All Forum Posts by: Jason Lam

I don't quite understand what waiting it out would accomplish. The most likely reason the market will "crash" is because interest rates rise. If that happens it doesn't matter you are locked into a nice low interest 30 year fix rate primary home mortgage paying sub 3%. If you wait for prices to come down your buying power will also fall when interest rates rise.

I’m looking at coming in on a deal with a partner where I am bringing the cash and he is doing the rehab work.

I plan on talking to a RE lawyer but wanted to just get some background of how to structure this deal.

We don't plan on forming a joint LLC at least not until we do a deal or two and if we see this working out long term we might do that. Not sure the pros and cons here.

As for this flip we will both be on the title and each have 50% ownership. As I’m bringing the money do I also put a lien on the property to secure my investment?

We’re still working out the details with my partner but I would feel more comfortable if he also personally guaranteed a line of credit for the rehab. So my invested capital would be the purchase price and a line of credit to my partner for the rehab cost. Would I put a second lien position on the property for the line of credit?

Thanks everyone

@Mark Futalan real estate is taxed as 6% of gross sales price. As US citizens the US will tax them based on US tax law which would be long term capital gains. they would be able to claim the 6% paid to the Philippines as a tax credit against US taxes

@Marc Estepa taxes here are 6% of gross sales price. You then have realtor fees, etc. to deal with.

@Cooper Reece I got 3.25% on a single family cash out refinance I started back in June with 75% LTV.

@Marc Estepa a lot of those banks you are finding such as Chase, Bank of America and Wells Fargo all operate call centers out here but have no banking operations. Only ones I can think of that operate both in the Philippines and US are HSBC and Citibank.

The Makati area where the condo is located did get hit pretty hard due to COVID but it should rebound relatively soon. In hindsight buying here made total sense but it doesn’t fit my strategy so I stay away. Just think about how much money you could be making if you deployed $700,000 anywhere the US, way more than $2000/mo in gross rents.

It may make sense for your friend to sell it and get the cash to then invest elsewhere.

I would love to connect with your friend to see how he is managing it. Every property manager I have dealt with is terrible.

@Marc Estepa I currently only invest in the US. I am looking for cashflow which is nearly impossible to find in Manila, its all appreciation here which don't get me wrong has paid off 10 fold for investors but its just not my cup of tea right now. That condo in Rockwell was probably purchased for $200k-$250k 10 years ago. As far as I know, no US bank will take a Philippine property as collateral. If you were to have a shot you would have to find a bank that has locations out here and there is a very slim chance they might. Check out Citi bank and HSBC

@Marc Estepa being a FilAm that does make things easier, I'm not sure if any banks will loan to you if you don't have any Philippine based income though. The credit system isn't really refined here so income is one of the key drivers. The terms are going to be terrible compared to a US based HELOC and as it's normally 7%+/year. You should be able to find private money at that rate in the US and not need to deal with FOREX.

How is the cashflow as a rental? I assume it’s probably a 2 bedroom condo so it’s probably renting for give or take $1200/mo? The return on equity isn’t very good there. Manila is a big appreciation play, I haven’t seen anything where the cashflow makes any sense.

@Marc Estepa Sorry I assumed you were not a citizen but taking a step back the banks do require income that is normally sourced from the Philippines and for non citizens you have to show residency and/or a long term visa here. You should still call a few to see if you can but I wouldn't hold your breath.

Keep in mind as its a Condo you're going to have association dues of probably $50-$75/mo and property tax of around $200/year. The dues and taxes are much cheaper than the US but still annoying. Do you have plans to come visit Manila?

@Marc Estepa

Wow great friend you have there.

Probably not since you have no Philippine based income and the Philippines and are not a citizen. You may be able to find a bank or two that may do it but your terms will not be great. You also would need to come out here as banks require wet ink signature.

The terms in the Philippines aren't good anyways, a normal HELOC carries a 7%+ interest rate