Advice Needed: First-time Buying Condo as Rental Investment

Hello,

I currently am still living in the states but am likely going to retire to the Philippines within the next 2 to 7 years. In the meantime, I am coming to the Philippines once or twice a year for vacation and to learn everything I need to know before retiring there.

I am strongly interested to buy a condo now as a rental investment and might or might not live in it upon retirement.

I am hoping that some of you can get me pointed in the right direction in regards to accomplishing this with minimal risk and maximum results knowing that I won't initially be living there for at least a few years.

I know that I can't buy the land but it seems that I can buy a condo and rent it out for some income. Do I need to work with a Filipino real estate agency to manage it?  How do I know who to trust? How to ensure it's kept in good repair if I can't be there most of the year?   Do you think this is good thing or bad thing to do?
I will be find down in May for few weeks.  I'd like to meet with the right people who can help me while I'm there and hopefully find the right condo to buy.

Any pointers or suggestions would be greatly appreciated!

Salamat po!

Bob

Welcome Bob.  Not sure how easy it would be for you to manage a condo from California, and hiring someone to do it for you may negate any money you could earn, having to pay the monthly fees etc.  The general rule for expats is to rent for at least a year before purchasing any real estate.  If you read other threads you will find rents are not high, and if you can afford to buy a condo you would probably be better served in some other safe investment the next few years.  In addition, if your total foreign deposits are $10,000 or more, even for one day, then there is extra forms to file with your federal income tax forms.  Even if your income is low enough to not have to file a form 1040, you will still be required to report the balances of your foreign accounts  You have at least two years, why Philippines?  Exmilitary?

Thanks, mugtech! Definitely some things to consider. My brother is a cpa, so I will consult with him about the IRS issues.

I wonder if I don't rent it out, what would be the downside? Then I wouldn't need to hire someone to manage it.  From my initial research, it seems like housing prices have been steadily climbing at a decent clip for the past 15 years.

Why the Philippines?  I just see that as an attractive option for retirement. I love the people and the culture.  Can't afford to retire here. Other options include Thailand, Vietnam, Portugal, South American, etc. But the Philippines is more friendly to American lifestyle, I think - especially language.

Thanks for your thoughts and advice!

Bob

bobquinn0801 :

Thanks, mugtech! Definitely some things to consider. My brother is a cpa, so I will consult with him about the IRS issues.

I wonder if I don't rent it out, what would be the downside? Then I wouldn't need to hire someone to manage it.  From my initial research, it seems like housing prices have been steadily climbing at a decent clip for the past 15 years.

Why the Philippines?  I just see that as an attractive option for retirement. I love the people and the culture.  Can't afford to retire here. Other options include Thailand, Vietnam, Portugal, South American, etc. But the Philippines is more friendly to American lifestyle, I think - especially language.

Thanks for your thoughts and advice!

Bob

There are monthly maintenance fees to pay, real estate taxes are few.  Perhaps you should rent for your next trip in the condo development where you want to buy.  Have read about condos in places like Makati that are noisy constantly, neighbors can be a problem.

I agree with your assessment of the Philippines,  the other places you listed, while perhaps similar in price, do not compare to the people and the amount of English spoken there.  Then again my wife is a dual citizen and we own a house in Ilocos Sur, so life is cheap and easy.

Thanks again, mugtech!  I must say that I'm envious of you guys already living the life there!  😊

bobquinn0801 :

Thanks again, mugtech!  I must say that I'm envious of you guys already living the life there!  😊

I did not retire until 2 weeks after I turned 68, nothing to be envious of for sure.  As long as you feel you are ready financially to retire the rest is easy.  My last three years I only worked December through April, often 60 hours a week.  I miss the people, but not the schedule.

Were you an accountant?  December to April sounds like tax season!  (I used to work in public accounting...)

bobquinn0801 :

Were you an accountant?  December to April sounds like tax season!  (I used to work in public accounting...)

Mostly corporate, partnerships and individual taxes the last 3 years.  Someone else got my 990 clients, did a few financial statements, but we were too small, gave up reviews and audits.  I trained a replacement all last tax season, she quit in July, and the firm got rid of many of my old clients.  I could have worked every tax season forever, but this is much better.  It's great to read books instead of tax updates and court rulings.

Amen to that!!   :)

Thanks again!!

