Investment-wise, real estate is fairly easy to get into. If you’re not that familiar with stocks, you can buy properties such as affordable homes, condo units, and lots instead. It’s up to you whether you develop, lease, or re-sell your property investment later on. One of the challenging parts, though, is that you have to look at the various options available for you. Your choices are often classified into preselling, ready for occupancy (RFO), and lot only properties.
Selecting a property is tricky because each type has its fair share of advantages and accompanying costs. Some offer more short-term benefits while others excel for being better in the long run. However, don’t just weigh on the different pros and cons of each. You should also take into account the main use of this investment.
The location and housing type are your major buying considerations if you wish to relocate soon. In case you’re shopping mainly for investment, focus more on the status of the property: is it already developed, being constructed, or still just lot? If you’re unsure which one to purchase, take a look at the unique advantages of preselling, RFO, and lot only properties.
Why Buy Preselling Properties
These days, you can preorder an upcoming phone model or music album. This saves you from the hassle of competing with other buyers during the first day of sale. You can also do a similar thing with real estate properties. Instead of preordering though, your option is to purchase a preselling property.
Preselling describes a property that’s yet to be completed, but already being sold. Its best examples are houses and condominium units that are still under construction. An advantage to buyers when buying preselling properties is that they get first-hand in picking the house or unit’s location in a subdivision or building.
you’re searching for an affordable
house and lot for sale in the Philippines, preselling
should be among your top choices. These properties are usually offered at lower
prices than their finished counterparts. Aside from discounts, more flexible
payment schemes are also granted to preselling buyers. These payment methods
may not require interest most of the time as stated in a Filipino Peso’s
One underrated advantage of buying a preselling property is that you can ask for adjustments. This spares you from renovation efforts and costs later on. However, keep in mind that not all developers and contractors will approve all your requests for modifications as they still have plans and budget to stick with. To be safe, check with your developer if they can accommodate adjustment requests such as different paint colors and additional power outlets. You may have to provide the needed materials though.
As the property is still under construction, you or your hired inspector can discover potential problems about your future home. Upon discovery, the contractor can have those fixed before the finishing touches. You may have to ask permission as some developers don’t let you visit the construction site.
Preselling properties are ideal for buyers who don’t intend to move in anytime soon, but may do so after a few years. Employees who are about to retire form part of the market for these properties. Couples who are still in the planning stage for building their families can also take advantage of these.
As an investment, preselling suits those who can wait for months or years before they lease it out. If you get a property in a coveted location, you can ask for a higher rental fee than the standard. This makes the waiting period worthwhile.
Why Buy Ready for Occupancy Properties
One of the things that make real estate a great investment is that there’s always a demand for a place to stay, store, or make business. It still depends on location, though. Even so, someone out there yearns to move out soon. This could be you.
Rental properties serve as temporary solutions. Rent-to-own ones are better. If you don’t want to be a tenant, you can buy a property that’s ready for occupancy.
The best part of getting an RFO is that you can move in as soon as the paperwork is done. It could be within weeks. There’s no need for you to wait for the construction to get completed.
If you want to recover some of your expenses as soon as possible, you can put your RFO property on lease. You can also do the same with preselling or lot-only. You may demand a payment in advance of the leasing. However, there isn’t a fat chance of having a tenant like that when it comes to those properties, unless the location is sought-after. With an RFO though, you have a better chance of finding a tenant sooner.
Overall, the upfront costs of getting an RFO are higher than those of preselling and lot-only. However, this property may still be deemed as an affordable house and lot in the Philippines as you don’t need additional services such as construction, installation, and inspection. Remember the time you’ll save as well. If you’re renting now, you can cut your expenses by buying and RFO and moving into it as soon as possible.
Thanks to housing loans, you’re a step closer to owning a house and at the same time investing in real estate. If you’re planning to borrow, you can benefit by choosing an RFO as this gives you a higher chance of securing a loan. As most of these properties are from developers, you can also expect assistance in your loan application. The same goes for preselling.
With a finished house, you won’t worry about the developer running away or the construction not getting completed. By the time the property is on the market, issues regarding the ownership, tax, and development of the property are likely resolved.
