REAL ESTATE INVESTING FOR BEGINNERS: Should You Loan? | Real Estate 101 Philippines

Summary

In this video, Charmigan from Reddit Adult Philippines breaks down the basics of real estate investing, highlighting key strategies such as leveraging home loans, capital appreciation, and rental income. She covers the various types of real estate properties, including residential, commercial, and industrial, while discussing how investors can buy directly from developers or the secondary market. Charmigan also dives into the benefits, such as long-term asset growth and passive income, along with the challenges, such as maintenance costs and being 'house poor.' Overall, she offers a comprehensive introduction to real estate investment for beginners.

Takeaways

• 😀 Real estate investing involves purchasing property to generate profits through capital appreciation or rental income.
• 😀 Capital appreciation occurs when property values increase over time due to factors like location, demand, and development.
• 😀 Rental income provides consistent monthly cash flow, with options to rent properties furnished, semi-furnished, or bare.
• 😀 Real estate is a long-term investment that can help build wealth as properties typically appreciate over decades.
• 😀 Leverage, or borrowing money for real estate investments, allows you to purchase properties with a smaller upfront cost (e.g., 20% down payment).
• 😀 Inflation can make mortgage payments more manageable over time by reducing the real value of monthly payments.
• 😀 Real estate investment is not limited to residential properties; commercial, industrial, and vacant land properties also offer investment opportunities.
• 😀 Investors can buy properties directly from developers or through the secondary market, including foreclosures, online platforms, or previous owners.
• 😀 To invest in real estate, you need good credit, knowledge of the market, and at least 10-30% of the property price saved for a down payment.
• 😀 Different real estate investment strategies include buying foreclosures (Hunter), flipping properties (Flipper), building new homes (Builder), and renting properties (Landlord).
• 😀 Challenges of real estate investing include high capital commitment, property maintenance costs, and the risk of becoming 'house poor' if you over-invest in property without other liquid assets.

Q & A

What are the primary ways to earn from real estate?

The two main ways to earn from real estate are through capital appreciation (buying a property at a lower price and selling it at a higher price) and rental income (renting out the property to tenants for a steady monthly income).

Why does real estate generally appreciate in value over time?

Real estate appreciates in value primarily because land is scarce. As an area becomes more developed, the demand for living or business space increases, while the supply remains limited, driving up the property values.

What is leverage in real estate investing and how does it work?

Leverage in real estate investing involves borrowing money (through loans or mortgages) to purchase a property. This allows investors to control a larger asset with less capital upfront, with the intention of generating returns from the property over time.

How does inflation impact real estate investment loans?

Inflation can help reduce the real value of mortgage payments over time. As inflation rises, the value of money decreases, meaning the monthly loan payments become easier to manage in real terms, even if the nominal amount remains the same.

What are the advantages of using a home loan for real estate investment?

Using a home loan for real estate investment allows investors to retain cash for other opportunities, as the loan typically requires a lower interest rate (6-8% in the Philippines) compared to other types of loans. It also enables leverage, making the property easier to acquire without using all available funds.

What is the risk of being 'house poor' when investing in real estate?

Being 'house poor' refers to having a significant portion of your finances tied up in property, making it difficult to manage other financial needs or emergencies. It can also limit your ability to take advantage of other investment opportunities.

What types of real estate properties can you invest in?

Real estate investments can include residential properties (like condos, townhouses, or houses), commercial properties (for retail or offices), industrial properties (such as warehouses or factories), and land (for future development or resale).

How can you buy real estate through a developer?

You can buy property from a developer by purchasing pre-selling units (where construction has yet to begin), buying ready-for-occupancy units (completed and available for move-in), or buying an empty lot to build your own property.

What are foreclosed properties and why are they attractive to investors?

Foreclosed properties are properties that have been repossessed by banks or financial institutions due to the previous owner’s inability to repay the loan. These properties are often sold at a lower price, making them an attractive option for investors looking for good deals.

What are some common types of real estate investors?

Common types of real estate investors include the 'hunter' (who looks for foreclosed properties), the 'flipper' (who buys and renovates properties to sell at a profit), the 'builder' (who constructs properties to sell), the 'swing seller' (who buys pre-selling properties to sell at a profit when the market value increases), and the 'landlord' (who buys properties for rental income).