Owning your own home in the Philippines.
(Last updated 29 May 2017)
- 0.1 You Buy A House, You Make Money In a Few Years. Maybe.
- 0.2 This Has Mostly Always Been True in the USA as well.
- 0.3 But It Doesn’t Work That Way In Today’s Philippine Market
- 0.4 It’s More Than Profit or Loss
- 0.5 If You Buy For The Right Reason It Can Make Sense
- 1 Related Posts
- 2 Readers who viewed this page, also viewed:
- 3 Share this Article:
OK, are you guys getting bored with articles on owning a home in the Philippines? I wasn’t planning to write this one myself, but a reader came by and offered a very insightful comment which will apply to many other readers, so I’m sharing it here. Thanks to all who contribute, I can use plenty more contributions, so any time you feel you have something to say, just fire away.
(The reader’s comments are in blue, and I’ve added my own clarifications and contributions).
Fascinating article. Where I come from (Melbourne, Australia) both rentals and purchasing are completely different beasts. Property values in Melbourne have pretty consistently risen by between 7-12%, sometimes even more and very rarely less, over the last 20+ years. In other words, if you managed to buy a house, you were on a pretty much surefire capital growth winner….
You Buy A House, You Make Money In a Few Years. Maybe.
This was always pretty much the case in the USA as well. Rents have certainly climbed higher over the years, and except for our debacle during 1007/2008 when all the sub-prime mortgages came home to roost, you pretty much were going to be able to resell any house for a profit after perhaps 5 or 6 years. So “renting was just throwing your money away” … or so it was said.
But what “they” said wasn’t always right.
If you bought it as an investment and rented it out you could even offset the income against your personal income tax and deduct all legitimate expenses, so it was a great investment. At the same time rental prices have been rising at an alarming rate (though renters are protected fairly well and landlords are required to maintain the property). So for me, owning your own house has always made much more sense.
This Has Mostly Always Been True in the USA as well.
I bought a house in Colorado Springs in 1982. Paid about $80,000 USD for it. In 1996 through 1999 I rented it out, easily, for $1200 a month, about twice what my mortgage payment and monthly carrying costs were. Sold it in the year 2001 9under pressure, a divorce situation) for $160k. Roughly doubled in value i just under 20 years. And during the years I was living in Japan and rented it out, it was a real little cash cow. Moo, moo, moo.
But It Doesn’t Work That Way In Today’s Philippine Market
Here in the Philippines it seems you certainly need to rethink the value proposition – however, I think I’d still end up settling on buying for the security and flexibility of having your own place which you can renovate, do whatever you want to it, and ultimately sell it to get your capital back OR bequeath it to your dependents.
It’s More Than Profit or Loss
This is the exact reason my wife and I, after renting a small, very basic 3 bed, 1 bath house for several years fo “peanuts” … about $140 USD per month, decided to buy that house and also hire a contractor to add a secons story, a couple real-sized bedrooms, two American size baths (one with a regulation-size bath tub) and a tiny bunk room and even tinier bath for a live-in maid.
We have by now spent right at $100,000 USD (spread over 10 years) on this house. We did it so we could live the way we wanted to, so the house would be essentially wood free (and therefore termite free), and we’d have all the free solar heated hot water we wanted and an insulated, ventilated attic space so that our air conditioning exspesne would be far less than in the old house.
We did not do it in the expectation that we could someday sell it at a profit … sheer dollars and cents-wise, we should have kept on renting.
Another reason is, like many Phil-Am couples, I am considerably older than my wife, and actuarily speaking, I will probably die long before she does. She’ll have a widows annuity after I die, but also she’ll have a free and clear house with very low maintenance and utility bills to live in as long as she wants to. No monthly rent to worry about.
If You Buy For The Right Reason It Can Make Sense
I’ve got several expat friends here in our city who have bought with a lump from their retirement savings so they’re not paying any bank interest (although they are of course passing up investment earning potential on that lump) and I think they’d feel pretty comfortable that made much more sense for them than renting.
Agreed. Especially since in today’s economy, banks are almost charging you money to hold your money … there’s no such thing as putting your savings in a safe investment that will outpace inflation. Things like traditional Certificates of Deposit in today’s market, while “safe”, are really just a balloon with a big leak, because at the end of the term of the certificate the money you get back has less purchasing power than it had when you out it in.
Do you guys want a blow-by-blow account of what it takes to get a home loan or a home improvement loan here in the Philippines, for a foreigner?
What else would you what to learn about Owning your own home in the Philippines?