Real Estate Property Investment Tips

You’ve worked hard for that money. You invested a lot of your effort into it. And now you chose real estate properties as your choice of investment.

Before you finalize your decision to buy that real estate that you’re eyeing, let me share to you some tips on how to get that property. I’ve been involved in a company before where we buy distressed assets and before we invest, we take our time to really have our detailed due diligence on it especially if it involves a high tag price. These real estate investment tips are applicable here in the Philippines. I just don’t know how it goes in other countries but generally, it should be the same.

Location – This is the top most important aspect of a real estate property. Where is it located? Is it in a city? Obviously, a lot in urban areas commands a high price than a lot in rural areas. Consider also the neighborhood and your main use of it. Is it for business purposes? Is it for residential purposes? Or do you plan to have it rented for capital gains?

Land Classification – Lots can be classified as commercial, residential, industrial and agricultural. Commercial lots are ideal for retail businesses since these lots have high foot traffic that can generate sales to your business. Residential lots are for domiciliary purposes which means a choice of your dwelling place. Industrial lots are ideal for businesses with factories and warehouses. And last but not the least, agricultural lots are generally raw lands used for cultivating plants and crops. Generally, commercial lots command the highest price among these classification of lots. This can generally be seen in the tax declaration of the property.

Cashflow – Is the property generating cashflow? Is there a tenant on it? How much is the tenant paying for it? And until when will be the lease period? You must get the lease agreement to know this. A very good choice of real estate investment can be a “self-liquidating asset” that generates passive income and will build your assets. Consider this scenario: Buy a strategically located real estate property where you can easily have instant tenants. Don’t pay the whole amount yet. Just pay the down payment and let your tenant’s monthly rental income pay for the rest of the amortizations. Isn’t it great?

Land Title – A land title is a legal document that entitles ownership. Check with the register of deeds and get a certified true copy of the land title. Who is the registered owner? Does the seller have legal rights in selling it? How many square meters is it? You should also check the encumbrances.

Encumbrances – Encumbrances refers to the limitations of a property. Does it have easement? An easement limits the occupiable space of the property. Maybe a portion of the property is dedicated say for example, a canal or a road. Does it have adverse claims? Adverse claims are legal issues attached to the property. Are there any third parties claiming rights to the property? Was it mortgaged to a bank? If so, then the mortgage should be cancelled. If not, then the bank may foreclose it. Was it subject for a writ of attachment? A writ of attachment is a court order that attaches or seizes a property in favor of a creditor. This what happens if the original owner had a loan, say from a bank or from any person, and left it unpaid. The creditor, in order to collect debts, will then conduct a property search of that debtor and seizes it in the form of a writ.

Tax Declaration – Of course, a property has a tax and a tax declaration or a tax assessment is a legal document for it. This is where you will find how much tax should you pay by owning this real estate property. It is also where you can find how your property was classified by the assessment office. Look for properties with updated tax payments. A property with taxes left unpaid will then be a subject for auction to the public by the local government. Get a certified true copy of the tax declaration and tax clearance. A tax payment tip: Annual tax due payments have huge discounts than quarterly payments.

Other Issues – Other issues concerning your purchase of that property may be: (a) flood prone area. No one wants a property that can easily becomes flooded when rainy season comes. (b) illegal tenants. Aside from the legal expenses that you will incur to eject those illegal encroachers, they may also steal anything that has market value from your property. (c) right of way. Be sure to buy a property with a road right of way. A right of way gives the public the permission to travel over it. No one wants a property where your visitors maybe sued for illegal trespassing just by visiting you.

Appraisal Report – If you are not really sure how much will you pay for the property, then get an appraisal report. Hire a property appraisal company who will then assess the market value of the property.

So the next time you’re thinking of investing in that property you’re eyeing for, consider these tips so that you’ll get the best deals for the money you’ve worked hard.

There are three types of real estate investment. Aside from buying a property, you could also investment in real estate through real estate investment trust (REITs) and real estate mutual funds.

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Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

21 responses on “Real Estate Property Investment Tips

  1. Just to let you know that I admire your content, as I seldom find a Filipino blogger that tackles this kind of topic.

    By the way, I saw you at DTM forum and welcomed you there.

    Good luck!

  2. This is a very comprehensive list. I would like to add that you should also check the condition of the property well. For example, water stains could indicate a major repair that could cost a lot. A recent foreclosed townhouse I inspected had water stains that turned out to be a major repair that would have cost me at least half a million pesos. Thank God my contractor spotted this and I didn’t buy the property, though it seemed like a bargain.

  3. @Angel Cuala: Thanks.

    @ph_investor: Yup, a personal property inspection should also be included in the list. Although, this might be already included in the appraisal report, however, some minute details might be left unnoticed by the appraiser.

