Often times I get queries about the advisability of buying a home in the Phlippines now and leaving it sit until retirement comes … as a hedge against inflation and a way to assure you’ll have at least that much of your retirement already in place.
This may work for some people but in general I counsel strongly gainst this idea. Basiclaly, for three reasons:
- Poor Investment Vehicle: A single-family home, not producing income, is a poor invetsment. In fact, it’s a liability, not an asset. The US has lived in a dream world for 20 years or so with peple making buying decsions in the belief home prices will always go up. Historically, they don’t, and the US and the rest of the world’s economy are paying dearly right now for this fairy tale assumprion.
- Squatters: Sometime refered to as undocumented occupants. this is a perennial problem here and there is no indication any long-term cure is in place to cut the problem down to size. The population is growing by leaps and bounds, adequate housing is very hard to find for many and there is a common feeling among some Filipinos that if a person isn’t usng somehting, he or she doesn’t need it, anyway. More common than someone actually breaking into and occupying a house are “barnacles”. Like the marine aninal, peple may see your property wall or even the wall f your house as a convenient ‘starting point’ for a little hovel they throw together out of cardboard and cast off plywood. Once this happens you are in for exspense, protracted negotiations, exspense for sure (you at the least will have to provide another place for these folks to live in ordert o get them off your land) and even violence if you try to exert too much pressure too fast. Getting into a situation where you are hosting squatters is not a place you want to be.
- Looting: Rather than squatters, or concurrent with illegal occupancy you may return from a stay abroad to find your prize home gutted. Pipes, electric wires, doors, windows , stairways, all are fair game. Got a wall and heavty steel gates to protect the property? The steel gates sell like hot cakes at so-called “junk shops” which buy all sorts of scrap without any proof or origin required. If your house falls victim to this, the more gates and grills there are, the more attraction the metal becomes. Not long ago in the Philippine’s largest city, (population-wise) Quezon City, a mansion belonging to former president Estrada was torn to bits, leaving very little except the bare lot and a few broken concrete blocks. Mr. Estrada was in jail at the time and unable to properly supervise. The mansion had been ordered turned over to the governement by court order. When queried about why this attrocity was allowed to occur, city officals stated, “Well, the title of the poperty was not clear until the court ruled, so we saw no need to propotect it.”
Does that logic give you a headache as it does me? Well, welcome to the Philippines. If there is not a legal owner onsite, and crooks and ner-do-wells start tearing a place to the ground, it’s quite likley that not a thing will be done by the authorities to protect the property. I’m not writing about this to try to be negative, but many people think buying and owning a hosuse here in the Philippines is like what they already know by virtue of buying and owning property in the States.
As the words of the old song go, “It ain’t necessarily so”.
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Dave, interesting column as usual. I agree completely with your comments. My wife and I had a house built in her hometown in 1998 for our future retirement, and, fortunately her brother and sister have been living in and watching over the house since. I have no doubt that had we just left the house abandoned it would now be gutted, dismantled or be a nice home for squatter(s). Maybe all of these. So unless you have someone you trust to live in your Philippine home, I would advise to wait and build when you’re there. As a matter of fact I would advise to be there while it’s built, even if you have someone to live there.
By the way I have almost the opposite problem. I own a home in the U.S> and my wife and I will be moving to the Philippines next year and our problem is what to do with our U.S> home. Should we rent, sell, or leave vacant. Might be worth a column in the future.
Richard
@richard: Thanks for the comment, Richard. Indeed that’s why I said you can’t leave a house _empty_. If you have reliable family then getting someone from ther family to occupy it is indeed a good solution. Be cautious about one thing … make sure you and the family member agree on a plan for what happens to them when you and your wife finally show up. It is not an insult, but merely a fact when I mention that ‘planning for the future’ is a weak area with many families. If you have say a brother and sister-in-law living in a mome, where will they go? Maybe where everthey were living before is no longer available or suitable … issues like that. Are you willing to foot the bill to set them up elsewhere? After all, they are family, you really just can’t say ‘Get out’.
Not bringing that up to sound negative, just a reminder to all to ‘begin with the end in mind’. I knew a guy who had a very bad expereinc eon this .. his wife’s brother and family lived in his house for years and then a huge family feud erupted when he lost his temper at being asked to set the BIL up elsewhere. My freind’s attitude was, “Why aren’t they grateful that I provided them a house all these years”. “Why didn’t they save the monery they didn’t have to pay for a place to live”?
The BIL seemed to feel the opposite, that he, in fact, had provided my freind a useful service … after all, in the US people often get paid to “house sit”, so perhaps he really did.
The argument could be made that both men were right or that both men were wrong, but any family discord casts a pall over your future happy life … if things are figured out in advance, you stand a much better chance of coming out of the deal with a smile.
The question of what to do with a property in the US is always agood one. I’ll try to write on that soon. One question in your particular case is, is your current property readily rentable, or not suitable by reason of value, location, etc.?
Thanks for the article, Dave. Something we have to consider in the future. We plan to pay the land off before we consider putting up any kind of structure but when we get closer to retirement and our trips are more frequent, we’d like to have a place to stay. We are considering putting up a more temporary house (nipa hut type of thing) at some point, but again we wouldn’t want to invite any unwanted guests when we are not there. It’s kind of a difficult situation.
We have time on our side, so I can let it play out I guess.
@Randy C: exactly. There is likely a solution, but I wanted to bring out the reality. Both family and government attitudes toward property protection here is a lot different than many are used to in the West … like other bumps in the road it needs to be accounted for. I mean literally, could you imagine if say Bush the Senior or some other former president had a mansion involved in a court battle over title and the mayor of the town it was located in just watched it be torn to bits because, “We didn’t know exactly who owned it”? Hard to imagine.