How to Know if Buying a Condo Is a Good Investment
- December 9, 2019
- by John Yu
Is buying a condo a good investment? Here’s a quick run down to guide you on this important milestone in your life.
- Pick a good location
- Find a property with flexible payment options
- Keep in mind that maintenance is a shared responsibility
- Simulate the property’s rental income
- Assess your financial capability and take the first step
Real estate investment is one of the best ways to generate wealth, but it can also be a challenging one if you don’t know where to start or if you’re making the best investment decisions that will impact your future.
It is a given that condominium living is the most practical solution nowadays to beat traffic and cut the travel time to your workplace. There will surely be a huge demand for both end-use and as an investment in rental income.
But beyond that, what other factors make condos a good investment? Continue reading if you want to find out if buying a condo is a good investment for you.
Pick a good location
If it cannot be stated enough, location should be one of the first things you consider if you’re planning on investing in any form of real estate, especially if it is for the purpose of medium to long-term residence.
It matters because your job, your child’s education, your travel and commute, and many other things depend on where your condo is situated. If you choose to live in a condo that is strategically located where your work or school is nearby, then you’ll come to work rested and be more productive.
The location also dictates the price and appreciation of the property itself, so even from an economical perspective, you should always make a good location the top priority. A licensed and trusted real estate broker should be your biggest ally in finding prime locations for a condominium property, so consult with one before making the decision.
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Find a property with flexible payment options
You may have seen the sudden growth of condominium developments in the city from the major developers like Ayala Land, Rockwell Land, and Shang Properties. These were brought about by the flexible payment terms that they are offering to their buyers at pre-selling prices which is light on the pocket for Millenials and OFWs.
When deciding on a particular developer, check their track record and visit their completed developments to see the quality of construction. Ask current homeowners or residents for feedback from the development or developer that you are considering purchasing from.
However, as with other residential developments, there are fees that will have to be considered when living in a condominium such as association and maintenance fees. Be sure to ask your broker about these in advance so you won’t be surprised by the maintenance fees and other fees when the unit is ready for turnover.
Keep in mind that maintenance is a shared responsibility
A condominium investment can be great for those who are averse to doing maintenance work since there is a condominium association in place that is in charge of maintaining the common areas, amenities, and security. Since this is a shared cost among all condominium unit owners and collected on a monthly or quarterly basis, you won’t have to worry about things outside the four walls of your unit.
Simulate the property’s rental income
For those who are looking to invest in real estate for passive income, a condo can be the right investment as this gives you a steady cash flow that can help you pay for the loan amortization or your living expenses.
A condo in a prime location like Makati, BGC, Greenhills in San Juan, or New Manila can be a really great way to earn passive income, given the high demand for this type of rental property. A standard rental yield of 3% to as high as 10% would be a good gauge since most interest rates from the bank nowadays would give you around 1-2% per year.
Before you start renting out a condo unit, it is best that you consult expert professional real estate brokers on the right pricing and target market for your property. They will also guide you with the policies of the Condominium Association, prepare the documents or contracts and help you make the rental process as smooth as possible.
Assess your financial capability
Investing in a condo can be a rewarding experience, but a major point of consideration is your financial capability. A condo can be a good investment, but if it will not make sense for you financially, then it will be a concern in the future.
One thing to consider is your purpose for buying a condo. Is it for your own use or for rental income? Would this be an asset and would the appreciation value of the property be enough to generate profits if you would need to liquidate the property in the coming years? Or will it be a liability and be difficult to resell?
This is where you would need to work with a licensed real estate broker and discuss these questions in detail with him or her because they can provide important insights or tips. They know the market and their advice would be valuable and can save you money and time.
Key Takeaway – Ready to Take the Plunge?
By considering the important factors for investing in a condo, you will need to make an important decision today. Weigh the benefits and learn as much as you can about property investing.
One thing is certain, everyone needs a roof over their heads every night, and knowing what type of investment that is suitable for you is key. That being said, if you want to jumpstart your real estate property investment, be sure to check out our condo listings by clicking the button below.