No one knows how long a person can work overseas. Having said that, Filipinos must look beyond their paycheck to paycheck and prepare ahead to guarantee their future. There are several ways you can achieve this. One of these is to invest a portion of your money and grow them to benefit you in the future. And there’s no better time to invest in your future than today. Whether you’re an OFW or not, this is something that you should keep at the back of your mind so as not to get too caught up with life’s daily cares.
Thinking forward – occasionally, as far as retirement is concerned, has its advantages. One of these is to be practical and innovative with the resources you have right now. Here’s a quick write-up about a Dubai-based OFW who converted his house into a 17-door apartment complex, how much it cost him, and some pointers on how you may do the same. If this is something you’d like to achieve for yourself too, then make sure to read until the end of this guide.
Disclaimer: This article is for information-sharing purposes only. The results may vary from one person to another. If you would like to get receive more content like the video featured in this post, you may subscribe to the vlogger’s (Donald) YouTube channel at Ingeniero TV to get notified of his future vlog updates.
Building an Apartment Business in the Philippines? Here Are Things to Consider
It is important that you think hard about your monthly income versus your expenses, and if you have extra savings at the end of the month, you can utilize that to fund your investment venture.
Before we get started, if you’re an OFW like the YouTuber in the video, starting your own apartment business is an excellent investment. Why? Purchasing a rental or real estate property has long been a popular option for people seeking to diversify their portfolios beyond equities and mutual funds. It’s an excellent way to generate passive income while building your property portfolio, especially in the Philippines.
High Initial Investment Costs
One disadvantage of this form of business is that the initial investment is much higher than the monthly cash flow (rent coming from tenants). Recouping investment takes longer than in many other high-risk investment vehicles. While most apartment rental businesses do not go bankrupt, natural disasters such as fire or typhoon might wipe out a whole investment.
The apartment comprises three stories and 17 units, the majority of which have a floor space of 20 square meters. According to Donald, the floor plan of the building, which is approximately 452 square meters, was meant to appeal to bachelors (call center agents) and those who are establishing their own families. As seen in the video, the area is optimized in the same way that condominium apartments are built in the Philippines.
The units with the most floor space are on the third story, where they decided to build three 2-bedroom units. In addition, there is a roof terrace on the same floor. This will be the place where tenants may hang their clothes to dry and hold events.
As for the breakdown of the expenses for the construction of the building, here is the shortlist of expenses prepared by Donald:
STRUCTURAL CONSTRUCTION COST BREAKDOWN
MATERIALS COST: PHP 2,885,593.50
LABOUR COST: PHP 1,895,834.93
TOTAL COST FOR STRUCTURAL: PHP 4,781,428.43
ARCHITECTURAL, ELECTRICAL & PLUMBING COST BREAKDOWN
MATERIALS: PHP 2,925,362.87
LABOUR COST: PHP 1,690,859.74
TOTAL COST FOR FINISHING: PHP 4,616,222.61
So, when you do the math, the total budget he spent on this project is PHP 9,397,651.04 (USD 192,745.82).
If you think about it, you could have built two or three houses for this amount, but why build simply for yourself when you can use it to provide housing for others? At the same time, this will provide you with funds that may be added to your income, allowing you to expand your savings and wealth. Once again, for your retirement.
Catch the full vlog episode as posted by Donald via Ingeniero TV on YouTube below:
Important Tips for Starting Your Apartment Business
Not all apartment businesses are the same. The costs and rules vary depending on the location of your province or city. That is why there is a need to do proper research before venturing into this type of business. After all, this is a long-term investment opportunity. Here are some important tips for those planning to set up a property business:
1. Consider the Location
Is your apartment close to points of interest and easily accessible by public transportation? Is the land zoned for residential development? Where can I find the nearby places or facilities? These are just a few of the questions you should ask yourself before embarking on the construction of an apartment building. This will help you identify potential tenants. If you live near a university, for example, you may expect to see students, and if you live near an office, you can expect to see young professionals.
2. Know the existing rental laws.
You must be up to date on current rental laws, which frequently change. As a landlord, you must understand how much you can raise rents. You must also be aware of the ejectment procedures. If you rent out condominium apartments, you must also follow the laws and regulations of the association. Furthermore, you should have an experienced lawyer draft your lease agreement.
3. Screen your tenants well.
Your capacity to determine your tenants is critical to the success of your business. Refuse those who are unable to pay their responsibilities on time. Reject those who are likely to generate too much wear and tear or commotion in the community.
4. Put value on amenities and aesthetics.
With many entrepreneurs in the apartment rental business, you must make your business stand out by putting value on aesthetics and amenities. Invest on furniture and paint jobs as this will be your edge over other apartment business. Try to provide high-speed Wi-Fi if possible. Furthermore, the appearance, amenities and services of your apartment will highly influence the cost you can charge the tenants.
5. Be upfront about the costs.
We all despise hidden charges. It is your responsibility as a landlord to inform your prospective tenant of all fees and charges. This covers the deposit and advance payments required before moving in.
Working hard is essential, but you will squander your prime years working with nothing to show for it without a goal or a vision. With this in mind, we hope you will use this blog as motivation to plan your future and make the most of your earnings and savings while working overseas.