All Forum Posts by: Ava G.

Your 10 units are condominiums? Are you renting them out?

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $70,000

Cash invested: $30,000

First rental property I bought was a condominium from a good property developer in the Philippines. Still bought despite all the red flags (yup, from BP members!). Nothing wrong with the property/developer itself. Just that the Philippines has very high loan interest rates (due to high inflation) and the monthly rentals are not enough to cover the mortgage + assoc. dues. The property is not cash flowing although it seems to be appreciating in value. Last resort is to sell and start over.

What made you interested in investing in this type of deal?

There are more people renting condos than landed houses due to poor commuting conditions. Expats also cannot buy their own homes and are likely to rent condos. It's also in a good location.

How did you finance this deal?

Through bank financing at 80% of the purchase price.

Lessons learned? Challenges?

1. I underestimated the 'misc.' costs that have to come out of my own pocket. About $11,000 was used, not for the actual price of the property, but for renovation, furniture, closing costs, holding fees, etc. If I don't make it cash flow soon, my expenses will just balloon over time.
2. I didn't research the rental rates properly and had a too optimistic estimate. As per BP, a good rental rate is 1-2% of the purchase price. However, my unit can only be rented for 0.6% or lower.
3. Shouldn't over-renovate.

I did and it did not go too well. But I'm looking to invest again and try to do things differently. 

Just an update on this. I was able to rent it out for the meantime for a measly $382 (I was off by more than 50% of how much I originally intended). I'm still bleeding by holding on to this property. However, it seems to have appreciated in value but still waiting for the property management to tell me by how much.

Anyway, has anyone experienced investing in a condominium in the Philippines that actually cash flows? I can't seem to find any that would rent for 1-2% of the purchase price. If I buy landed property, I may get a better yield but I am not sure how easy it is to rent out. The traffic there is horrible and more and more people are finding residency within the CBD areas and that means condos.

Hmm, in our country, it's quite common to provide TV (and is expected). Maybe instead of TV, let's just say any appliance that is brand new and they want a better one, how do you handle a request?

I just got a request from the property manager that the tenant is asking for a 4K quality/resolution TV. The TV in the unit is brand new (32" led tech tv). This is my first ever tenant and am not sure what is reasonable or not. The tenant is also quite new also (barely 2 months).

How should one handle such a request?

I was asking in another post that I'm planning to do my first house purchase for a flip. But let's say in doing ARV, there're only brand new houses as a point of comparison for the market value of the property I am looking at. I don't live in the US so we don't have the websites / tools ya'll use to do market research (e.g. to know whether a property was sold brand new or rehabbed). All we have are local listings of the selling price of brand new properties (mostly).

For example, I am looking at this property:

Selling Price: $22,193

Floor size: 100 sqm

Lot size: 70 sqm

No. of Bedrooms: 2

Toilet&Bath: 1

Car Garage: 1

Now, in the same area (about 3km radius), 2-bedroom SFHs are selling for (F - floor size, L - lot size in sqm):

F: 90, L: 100 - $42,537

F: 94, L: 91 - $55,537

F: 72, L: 120 - $33,290

F: 80, L: 80 - $51,000

F: 84, L: 63 - $48,000

However, these are brand new. Is there a better way to roughly calculate the ARV based from these numbers? Like, should I lower the ARV by e.g. 10% as compared to a new house? Let's say, on average, a new home of the same type is selling for $45,000 multiply it by 10%, means I should deduct $4,500 to get to my final ARV.

Any thoughts?

Why is it a problem if floor size is bigger than lot size as with the case of a 2-story building?

As a background, I don't live in the USA and my market is the Philippines but just the same, I just like to know if this is something I can look further into based from what I learned from BP and other real estate advice I've read so far. Costs are converted to dollars.

Selling Price: $22,193 (foreclosed property)

Floor size: 100 sqm

Lot size: 70 sqm

No. of Bedrooms: 2

Toilet&Bath: 1

Car Garage: 1

I cannot post the property photo but I can somehow describe it. The interior doesn't look like it has major damages as in the walls are intact, a bit dirty, so needs some repainting. The living room & kitchen floors are using white tiles and the room floors are vinyl. The bathroom, that one I think needs some major makeover and also the kitchen area (cupboards look old and unsightly) so if I'd do repairs, most of the expenses would go into these sections. Location-wise is quite good too. It's near commercial areas, schools, and restaurants.

Now to assess its ARV, we don't have websites like Zillow or MLS to check how much properties in the area have been sold (and whether they're brand new or remodeled). But looking at 2 bedroom properties for sale within the same area (as in about roughly 3km radius), what I see are these numbers (F - floor size, L - lot size):

F: 90, L: 100 - $42,537

F: 94, L: 91 - $55,537

F: 72, L: 120 - $33,290

F: 80, L: 80 - $51,000

F: 84, L: 63 - $48,000

And so on.. I've looked at about 15 properties for sale with about the same numbers. They are mostly brand new properties though so I am not sure how important that is in determining how much I can sell the property for if it's going to be refurbished anyway. Let's say the repairs + other costs amounts to roughly $10,000, I can sell the property for $40,000 - $45,000 at least, and it's still cheap compared to the others.

Of course, I need to do further inspection of the property and properly crunch the numbers. But based from the information I currently have, is this something that I can shortlist and consider further? Any other important things that I should take note of?

I am not looking to earn a lot on this flip as it's quite cheap but if I can do it successfully, then I would've gained experience and a bit of cash too.

Any other possible solutions instead of selling? I mean, if there are other benefits to hold into this property that I can look into, even for the meantime, I can consider too.