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Expert advice on investing in a preselling property | MyProperty.ph
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Expert advice on investing in a preselling property

by MyProperty.phPublished: June 22, 2018Updated: June 22, 2018

Pre-selling properties help boost ROI just from the appreciation of its property value. There are, however, other ways to recover the costs of such an investment.

Expert advice on investing in a pre-selling property

Getting into real estate is always a good idea, especially at a young age. Some go into it to speculate on price appreciation, such as land banking. While there are many savvy investors who have benefitted from this practice, it might not be for everybody. It has a relatively restrictive point of entry. This is coupled with a long-term waiting period and a risky promise that this investment vehicle can actually turn a profit. Fortunately, there are other real estate markets to enter into, such as pre-selling properties.

Before turnover

There are many pre-selling real estate developers who guarantee great returns to anyone who invests in their projects. With the way the Philippine real estate market has been performing, it is easy to believe this to be true. Property values continue to rise, especial in the CBD areas. There are still plenty of opportunities to capitalize on the country’s property boom in Metro Manila through its pre-selling properties. This will provide a lower entry point into the market due to its bargain rates.

To guarantee a good return on investment (ROI), keen investors should look for recently launched projects by reputable property developers. They must have a good track record of delivering their finished projects on time (or even earlier), building according to specifications, and selling at the agreed cost. Pre-selling projects during the initial stages of development sold by such firms are usually priced at around 30 to 50 percent lower than a completed unit. This will also help prospective buyers benefit from lighter payment plans. Further, it would have a wider selection of availabilities, which are usually better in terms of view, location, and size.

Ideal as an additional source of income

Alpina Heights is an ongoing condominium development in Parañaque City. It is located just a few meters from the Sucat exit and accessible via the West Service Road. This low-density condo is an ideal investment vehicle for those looking for lower priced options with bigger unit cuts. Generous portions of its land area are allocated for amenities such as a basketball court, swimming pool, jogging path, children’s playground, and swimming pool. Electricity consumption is reduced through the installation of solar panels to help augment its power requirements.

Expert advice on investing in a pre-selling property
One-bedroom unit at Alpina Heights. Photo from Alpina Heights Properties Corp.

Expert advice on investing in a pre-selling property
Two-bedroom unit at Alpina Heights. Photo from Alpina Heights Properties Corp.

Within Alpina’s five residential buildings are sleek one- and two-bedroom selections with quality finishings. Each will be turned over with a split-type air conditioning unit, CATV, telephone outlet, smoke detector, sprinkler, USB ports, and water heater outlet. The kitchen will come equipped with a granite countertop, stainless sink, induction stove and laminated finish.

After turnover

Remember that the price appreciation of a unit bought during the pre-selling stage does not stop when it is finished. It continues to do so though at a customarily slower pace of up to 10 percent a year. Since this is now a completed unit, owners can opt to rent it out for additional income. This will help recoup some of the capital spent, as well as pay off mortgage payments, if any.

At this point, there will also be expenses. This is represented by association dues, insurance, real property taxes, and loan interest. Computing for the ROI necessarily includes these factors.

Examining the figures

At Alpina Heights, each 27sqm one-bedroom preselling condo unit comes with a balcony and one toilet & bath. This is reasonably priced at around Php1.9 million. Its two bedroom “tandem” units are sized at 54sqm, built with two balconies and two toilet & baths. They go for an affordable Php3.45 million each.

For computation purposes, let’s assume that rent for a one-bedroom unit is set at Php15,000 a month, while a two-bedroom’s monthly rent is Php30,000. ROI will be computed by dividing the net income by the pre-selling price multiplied by 100. Note that its property value will improve by about 30% to 50% from its pre-selling price. There will also be an annual appreciation of its market price by about 10%. Those who will loan money to pay for their investment must also compute for interest expenses at the corresponding rates.

This is, for sure, a promising breakdown for any condo investment. Imagine if you were to put your money in a condo that can actually deliver just that due to its location, amenities, unit features, and more.

End users seeking to upgrade from a studio unit can certainly consider looking into a pre-selling condo at Alpina Heights. Similarly, OFWs and investors who are hoping to earn additional income through rentals will easily see and appreciate what this development can offer.

 

Sources: afr.com, bworldonline.com, business.inquirer.net, foreclosurephilippines.com

Main photo via Depositphotos

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