Real Estate during COVID-19: How to Invest?
Despite the pandemic, the real estate industry proved resilient enough to weather uncertainties amid the adverse effects of the coronavirus disease. But no matter the economic environment, real estate still has strong potential to give its investors good returns.
According to a survey by global think tank YouGov, real estate was ranked the third safest investment next to gold and certificates of deposit. And this confidence is not entirely baseless. Property gives owners flexibility on how to get income—and not just about buying or selling properties. Investors have the freedom to remodel or renovate for rentals or even lease, among many other options to get creative.
Apart from this, real estate is historically a much more viable and trustworthy investment than stocks. According to the study “The Rate of Return on Everything, 1870-2015,” with a century of returns from securities like equities and housing across different countries, the research finds that in the long run, residential real estate generally delivers its promised return of investment than equity at lower volatility and lower correlation to the performance of stocks in the free market.
For many Overseas Filipino Workers (OFWs) who are planning to spend their retirement in the Philippines but unsure of where to invest their money, real estate is also a viable option. But generally, property investment is a field everyone can participate in.
According to Adiel Bonifacio of LYONS Realty Corp., real estate is always a good option, not just for OFWs, but for anyone serious about investing for the future.
“If the OFW has enough money saved up and can afford to buy a property that’s ready for occupancy, it could be a good move. Not only will the property be a low-risk investment vehicle, but it can also provide the monthly income that the OFW has lost if he can successfully lease it out.”
On top of all the methods of investing in real estate, the first thing you’ll need to ensure is having savings. This is true especially if you are going to invest in actual property.
If you have the budget for your investment already, then buying property is the best way you can make a mark in real estate. But purchasing a house involves a lot of creativity rather than merely holding onto it.
Buy and Fix Up a Home
Flipping a house like in reality TV shows is as hands-on as you can get for an investment. You buy the property, invest in maintenance and a few renovations, and sell it for almost triple the price.
But more than anything, fixing a house requires more investment and more time than you might have. It’s a long-term process that requires a solid knowledge of real estate and home improvement. Even profitable home renovations can lead to income loss. But patience is crucial if you’re going to commit to a fixer-upper.
Rent-to-Own a Home
Rent-to-own is a good tactic if you want to sign a contract to rent a home for a predetermined period of time. Of course, this entails an option to purchase the home once that time expires. But keep in mind that that option is a requirement, a promise that you will be buying the house, as a huge bulk of your monthly rent payments go toward the down payment on a mortgage when the purchase becomes official.
Rent-to-own agreements come with risks, but they’re suitable for people who are still having second thought in buying a house. This gives people with other loans like credit card debt, hospital bills, among others the time to pay those off without having to deal with the added financial burden of a huge monthly mortgage. Comb through the rent-to-own contract carefully, including all the nitty-gritty parts to make sure the details are in your favor, and it has the potential to help you ease your way into an investment.
Buy Rental Real Estate Property
Ideally, if you have the money, you could purchase an entire rental property and have it rented out by tenants. However, you must keep your expenses low, so you can keep rent affordable for those who are looking to get an apartment.
You may opt to purchase property that you live in while renting out other rooms in the property since you get to be the landlord either way. So long as you follow the rules of investment, and you’ll be in a much better position to succeed in real estate. Keep the property in excellent condition, be readily available to your tenants when needed, and, if necessary, hire someone who can help with repairs.
Purchase Vacation Property
Having a vacation property gives you the authority to have it rented out to tenants for shorter periods. As long as you maintain a good house in the right area, and you may be able to make the same money off a few vacation tenants that you might make from a year-round tenant elsewhere.
Because they are mostly located in a desirable area, vacation rentals tend to be expensive both to buy and maintain for residential purposes. Who wants to rent out a small farm house for their vacation? You need to weigh the pros and cons carefully. If you do it right – research thoroughly and consult with good brokerage firms – a beach rental can be lucrative come summer.
Use Lodging Apps Like Airbnb
Airbnb has become a popular way to get passive income for property owners. Since you’re earning money either way, why not incorporate it into your own investment for higher income?
Airbnb is definitely a good choice in certain areas. Desirable vacation destination? Close to a music festival? Lovely apartment in a popular city? Airbnb can lead to huge profits. If it’s a property you own but don’t reside in, the added availability can help out a lot.
Have a Real Estate Investment Plan
Once you’ve identified your safe zones in property investment or have decided on a property to invest in, you should then figure out how to create an efficient timeline in terms of return on investment.
By laying out an investment plan containing all sorts of details like monthly expenses and income, you can streamline the whole process and get a ROI in no time.
To give you an idea, here’s a simple example showing the computation of a condo unit’s ROI (assuming it was paid entirely in cash):
LYONS’s Adiel Bonifacio reminded interested property investors to remain steadfast and know that the COVID crisis will pass, sooner or later.
“If the market is in a bit of a panic, driving property prices lower than market value, then don’t sell your property so as not to incur a loss. If you are leasing a condo unit out and tenants are becoming harder to find, lower your asking rate to cast a wider net.”
The real estate industry opens up a lot of opportunities for investors. To help you with buying, selling, renting, and leasing properties, you’ll need a brokerage firm. According to Jeffrey Sonora of LYONS Realty Corp., every investor needs to go with a reputable broker because, in the market, there are hundreds of properties, but not all can provide successful returns.
“Not all property developers can provide you with the perfect property that fits your needs. This is why brokerage firms like LYONS Realty Corp. filter good developers from the bad ones.”
Are you interested in investing in real estate projects? Then consider inquiring about other possibilities with LYONS Realty Corp., a trusted brokerage firm in the Philippines dedicated to providing fresh perspective and ideas for a new approach in providing top-notch service to every real estate client. Contact us today and get your dream home in no time.