  4. Is there a way to determine the fairest value of a foreclosed property? If the buyer considers the loan value of the property of the bank’s appraised value, their selling price could be at the 40%-up discount.

  5. Hi John, first of all you should check if the foreclosed property is still subject for redemption. In my experience, the internal appraisal of the bank is lower than most of the external appraisers. This is because they are conservative. If the property was bought thru a bank loan, then the lower the bank’s internal appraisal, the lower will be it’s loan value. Usually, they give 70-80% loan value based on their internal appraisal. They could be selling it at 20-30% discount but take note also that the property may need some major renovation which is why they are giving it at that discount. In my experience, banks are shrewd and clever. They won’t give it at a loss unless they are experiencing a major liquidity issue on their balance sheets.

  6. Banks maybe shrewed and clever, but as investors, we should be more shrewed and more clever. Don’t settle for the discount given by banks. Dictate your discount by making offers at 60% to 50% off their selling price. You’ll be surprised, try it!

  7. thanks Admin for your response… I have another question about foreclosed properties: before foreclosure of collaterals to bank loans, the Register of Deeds normally do an auction sale somewhere. How do I participate in the auction sale? Is it true that a commission rate is paid to the auction officer for the property before it is awarded to lucky bidder? Thanks again.

  8. Hi John, no. The foreclosure of properties is done by the bank and not by the register of deeds if it’s a BANK LOAN since the property was mortgaged to the bank. The Municipal Hall does not forecloses property but instead it would be subject for auction just in case the property taxes were unpaid for several years. For the foreclosure of properties done by the bank, yes, a commission will be paid to the auction officer depending on the winning bid amount.

  9. @John, you might be referring to the first auction before a property becomes a bank acquired property. I’m not exactly sure what they call this auction though. What I do know is that if there are no other bids higher than the first bid set by the bank, the property becomes a bank acquired asset and these are the properties they auction later. Notices for these types of foreclosure auctions are normally posted at the registry of deeds and at the RTC’s usually beside the city halls. I got this info from a lawyer who used to handle foreclosure proceedings for a certain bank.

  10. You’re correct Jay. The Sheriff handles the foreclosure proceedings. He will gather as much bids as possible for the auction. Then the winning bidder will receive a “Certificate of Sale” as a proof that he indeed won the bid. I’ve been involved in a foreclosure proceeding before when I was tasked to foreclose chattels.

  11. hi, i’m seriously considering purchasing a foreclosed residential lot somewhere in pasig or mandaluyong. how do i go about this? should i start in banks? or the city halls? thanks for your inputs

    • Hi Marj, yes you should start to go to banks to get the latest copy of foreclosed properties. Yes, you’re right, you can also go to the city hall as they regularly conduct an auction for those properties with delinquent tax payments. I can refer you to my friend, Jay Castillo as he is the expert when it comes to foreclosed properties. He is the owner of

  12. Hi, I read the books of Robert Kiyosaki andd for those who had read this especially in his cashflow game. Ask ko lng po kung yung style nya ay applicable sa sa atin? lalo na yung Downpayment tapos after a year pa young full payment. Or sana mapaliwanagan nyo ako dito.thanks

  13. I’m planning to buy a H&L pero i-loan ko sa bank payable in 15-20 years.
    1.) Ano ba ang dapat na makukuha ko after ako makapag-down sa owner/developer?
    2.) Ibibigay na ba agad yung titulo sa akin or sa banko?
    3.) Or ano ang magiging hawak ko na document na nagsasabing sa akin ang property though hindi pa siya talaga sa akin?
    4.) Nakapangalan na ba agad yung titulo sa akin or sa banko?
    Thanks for you answers.

    • Hi First! Here are the answers to your questions:

      1. You can get the receipt of your downpayment and the Contract to Sell from the developer.
      2. The title of the land will be under the possession of the bank since the bank will pay it to the developer.
      3. Contract to Sell from the developer and Real Estate Mortgage (REM) with the bank.
      4. No, it’s under the bank’s name. It will only be transferred to your name once you are fully paid.

  14. Hi! Tyrone,

    My mother wants to sell the agricultural lots that we inherited from my father, pero declaration lang ang documents na meron kami. How can we get a land title for it and what’s the procedure on selling it? How to get the properties’ value?

    Appreciate your reply.

    • Hi MC,

      I’m sorry but I don’t know exactly how do you get a land title for it. Better consult a lawyer for it. I advise that you have it titled first before you sell it as tax declaration is not solid evidence of proof of ownership.

      As for the properties’ value, you can have it appraised by third party appraisers. You could also look at it’s assessed value in the tax declaration. But it would be sure deal if you could have it appraised.

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