How to Get Started Real Estate Investing in the Philippines

Real estate can be one of the most stable and lucrative investment types available to those looking to expand their portfolios. This is especially true in markets like the Philippines where long-term economic expansion has proven valuable to homeowners of all backgrounds. Now, pandemic era challenges provide both obstacles and opportunities for those looking to purchase a new home or invest in a property that might reliably provide income.

For all those interested in expanding their wealth through property investment in the Philippines, here are some important points to consider before you get started. The Philippines will always be a market worth investing in for the people and opportunities there, but first, explore the market and its challenges.

Understand the Market

Investing in real estate in the Philippines might not be the simplest process — especially for those examining the market from abroad. In this case, added difficulties can make getting started that much harder. Meanwhile, for residents of the Philippines, COVID-19 has been particularly challenging economically.

Like most other nations around the world, the Philippines was sent into an economic recession when the pandemic struck. This ended what was a decade-long housing boom and has been reflected in the prices of homes on the archipelago. However, S&P Global Ratings anticipates a rebound, believing the Philippine gross domestic product can still grow 7.4% despite pandemic challenges.

With that in mind, prospective property owners of all types need to understand the larger economic conditions in the nation. The cost of living is less in the Philippines than in many western countries but average salaries are lower as well. Here are some of the numbers you should keep in mind, in both US dollars (USD$) and Philippine pesos (PHP):

• Average monthly salary = $288.35 USD, or 14,518.42 PHP
• Average household income = $5,237.10 USD, or 263,687.99 PHP
• Average monthly rent (small apartment) = $168.00 USD, or 8,458.80 PHP
• Average monthly rent (3-bedroom home) = $325.00 USD, or 16,363.75 PHP

It’s important to note that these are averages and do not represent the various market values you’ll find in different parts of the country. These rates will vary depending on location, but understanding these numbers is essential for building a comprehensive view of your potential investment.

Once you know the market values for the location you have in mind, it’s time to explore other challenges you might face as a new real estate investor in the Philippines.

Explore the Challenges

Any new investor will face their own particular obstacles to success. If you’re looking to purchase a property in the Philippines, you’ll need to understand the larger framework of what it will take to purchase and manage that property — whether you plan to live within the country or not.

The Philippines places certain restrictions on foreign ownership, meaning there are legal considerations to keep in mind. Meanwhile, managing your property will come with its own difficulties depending on your situation. Here’s what you need to know:

Legal Considerations

In the Philippines, foreigners cannot own land. They can, however, own buildings under certain circumstances and lease the land from native owners. Lease agreements can only be granted to a foreign national on a long-term basis, with an initial period of up to 50 years. Additionally, the Philippine Condominium Act made it possible for foreigners to own condo units so long as 60% of the building is owned by Filipinos.

These considerations are vital to keep in mind for anyone hoping to relocate to the Philippines or rent out units in the region. They mean you’ll have to form partnerships with the locals and foster mutually beneficial relationships that help the people of this developing nation thrive.

Management

Then, you’ll need to consider the management tasks associated with property investment. If you plan to live outside the Philippines but operate a rental there, you’ll need a property management company that you can count on to support your investment and protect the unit. From the beginning of your journey, consider the management tasks you’ll need help with.

For instance, older homes tend to have hidden hazards such as asbestos that could become a danger to renters. Fortunately, real estate in today’s digital age allows for many nearly fool-proof processes for examining a property even from the other side of the world. Explore these tools and methods as you make a plan to manage a real estate investment in the Philippines.

Make a Plan

Now that you have a better grasp on the Filipino real estate market and understand the challenges that come with it, you’re better prepared to make an investment plan that is all but guaranteed to benefit not just you but your future tenants and partners. Real estate investment in the Philippines can be a great way to develop networks of people and opportunities while earning a decent return on investment (ROI). However, you’ll need a thorough plan if your investment is to pay off.

Here are some additional tips for getting started with real estate investment in the Philippines:

1. Explore the differences between dense urban markets like Quezon City and rural or touristy ones like Tagaytay.
2. If you’re a foreigner, find a real estate agent that specializes in ex-pat investment and allow them to take you through the process.
3. Network with Filipino real estate professionals to improve your opportunities.
4. Diversify your investment portfolio to support thriving business in the Philippines while avoiding putting all your eggs in one real estate basket.
5. Explore Community Mortgage Programs for assistance with homeownership.

The Philippines is a beautiful country home to plenty of tourist destinations and economic opportunities. Anyone interested in investing in real estate there should first explore the local markets and understand the challenges that can come with property ownership — particularly for foreigners. Legal and management considerations abound, but these tips can help you get started down the path of greater wealth and financial freedom, regardless of your background.

Prospective investors in Filipino real estate should start here, then partner with agents and financial experts who will advocate for your success.