Thursday, February 16, 2012

things to consider before investing in a condo

A search on google regarding real estate is flooded with results pointing to condominiums. They are being built left, right and centre in the major urban areas of the Philippines. From an investor's point of view, one should consider the merits and disadvantages of investing in a condo unit. I guess the first consideration would have to be the most obvious, why do you want one? Do you plan to live in it? or rent it out and derive income from it, or just use it as a store of value.

Planning to earn from it requires careful research on the prospect of rental income. It would be ideal if the tenant ends up paying for most of the mortgage plus maintenance cost. But again, this scenario requires careful planning and not many condo projects can offer this. As a store of value, I am biased against condos because of two things. First is that buildings depreciate as years go by and secondly, the supply of condo units can increase anytime thereby decreasing its price. Land would be a better store of value.

Another consideration to be made before investing in a condo is the quality of the project. Not all developers are the same; it is best to stick with those who have completed projects previously. Did they deliver on their promises? was it completed on time? are previous clients happy with their units?

Lastly, can you afford it? It is equally important that you do not overstretch your budget. Beware of salespeople telling you to dive in and sign the contract. It is not a limited opportunity. Condo units will always be available so if you aren't entirely comfortable about parting with your money, then don't. Be patient and continue to study the options available. When you find the right deal for you, then that's the time to pounce.