Regardless of whether you are a first-time condo buyer for the purpose of residing in it or looking forward to generating passive income by renting it out, having effective and well-planned condominium strategies should help you define a course of action for the future. From assessing the location of the complex to developing a long-term plan for an ensured return on investment and equity, here are some of the factors to look at when planning to use the condo for sale in your area as an investment vehicle.
Start with the Location
The main investment you are making when buying a condo is not actually buying the unit itself but the location of the complex. If you are buying a condo, make sure to look at the location. Condominiums with good location should increase the value or appreciate the value of the unit you purchased. To put it simply, you are buying a condo because of the location because it enables you to have a convenient life of either being near to your work or close to entertainment areas.
Apart from the convenience of being near work and entertainment establishments, looking at the other issues like flood cases and traffic within the vicinity of the complex are two other things that you must also consider. Most high-rise condominiums are located in business districts which means it is bound to experience some heavy traffic, especially during rush hours. On the other hand, a flood may not be a problem if the condominium is elevated from the roadside.
Look for Stable Financing
When looking at stabilizing your finances to buy a condo. It is advisable to look at your cash reserve and cash flow. Buying a condo in cash should help you get a better price from the condominium developers. Apart from significant discounts, you should get ahold of incentives that you might not get if you are paying in installments. If you are using cash to purchase a condo unit, make sure you have ample cash reserve for emergency purposes. Take note, condo units are harder to sell or liquidate, unlike paper assets such as stocks and mutual funds.
Conversely, if you are looking to avail loans from banks or other financing services, you have to ensure yourself of strong cash flow to have the capacity to pay for the monthly amortization. On the other hand, if you are buying a condo unit for the purpose of generating a passive income, you must consider amortization and compare it with the potential rental income. The monthly amortization should ideally be less than the potential monthly rental income. With this, you achieve a self-liquidating investment which gives you less headaches in the long run.
Be Aware of the Costs
Owning a condo does not mean you only spend on the monthly rent. You have to think about the maintenance and repairs cost as well as the associated fees. The fees are usually used for maintaining the common areas of the complex. These areas can be the gym, pool, cafeteria, and park. In addition to that, you have to take note of the expenses that come along with real estate property ownership. Since you have the entitlement to the property, you are required to pay for the annual real property taxes and insurance.
With this, you must go back to your budget planning. Consider your cash flow and cash reserves while taking into account the added costs on top of paying for rent or buying a condo. Do you have enough monthly cash to pay for the associated fees apart from paying your rent? The best approach to this is by mapping out your source of income, daily and monthly expenses, emergency money, and using what is left as a deciding factor if you can accommodate added fees.
Trust the Numbers
For those who plan to rent out their condos for passive rental income, take a look at the numbers and put yourself in the shoes of the renter. Offering the best price to potential renters should ensure your space has a minimal vacancy. The price should always include associated dues to make it look more enticing for renters. Always think ahead and think for the renter when pricing your condo unit for rent. Since renters have two choices: buying second hand or brand new condo, you must be able to propose to them the benefits of renting your condo.
Investing your money in a condo for sale in Manila, whether you wish to use it for personal purposes or rent it out to generate passive income, should deliver you equity either way. Condominium investing is indeed a good source of passive income. For instance, you will be out of town for a couple of months. It is best to have your condo placed on rent. With this, you are not allowing a day in the condo unoccupied as the bills go up. Before investing your hard-earned money in a condo, make sure you are equipped with a strategy especially a budget plan to prevent losing investment.