 9000/sqm.

So if you want to buy land for investment, choose one that is not yet developed but has the possibility to be later.

12 comments:

Morion said...

nakarelate aq sa post na to" hopefully next year makalipat n rin kmi s nakuha qng bhay s laguna... more dan 3 yers din kmi nagrerent ,,, true na mas mganda n sarili na habang tumatagal lumalaki halaga lalo n ng lot,,,

tatess said...

buying property insteasd of renting is really advisable.Laguna is a good choice to buy a property.

Tungaw Ako said...

tagal ko na ring gusto makakuha ng sariling lupa't bahay,hirap ng nagrerent, kaso kapag sa Laguna naman, ang layo na sa parents ko..

sarj said...

true.hirap magrent..buti kung rent to own right? I saw a good place in Rizal. mura pa :)

Jonathan said...

Real estate is actually very risky. Look into other options such as stocks, bonds, mutual funds, equity funds, and small business opportunities.

You can do a lot of other things that are a lot less risky and a lot more liquid in case you need the money for emergency. Just look into your options first.

Gil Camporazo said...

Acquiring a house and lot of their own is a basic requirement of every couple, next to life insurance and even property. There's no question about this if they're practical and looking after for the welfare for their children in the future. I just learn later to get a lot of my own or for my family when I've not reached an old age. Earlier is better!

From RandomThoughts!

Clint said...

I'm quite unsure but I think it's the ad that I'm seeing outside my apartment in Makati. Nice, I really wanted to have my own.

Shirgie said...

thanks for giving us the idea on how to buy real estate properties

Mark Madrona said...

At 21, wala pa po akong capacity to buy my own house and lot right now, although it's one of my long term goals for the future. :-)

C5 said...

@Morion, saan sa Laguna?
@tatess, yes, Laguna is one of the best places which is accessible to the metro.
@Tungaw Ako, saan ang parents mo? Bakit di mo maiwan?
@sarj, di ba binabaha sa Rizal?
@Jonathan, stocks, bonds and mutual funds are riskier than lands as they can depreciate.
@Gil Camporazo, at least you still decided even at an old age.
@Clint, what's the ad about?
@Shirgie, you're welcome.
@Mark Madrona, agewise, you have the capacity and legality to buy. How about the finances?

Sining Factory said...

Yes. We're thinking to buy one in Sta Rosa. Malapit sa Tagaytay. But you need to have kotse rin so that you can visit the metro anytime. Thanks for the info. :)

kiko :(|) said...

this is a great post, very informative, still my house in DasmariƱas Cavite is being rented and it covers our monthly rent in Quezon City as well as the Electricity bill.

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