If you don’t have
a specific house design in mind, RFO properties are perfect for you. The design
is already finalized so you don’t have to browse for ideas and make decisions
for these. You also don’t need to hire a contractor or assemble a team to put
your vision into an actual home. Apart
from the paperwork involved in the sale, you don’t have to get building permits
and other documentary requirements for developing a property.
While you don’t have control over the design and number of rooms in an RFO, you can still incorporate your creative ideas as you fill the interior. You can re-coat the walls with another paint color or pay an artist to make a mural. You can mix and match furniture pieces. You can feature your collections among other things.
RFO properties fit individuals or families who want to become independent soon. These are also recommended to those who long to get away from an unsafe or toxic community. With such properties, you don’t have to prolong your agony by staying in a terrible neighborhood. A stable source of income is a basic requirement though.
Foreigners who want to settle down here in the country may opt for RFO condo units. It’s not advisable for them to get a house and lot though. In its guide on how to buy property in the Philippines, Wise.com points out how difficult it is to buy land in the country.
Before buying an RFO though, it’s highly recommended to make multiple visits first. My Financial Coach even advises to visit at different times. Doing so helps you find out possible noise at certain hours.
Why Buy Lot Only Properties
Just because you have the means doesn’t mean you have to choose a house and lot for sale over other options. If you won’t live there right away or if you have yet to find tenants, having that property may present some disadvantages. One of which is needing someone to look after the home. In this case, the property is more like a burden rather than an investment.
Instead of preselling or RFOs, consider lot-only properties. Of the three choices, the last one is the most flexible. You can transform your lot into a residential or commercial property except when the lot is in a planned subdivision. With just a lot, you don’t have to look for a caretaker. You may simply visit your property when you’re free. In case you’re based overseas, you can ask a relative to check on your lot and have it cleaned.
Having a lot-only property also grants you freedom when it comes to the design of your home. You can even add a small pool or outdoor shed. There’s no risk for you to deal with a house whose design is bound to be less trendy in the coming years. For preselling or RFO buyers, you can avoid a tacky house design by requesting for the blueprint, 3D model and a house tour before deciding to buy.
Unless your lot isn’t in a gated community, you may consider setting up a garden while you’re still not keen on constructing a building therein. Avoid planting big trees, though, as it will be hard to remove them before the construction.
Without a building in place, it’s obvious that a lot-only property is cheaper than a property with a house or any other establishment. Future construction means costs, but you can opt to earn and save for the meantime. You can also try to generate income by putting your property on lease, preferably for commercial purposes.
If you intend to take a loan and use your property as a collateral, having a lot-only property is the most ideal. If you’re unable to pay for the loan, you’ll only lose the lot. It won’t be as bad as losing both the house and lot as in the case with other property types.
Lot-only properties suit OFWs who intend to retire in the country. They can opt to pay for and start the construction once they return. They don’t have to worry about inspection and maintenance as in the case with purchasing RFOs.
Even soon-to-be-retirees here in the country can take advantage of lot only properties. As much as possible though, they should already prepare the requirements for their retirement benefits before their purchase. This way, they can deal with fewer hassles when they process for their lump sum which they can use to build the house in their lots afterwards. Compared to their younger counterparts, they have a lower chance of getting a housing loan.
Young employees and entrepreneurs can also tap the lot only properties and put them on lease for some years. If it’s not in a subdivision, you may consider renting the lot for commercial purpose. This tends to pay better and you might not need to cover the expenses for the construction. You can even put on the leasing agreement that you can decide what to do with the building after the rental phase is over.
If you have a sizable lot, why don’t you develop it into affordable homes that you can rent out? You can have a simple townhouse or apartment for instance.
Meanwhile, the beauty of a lot-only property in a subdivision is that there are already predetermined house designs that you can just follow later on. More importantly, you can entrust the maintenance to the developer. You can also expect that there’s no unpleasant view around your home later on.
All in all, preselling, RFO, and lot-only properties present opportunities for you to acquire affordable housing and a potential source of income. If you’re going to lease, make sure you factor in the demand before determining the rate for the rent. If you’re planning to sell it after some years, look for ways on how to increase the value of your property.
To further help you in your selection, check out Lessandra’s project listings and house listings. Feel free to reach us out to know more about our preselling, RFOs, and lot-only offers.
For more articles on real estate, investment, and how to buy house and lot in the Philippines, visit Lessandra Blogs on Home Investments.