Everybody knows that real estate is one of the safest and most stable investments out there. Unlike other securities, property values have little to no chance of falling to zero levels or beyond. Until the world can figure out a way to create dwellings that float in the air or survive under the sea, land will remain a precious and limited commodity. The better question that a potential business-minded homebuyer should ask is: what’s the best type of property for me to purchase that will maximize my investment?
The Incredible Shrinking Earth
Investment property is a real estate asset that aims to generate wealth for the owner. In contrast, residential properties are what people buy to serve as their primary home. For this article, we’ll focus on homebuyers who are looking to expand their portfolios by purchasing real estate. But, how does one generate income through property investment? First, let’s talk about demand.
Real Estate 101 will tell you that land appreciates over time. So holding on to a piece of property long enough (which can mean a generation or more) can ensure that its value will rise. The biggest takeaway in real estate investing is that people always need somewhere to live. Only about 20% of the Earth’s total land mass is described as inhabited or used as croplands. Unfortunately, today’s 8 billion people will undoubtedly hit 10 billion by 2057, which means the world will require using even more land for food and shelter.
Of course, simply holding on to just about any piece of land won’t become the best investment automatically. Some areas develop faster and better than others, so most homebuyers will naturally gravitate where they are. Other external factors such as economics, technology, and even the environment can all influence how much your property will be worth over time.
How Do You Earn Money from Property Investments?
Selling a property after it has managed to accumulate value over time is one great way to make money. The formula is simple: buy property at a popular location at pre-selling rates. Sell the same property when it launches and retails for full price. Or, wait for a few more years when prices appreciate some more due to demand.
Additionally, you can also rent out your property for a set period. You earn income from monthly rentals, which you can use to either pay for your monthly mortgage, reinvest in other businesses, or save. This method allows you to make money without having to hand over your initial investment. For bigger properties or those that need further development, you can enter into a long-term lease with a tenant. This usually covers a period of ten years and above, which is more than enough time for a tenant to develop the property and turn a profit.
What Property Type Makes The Best Investment?
All property types, even those not for residential use, are suitable for investment. Let’s look at the common property types that can turn into potential revenue generators for the wise investor.
This is the most basic type of property you can invest in. Homebuyers are able to buy a residence and, when it becomes too small for their growing family, flip it for a newer, bigger one. Homeowners may also study the market and buy a number of pre-selling homes for rent or outright sale. Residential property types consist of the following:
House and Lot/Lot Only
The best part about house and lot units is they allow you to own residential land. They also offer loads more space compared to condominiums. Plus, you have more freedom to apply your personality to your property. As a homeowner, you’re free to make whatever changes or upgrades you want in your property. However, note that some subdivisions will require owners to conform to a specific design theme on the exterior.
As an investment, you can sell your finished home outright or rent it out. Lot-only purchases can cost less, but they will also sell for less compared to finished houses. As long as you recoup your original investment and stand to earn a profit, a house and lot investment is a good way to start your property business.
Townhouses are identical to house and lot units but with some notable differences. The most glaring one is having a pre-designed home built to the developer’s specifications. This isn’t necessarily a bad thing, as many of today’s townhouses feature modern amenities. Due to the smaller lot sizes, townhouses are often cheaper than house and lot packages. However, most townhouses are located in urban areas, so the savings might be offset by the high property prices due to location.
Similar to house and lot units, you can buy a townhouse pre-selling or sell when property rates in the area go up. Or, you can rent out your home to earn monthly passive income.
Condominiums are generally the least expensive compared to house & lot units and townhomes. That’s because you’ll be owning a residence within a building along with other households. Common areas and amenities are jointly owned by unit owners.
Condos are usually found in high-density urban areas, so they hold a premium price. They’re also highly sought by transient individuals looking for a convenient place to stay in the city. For generating rental income, having a condominium unit in a high-traffic location can be a great opportunity. Meanwhile, buying units at pre-selling rates and flipping them off after launch is also contingent on location and market demand.
Aside from residential units, you can also purchase commercial properties for rent and sale later on. This includes whole buildings, commercial lots, agricultural lands, idle factories, warehouses, and resort areas. You can generate bigger incomes in these properties, and can also enter long-term leases involving decades or more.
Office buildings and units are a popular income earner for many property investors. It’s also location-specific, so if you get a chance to grab a unit for cheap at a burgeoning business district, expect some good business to go your way. Investing in commercial buildings can multiply that income exponentially. You can rent out to a number of businesses and have the ground floor leased out for commercial ventures like banks, fast food outlets, or convenience stores.
Meanwhile, commercial lots are popular everywhere as long as the location is strategic. Rural commercial areas often have direct access to a national highway, have ample supply of electricity and water (preferably internet as well), and are within or near a city’s borders. Multinational corporations would often look for these strategic commercial lots for lease as gasoline stations, food outlets, warehouses, or even commercial centers.
A note on leasing commercial properties: Many tenants wouldn’t mind leasing empty lots. Similarly, they usually undertake the needed renovations for office units or commercial ventures. Keeping your properties bare can be a good idea to attract different client types. You’ll also save lots on construction costs.
Mixed-use properties are exactly that: commercial ventures at the bottom/front and residential units upstairs or inside. You can rent out a building to commercial tenants on the ground floor and households on the residential floors. It’s a good investment to make considering you double your rent income. If the location proves successful, you’ll most likely find developers bidding for your property if demand continues to rise.
Simply looking at the property type won’t be enough to make the best investment, though. You should also be on the lookout for a stellar location that is on the verge of breaking out. You’ll also need to constantly update yourself with real estate developments in order to gauge the market’s current appetite.
The Best Areas to Make Your Next Best Investment
So, which cities and areas in the Philippines are great places to make your next best investment? For this shortlist, we’ll remove the usual suspects such as established business districts in Makati, Ortigas, and Bonifacio Global City due to their already high property prices. We’re not telling you to avoid investing in these areas, which still have a lot of available properties. However, buying properties in these locations will require not just lots of investment funds, but also a ton of patience.
Northwin Global City, Bulacan
As we all know, things are getting more industrialized up North. Metro Manila’s rail system is expanding, and it will soon include the provinces of Bulacan and Pampanga. In addition, an airport complex is being built between Metro Manila and Clark, Pampanga. This means that economic activity will get even more frenzied in Bulacan in the coming years. Megaworld’s Northwin Global City is set to address this surge of demand by constructing a new business district in Bulacan. Northwin Global City hopes to become the latest business hub in the Philippines. This means that investors can have their pick on lots of residential, commercial, and mixed-use properties at pre-selling rates.
Bridgetowne, Pasig City
Quezon City and Pasig share a border in Eastern Metro Manila that is proving to be irresistible for development. This is why Robinsons Land Corporation (RLC) decided to turn their former industrial lands into a sprawling new township that covers both cities. Named Bridgetowne, this community promises to feature more nature-based designs and utilize more green energy to create an eco-friendly residential and commercial district. A few office buildings are already in business, while several residential condominiums are in preselling mode.
North Triangle, Quezon City
Seeking to free the city from traffic, Metro Manila has embarked on a serious construction spree aimed at expanding railway transport within and outside the metropolis. Heavy construction in Quezon City’s North Triangle Area will soon yield an interconnected LRT and MRT system, a new railway line going to Bulacan, and a subway system going South. While plenty of residential options have opened up over the years, the area is still working on new residential developments. As the new rail lines are expected to be fully operational by 2027 or 2028, now’s a good time to look into investments in the North Triangle area.
Ohmyhome Helps You Figure Out Your Next Best Investment
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