What’s the first thing that pops out in your mind when someone mentions real estate?
For me, buildings – big, tall skyscrapers like the Empire State Building. With the Philippines continuing to experience a real estate boom, you see more and more of them all over Metro Manila.
So it can intimidating when someone mentions real estate investing because let’s face it, how many of us have the resources to build these huge buildings?
Fortunately, you don’t have to start big to invest in real estate.
In fact, you can start just by owning your own home – like what this old couple did more than 30 years ago.
Own Your Home
In the 1990’s, a middle-aged couple working in the government decided to buy their own home. Using a PAG-IBIG loan, they acquired a house & lot in a squatter-infested area in Pasig for about Php500,000.
Even though the neighborhood was dusty in the summer and muddy during the rainy season, they loved that house because it was the fulfillment of their lifelong dream – the dream to own their home.
They said goodbye to their landlord and they are now the master of their own house.
However, the environment outside their house is not very enticing.
Their street would always have groups of half-naked men drinking gin bilog or beer in the evening. Sometimes, these men would fight and put everyone on the edge. They would often worry about the safety of their son and 2 daughters – especially their daughters.
Yet everyday, they would go home to that house and feel safe and protected inside.
They would go home and enjoy family dinners or watch movies in their Betamax player.
They would go home and watch their children grow up and build countless memories in that house.
All while paying their monthly amortization and building up their equity.
They no longer had to pay rent. They no longer had to worry about increases in monthly rent.
The value of their property increased over time but their amortization remained relatively constant over the years.
It was only a matter of time before they fully paid their loan and owned their house free and clear.
For most people, this would be their biggest real estate investment. Sometimes, it’s their only investment.
Once you own your home, consider adding properties for passive income.
Own A Property For Passive Income
Let’s go back to the old couple’s story.
Over time, the neighborhood changed.
The squatters were removed and replaced by a highway which we now know as C-5.
The neighborhood drunks and toughies were replaced by cars, vans and huge trailer trucks.
As the couple grew older, they needed to move away from the polluted highway and find a place with more fresh air.
But, they didn’t want to sell the house so they had it rented out to a cooperative while they rented a house in Greenwoods, Pasig.
By renting out their old house, they had a good source of passive income at a time when they were already retired and couldn’t work anymore.
When they rented it out, the cooperative gave them checks for the advance rent and security deposit. They also got post-dated checks for the monthly rent. The only work they had to do was deposit their monthly checks and pay their taxes.
They didn’t even need to make improvements to the house because the cooperative rented it “as-is where-is”. The tenant did all the work of improving it and making it fit their needs.
Own A Property For Capital Gains
Eventually, the couple decided to sell the property.
That’s where we came in. Their daughter recommended us to help them sell it.
Although, the property is located in C-5, it’s not a prime spot along C-5. The zoning is R2 – medium density residential so it’s not commercial.
Still, the value of the property has increased substantially more than what they bought it for.
Within a few months, we found a buyer who had the resources to turn the property into an even bigger money-making machine. They agreed on a win-win price and both of them were happy with the transaction.
The buyer plans to build a rental apartment in the lot. The seller used part of the proceeds to buy a house in Greenwoods and used the reminder for their retirement needs.
The Beauty of Real Estate Investing
The old couple, after more than 2 decades of living in the property and renting out, was able to make even more money.
Even though the house was already run down and needed demolition, the value of the lot was more than 10 times their original purchase price. Much, much more than 10 times.
Let me ask you: Aside from real estate, what can you buy now, use for 20 years and sell at a higher price than what you paid for?
What’s even more encouraging is that the old couple were not sharp investors or shrewd entrepreneurs. They were just ordinary government employees who had the simple dream of owning their own house.
They could not buy a property in an expensive and exclusive subdivision. They bought what they could afford in a neighborhood most people would never aspire to live in. The important thing for them is to have a place they could call their own. They were not thinking of making money in real estate.
It’s an investment to shelter and secure your family now. Later on, it has the potential to provide for your needs in the future. You can even elect not to sell it and leave it as a lasting legacy for the next generations in your family.
That’s the beauty of real estate.
How about you? What’s your real estate story?