Several years back I posted a series outlining what a Filipino retiree I know here in my town of Marilao, Bulacan, has been doing to meet three goals.
1. He wanted a sensible, low-risk place to invest his retirement savings.
2. He wanted to provide something aside from a cash legacy for each of his 4 children after he passes on.
3. He wanted to do his own part on solving the chronic shortage of decent rental property … a significant problem everywhere I have visited in the Philippines.
I wrote this back in 2008, so9 you might think it is now ancient history. But it is not. The properties mentioned in the article are still “chugging along”, doing great. I walk past each of these properties on a regular basis and over the 6 years or so that they have been “open for business” I hardly ever see a “Vacancy” sign. I also know from other “insider” sources that the owner has bee enjoying a less than 5% vacancy rate since the properties were opened for occupancy.
There’s a ‘rule’ or insider tip in most any path of business. If you see something you might be interested in investing in, look back at least 5 years and see if the same business has been successful over time.
These rental properties here certainly meet that test, and I have seen a number of ‘copy cat” type projects since 2008 which all seem to be doing well.
Go read my original series … start here and follow the “Related Post” links at the bottom of the articles:
It Can Be Done
It Can Be Done —Part 2
It Can Be Done In The Philippines Continues 2
It Can Be Done in the Philippines Continues — 3
I also recommend you read my friend Bob’s article which kicked off this whole train of thought back in 2008:
A strategy for creating passive income in the Philippines
Note particularly in Bob’s article:
….The units that I have in mind would be maybe 5 or 6 apartment units in the building. Let’s say 6 units. I would rent 5 of the apartments on a long term lease for around P20,000 per month (minimum one year lease). The sixth unit, I would reserve for short term rentals to foreigners visiting Davao. I get lots of e-mails from people planning to vacation here and want somewhere to stay other than a hotel. I would rent this last unit for P13,000 or P15,000 per week. ….
Here just outside the boundary of Metro of Manila I know, beyond a shadow of a doubt I could keep a couple ‘short-term’ units busy as well. I also have a reader who built a similar 6 unit property way out in the boonies down south in Luzon. He built a 6 unit property with one end unit (his own) built bigger, to a much higher standard than the other units, then 4 decent but inexpensive 2 bedroom units, and for the 6th unit, he divided the space that a two bedroom apartment would have used into four small, but decently built motel room type accommodations, two up and two down.
The little motel style units are his best sellers … seems there are a lot of “commercial travelers” passing through his little provincial city every week, and no place aside from a “short time” hotel (if you have to ask what that is, you really don’t want to know) to accommodate the salesmen, company trainers, business auditors etc. who pass through town regularly. My reader has enjoyed quite decent occupancy rates and says his only real regret is, he should have built more of the motel-style units.
How much is he making per month? More than enough to pay off any loans he took out to get the place built up and going, that’s for sure.
A Thought For Those With Lesser Capital:
If any of you have read this far, you are interested. Mostly you fall into two categories, by my guess.
Those who are married to a Filipino/former Filipino and will probably buy any property you are interested in in the name of your spouse (with possible survival rights). This is a pretty common practice (I am in that same situation myself), but it is not really “ownership” in any real sense of the words, and it’s fraught with its own set of hazards. See:
I Heard A Foreigner Can Inherit Land In The Philippines
Those who are not married, but still think investing in rental property might be the right thing for them to do.
As is pretty well known, foreigner sin the Philippines may NOT own land in the Philippines. So short of getting married just to pretend you have an ownership interest in property, is this path closed to you?
In my view, absolutely not. Dave’s D-Double dandy solution? lease apiece of property (25 years with an additional 25 years extension, or 50 years with 25 years extension under certain investment programs. You could have the best of both worlds.
Full control and freedom to build and manage as you see fit, and no large capital outlay to buy the property, which otherwise could take years to pay for itself.
I’m going to get a lot so static for this advice above, I know, because a great many Americans have a predisposition against leasing, but not those in big business (where leasing property for stores, factories and such is very common), or even the US government, where even whole military bases, post offices and such are built on leased land.
If you are dead set against leasing, fine well and good, but if you want to explore viable alternatives toward legally having property under your control in the Philippines, you ought to take a closer look .. or so Dave opines.
