Investing in real estate

First of all, I am writing this post not to brag but to inspire. When somebody talks about good things that happened to them by working hard and investing on something, my husband and I are always inspired. Of course we need to think about it and really study about it before we will do the same. We’ve learnt our lesson on some things about investments, sadly, we learned it the hard way.

When my husband and I got married, we took the risk of buying a parcel of land in Cebu City. It was a risk because, we just got married, my husband is new in his job, and I, though was in a good company, was not certain if I will also be retrenched just as my other colleagues were. I think, it was a good investment because the value of the land that we purchased 11 years ago, appreciated for almost 300%.

It was 2013 or 2014, when my husband and I again decided to buy a house and lot near my home place. As we knew how tiresome it is to pay the mortgage every month, we decided to pay it in cash. We saved the money for almost two years. We were already in Singapore back then and both of us are working. It was a small house and lot, around 80 sqm.

The decision of paying it in cash was not something that I could recommend, especially if you are just earning an average salary. During that time, our savings were completely consumed. I was the one who was in charge of savings, and it was very difficult. My husband even asked me, how did I manage to save.

Mortgage is fine because the value of the property is also increasing. We’ve learned about it and so we acquire a bigger house and lot. It was a risk actually because, we bought it in a bigger subdivision and it is somehow pricey. We are about to pay this for 6 years in the bank. The value of the house and lot that we bought is now higher than the interest of the loan that we had in the bank. We somehow earned already on this property.

This house is where we are living now.

For us, it is a necessity to have a vehicle here in the Philippines because the transportation is somehow troublesome. My husband was thinking of buying a SUV (sport utility vehicle) however, I was really not into it because, firstly, it is expensive, secondly, I am not used to driving big vehicles. So, I gave a suggestion to my husband if we could just buy a sedan, then buy another small house and lot. He gave in to my suggestion and now we acquired another property. This will be payable for 15 years.

For the past, three days I was busy cleaning our first house and lot (the small one) because someone wants to rent it. My mom was living there before then, I asked my mom if she could just be with us. A lot were asking me about this property, if it is for sale or for rent. The location was good and the neighborhood is quiet. It was ideal actually.

My husband and I were excited because this is the first time we will be earning from our investments. The last house and lot, will be turned over to us, eventually, we will also lease this unit.

Advantages

• This is a good investment for retirement. After 15 years when we settled the last unit, the rentals for the two units that we had will be our allowance. This is a good source of income.
• It appreciates overtime. Unlike vehicles, real estates appreciate. Especially when you acquire the house and lot in a good and reputable developer.
• An investment that you could pass to your children. It’s good to have peace of mind knowing that your children will have something from you when you expired in this world.

Disadvantages

• Might take longer time to sell. This is not an investment where you could just sell it right away when you need money. Of course you could pawn it to the bank, however, you will be on the loosing end.
• Higher transaction cost. One should have an adequate amount of money for the transaction cost of buying real estate. The equity payable for 12 to 24 months, bank loan fees, insurance, etc.

Tips

If you are wondering what is happening now in the land that we bought in Cebu, the answer is nothing. Please remember that a land without a building is not profitable. It will certainly appreciate but you will earn while you are paying the mortgage.

If you want to invest also in real estate, do a lot of research. Study the location, know the developer, research on the best bank to mortgage. Do not be excited.. Take time to study and think about it.

We are still planning on what to do in this property. We need a lot of savings still.

Please do not get me wrong. This is not a walk in the park journey. There are a lot of sacrifices just to acquire the properties. We are just mindful of our future.