OFWs overcome various hardships, such as loneliness and homesickness, to ensure their family’s future. And, because the future is at stake, they carefully organize everything to ensure that the money they give does not go to waste. OFWs like you have almost certainly considered investing in real estate.
Real estate is a popular investment among Filipinos because if they purchase a house and lot, farm fields, condominium units, and the like, they will never lose their hard-earned money. After all, the value of these properties rises so rapidly.
- 9 Benefits of Investing in Real Estate for OFWs
- 1. Property value appreciates over time.
- 2. You can make money from it.
- 3. It diversifies your investment portfolio.
- 4. Your property’s equity has a lot of uses.
- 5. You can maintain control over it.
- 6. You can enjoy tax breaks and deductions.
- 7. A good way to build equity and health.
- 8. Real estate can be used as leverage.
- 9. It can serve as a hedge against inflation.
9 Benefits of Investing in Real Estate for OFWs
Another reason it is a popular investment option for many is the proliferation of real estate companies that offer low-interest rates and flexible financing options. Many Filipinos aspire to possess a home that they may eventually call their own.
Even if the Philippine government provides OFWs with loans to help finance whatever investments they pick, this may not be enough, and some may require additional loans from banks with the assistance of a financial broker.
However, as with any investment, there are drawbacks to purchasing a house or land. For one thing, real estate investing would necessitate enormous sums of money, and earnings might not be realized immediately away.
Here’s why you should consider investing in real estate today:
1. Property value appreciates over time.
The value of real estate property fluctuates over time – usually for the better. This is arguably one of the most significant advantages of beginning a real estate investment in the Philippines. While other high-priced commodities, such as vehicles and designer handbags, deteriorate quickly, real estate has the potential to appreciate. Demand has a role, especially if you choose a property in a city or town where the supply of homes is limited but the demand is high. But don’t get too enthusiastic just yet, because the pace of appreciation differs per market.
2. You can make money from it.
One obvious strategy to profit from real estate is to wait for the value of your home to rise and then sell it at a much greater price. However, keep in mind that this could take a few years. You can still monetize your real estate property as soon as you own it if you’re innovative enough or willing to be hands-on. For starters, your condominium can be leased or rented. If the house is near a tourist attraction, you can convert it into housing or an Airbnb unit. However, keep in mind that this will almost certainly necessitate spending money on renovations and adding value to your guests’ arrival.
Another option for converting your property into an income-generating asset is full-fledged property conversion. Your corner lot house, for example, may be converted into a little café or exquisite restaurant. You can turn a huge property into a resort if you have purchased a large property that can readily accommodate large groups of people. This, like the first suggestion, will necessitate some financial investment, so be prepared.
3. It diversifies your investment portfolio.
Real estate investment in the Philippines will also aid in the stabilization of your investment portfolio. You may already know that the value of stocks, mutual funds, and similar equities might fluctuate depending on market conditions. To mitigate the effects of such volatility, you should have a non-liquid investment, such as real estate. This is because the value of condominiums, houses and lots, and farm estates increases over time. When the value of stocks and mutual funds falls at a certain moment, the value of your real estate property is likely to remain the same. This prevents you from losing a significant amount of assets or money.
4. Your property’s equity has a lot of uses.
Home equity is more than just a real estate business buzzword. Simply put, home equity is the value of your ownership of a piece of real estate.
Assume you purchased a house worth PHP 1.5 million with a down payment of PHP 700,000; you now have PHP 700,000 in equity. The value of your home improves as you pay down your mortgage over time. And, because the value of real estate rises, you may anticipate that your equity will increase as well.
5. You can maintain control over it.
When you invest, you don’t just think about how much money you’ll make in the future. You’re also thinking about the prospective losses. Real estate is a comparatively low-risk investment in this aspect. This is because the value of a property tends to remain constant or increase, particularly if the demand for homes and land increases. And, unlike unpredictable investments such as stocks, you can be confident that real estate will stick with you when times are rough because it is a tangible asset. This means you have power over it. And if you’re inventive, daring, and willing, you can transform it into a profitable asset. So why not give this investment some serious thought?
6. You can enjoy tax breaks and deductions.
Real estate investors can benefit from various tax benefits and deductions, which can result in tax savings. In general, you can deduct reasonable costs associated with owning, operating, and maintaining a property.
And, since the cost of purchasing and developing an investment property can be depreciated over its useful life (27.5 years for residential properties; 39 years for commercial properties), you benefit from decades of deductions that help reduce your taxable income.
7. A good way to build equity and health.
As you pay down a mortgage, you accumulate equity—an asset that contributes to your net worth. And as your equity grows, you’ll have greater leverage to buy other properties, increasing your cash flow and wealth even more.
8. Real estate can be used as leverage.
Leverage is using various financial tools or borrowed resources (e.g., debt) to boost the potential return on investment. A 20% down payment on a mortgage, for example, gets you 100% of the house you want—leverage. Financing is readily available since real estate is a physical asset that can be used as security.
9. It can serve as a hedge against inflation.
The capacity of real estate to hedge inflation arises from the positive link between GDP growth and demand for real estate. Rents rise as economies grow and demand for real estate rises. This, in turn, leads to increased capital values. As a result, real estate tends to preserve capital’s purchasing power by passing some of the inflationary pressure on to tenants and integrating some of the inflationary pressure in the form of capital appreciation.
Many people may seem estranged from the importance of investing in real estate – especially OFWs, whom we know are in the best position to earn significant amounts of money over a certain period of their career. With this guide in your hands, we hope you can maximize the wealth-building power of real estate to gift you with a comfortable future for you and your family you deserve.
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