Tips on condo investing

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INVESTMENT is a necessary and significant step in order to achieve financial freedom. A popular housing investment option in the Philippines is the condominium or condo. According to the Merriam-Webster Dictionary, a condominium refers to individual ownership of a unit in a multiunit structure or on land owned in common. The number of condo units shows a sustained increase through the years. It is, therefore, worthwhile to take stock of various things to consider when one plans to invest in a condo.

Everything starts with the determination of the goal. One has to have a clear financial goal; and the role of the condo in the achievement of the goal must be defined. For the condo, the goal of ownership must be known. A goal related to condo investing can be for utility. With this goal, the condo serves the purpose of providing shelter and a home to an individual or family. A goal related to condo investing can be for income generation. With this goal, the condo serves as an asset that can yield good returns through rent.

Location is very important to consider in choosing a condo. Land is a finite resource so every inch of prime location makes a difference. Knowledge of thriving economic sectors can give hints on what the attractive locations are. Knowledge about key infrastructure plans of the national government and local governments in urban areas and the countryside can point to the right locations. Further research on environmental and social characteristics can help in assessing a particular location.

The developer of the condo is an important consideration. The reputation, track record, land bank and financial strength of a developer give an indication about its credibility. The future plans especially those that deal with innovation give an indication regarding the vision of the developer. Integrated living spaces, green living and townships are just some of the innovations that make the real estate market vibrant. The effectiveness of the property management company in maintaining the upkeep of the condo matters too.     

Budgeting for expenses related to condos must be taken into consideration. One type of expense will be the real estate property tax, which is paid on an annual basis. Condo investors must be cognizant that that there are discounts given for early payments. Hopefully, the taxes collected will be used for prudent development items. Another type of expense will be association dues that are used to maintain support services of the condo. Expenses on utilities, entertainment and connectivity must be also be budgeted.  

Just like any investment, there are advantages and disadvantages of investing in a condo. One advantage would be in terms of security. This comes in the form of both regular security personnel deployed in a condo and through the support of the neighbors in the condo. Another advantage will be in terms of maintenance. Aesthetic surroundings and repair of assets are common examples of maintenance support services in the condo. Amenities provide great spaces for wellness, relaxation and socialization activities.

Condo investing can yield good financial returns. One return will be in the form of price appreciation. Positive developments related to both the condo and its immediate environment can increase its asset value. Another return will be in the form of rental income. Proximity to key places like schools and offices can assure that there will be strong demand for condos that are strategically located in key areas. There are disadvantages to consider. Recurring costs, more rules and lack of privacy are some of the cons.

While ownership of a condo can be a symbol of financial progress, due diligence must be done in order to make the most out of condo investing. An informed decision can lead to desirable outcomes. From a bigger perspective, successful real estate decisions will further support a growing Philippine economy.

Genesis Kelly “Gemmy” Lontoc is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 94th RFP program this March 2022. To inquire, e-mail info@rfp.ph or text at 0917-6248110.