I’m buying a condo now and I intend living there initially but same as you, rental longer term. Do you know where you intend looking? I have an English friend with a filippina wife and they are basically estate agents in Cebu if you want there detail let me know.
However I did it through a new build that’s Korean owned, and used their agents. One thing to be aware of, new builds often need the sales to continue building, they use the funds to finance the completion.
The legal system here is very close to the European system of law due to the Spanish influence, so although corruption is an issue the process can be understood easily.

I've only been to the Manila area before, so that's my initial thinking. However, on my next visit in May, I'm planning to explore other places like Cebu and Davao to learn more about where to buy and where to live when I retire.

Thanks!

Bob

Bob hello I’m an American living in a
Rented condo in davao owned by a Japanese investor,

He had to have a real estate agent shown as the leasing party leasing -  to me on the lease  because you have to
Pay income tax here on the rental income and if your not a citizen here  or regiisterd company you can’t legally lease it because of the tax implications from my understanding.

Need to check with a real estate management company - and see how that option is
Managed and your ROI after paying a management company for that process ,

Kind regards

Larry

Thanks, Larry for the info!

Be sure to examine carefully the Master Deed. Most are scams that rely on the owners being abroad. Those residing are usually disinterested and don't wish to acknowledge their folly so the Developers get away with dishonesty. I imagine that this is typical of condominiums all over the world. In my case, the Developer used half the building for their hotel operations. Hidden in the Master Deed is that the resident Unit Owners pay for the Hotel dues having hidden in said Deed that they declared he hotel areas as "Common Areas" making them subject to payment of dues. Meanwhile, it has been impossible and typical, to be unable to assemble a quorum  of owners in whatever kind of meeting, annual or special. This is what developers exploit. Look for other angles.

Hi Bob,  I'm a Filipino-American real estate broker in Flushing, New York.  My mom and sister are selling their Eastwood City 2 bedroom + 2 full bath + parking Condo in Quezon City. They're direct sellers, I'm not charging any commission.

It's advertised here in Expat, link below. Also, its website is condohouselot.com with all the information you need.

https://www.expat.com/en/housing/asia/p … condo.html      Thanks.  Ray

I wish i had more positive things to say about condos in the Philippines but here's my 2 cents.

My experience has been strictly renting/leasing a condo although i have relations that own and lease. Although construction standards in the Philippines may be similar to the US, the end product and regulations within the condominium can be entirely different. This is because the structure may not necessarily be to code due to bribery, short cuts and corruption. Case in point - SMDC's Messa Residences that leak water whenever it rains because water seeps thru the outer walls and in to the ceiling of every floor. Maintenance can also be horrendous such as plumbing and electrical due to quality issues. Your kitchen faucet can burst and flood your unit. Your generator auto transfer switch can be a constant problem.

The sad part is that developers and property managers will look at you straight in the eye and tell you everything is fine. Absolutely no disclosure of problems. And unit owners who are selling or leasing will do the same otherwise no one will buy their property. And good luck on taking them to court.

And did I mention smoking? Filipinos are not as health conscious with regards to smoking and will smoke inside their units even if it is prohibited. Smoke travels within the floor and to other units. Bad for your health plus annoying odor. And will affect resale once a potential buyer smells it.

Also, keep in mind that the high rise condominium market in the Philippines, especially in the metropolitan Manila area, is saturated!! The difficulty will be reselling.

Do not - I repeat - do not expect the same standards and accountability from property managers and developers as you would in the US. I have found that there is no accountability to the law so developers, property owners and real estate brokers will do whatever they can get away with.

You will find condominiums to rent or for sale in OLX.com and Craigslist Philippines.

I was actually in a situation where I could have purchased a condo a few years ago but am glad never did.

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Hello,

Thanks for opening this thread.
I am really confused as I hear contradictory info from here and there.

I plan to buy a condo unit in the Philippines, I am a foreigner who will live most of the year in Europe.

Some people say I can rent my condo and just pay the property tax but won't have to pay anything on the rental income revenues .

That seems strange to me as any revenues normally must be declared and thus are taxable .

So if I rent my condo unit (studio or 1 BR) do I have to declare anything ? Will I have to pay tax on the rental income, and how much?

Any link to official website that explains that would be of great help.

Thank you in advance for your help.

I agree with your thinking - you will certainly have to declare that income somewhere - probably your European home country.

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