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Case Study: Pre-Selling Condo vs Mutual Fund

Demystifying the Myths and Truths for Ordinary OFW By Allan Miranda

Case Study: Pre-Selling Condo vs Mutual Fund

Part 01: Pre-selling Condo

By Allan Miranda
A well informed investor is a well protected investor

An OFW Investor & Finance Advocate A Financial Savvy Overseas Filipino, click here for details
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DISCLAIMER - The Information on this case study is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this is not intended to be and does not constitute financial advice or investment advice or any other advice. The Information on this case study is general in nature and is not specific to you the User or anyone else. YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. You understand that you are using any and all Information available AT YOUR OWN RISK. RISK STATEMENT Investing in paper assets (stocks/mutual funds) and in real estate has potential rewards, and it also has potential risks involved. Anyone wishing to invest should seek his or her own independent financial or professional advice.

Filipinos love Real Estate

Theres no doubt, as an OFW like me, we love to see our hard earned money transform into an asset that can potential provide income. The most common come into our mind is real estate, tama ba? In various forms pa... House & Lot, Subdivision, Vacant Lot, Condominium and specially the Pre-Selling Condo.

What we gonna focus today is the hot market of Pre-Selling Condo. Lets dig deep.. As a savvy Pinoy investor, common sense always a Investigating before Investing approach.. Lets find out if this type of Real Estate really brings big buck to your hard earned money as an OFW while working here in Middle East.

Lets consult Mr. Google..

Google says a lot about this preselling market in the Philippines 27Million results, mostly are brokers/agents and many advertisers which are brokers/agents (on the right column, below)

This doesnt include yet giant billboards in metropolis area in the Philippines, big name celebrity endorsers and ads in various newspapers & Buy&Sell magazines in local stores in Philippines. Many international satellite offices are also established by Real estate companies to capture the OFW markets here there and everywhere.
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Latest in Google Trend, says Pinoys are in and looking for this pre-selling market. Which suddenly jump recently in mid of 2011. It ranges from 60-100 interest per month.

Just a note. Im not an anti-real estate guy as Im sounding it may be I owned as well real estate back in the Philippines, either as future residence which I will called home and for experimental investment strategy which I will call cash flow generating property but not the pre-selling type

Advantages and Rewards of Pre-Selling Condo...

So what are the reasons why it is wiser to buy when its pre-selling? 1. Price is at its lowest This is so absolutely true because youre not buying a tangible unit yet. Hindi pa kasi visible yung building kaya you dont have a tangible property. Thus, the price is relatively low.. Developers initially offer it at the lowest price as a teaser to investors like us so they can use our money to finance the construction. Ang presyo ng pre-selling ay tumataas as the project approaches completion and therefore giving a big yield on your investment. 2. Easier Payment Terms There are many payment scheme available. Usually 20% down payment of the total contract price, spread in 36mos prior to completion or RFO date without additional interest. So for example, a unit worth 1.8 million that will be completed in 36 months (3 years) and has a 20% down payment of 360,000.00 would result to a monthly equal payment of 10,000.00 for 3 years. Remaining 1.44 million can be in house finance or loan to a bank or PAG-IBIG.. Sweet deal#1, di ba?

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3. Choose the best unit and best view Generally, in the first 6-9months, marami available units na pagpipiliin.. The advantage of this is that you can choose a unit according to your preferences like if its facing north, facing the morning sun or facing the amenities. Or kung mahilig ka sa feng shui choose units with lucky numbers like 8 and 7. 4. Fast & the furious plus bigger yield on your investment Low initial investments (ex.36mos easy payment), long term loan and potentially 40% increase of your property.. Sweet deal#2, di ba?

Wanna be Proud and Happy condo buyer ka

na, di ba??

You contact an agent and discuss yung presentation, love the property and seems a great investment, consult your friends here in Dubai and they also love your investment choice. You prepare the required documents, do a Special Power of Attorney (SPA) to your relatives sa Pinas, put up your downpayment in the bank, post in FB Im proud owner of this XXX condo.. Ka-level ko na si Anne Kutis or Papa P----.. Weeehh!!!

But wait a minute.. This is the common problem nating mga Pinoy.. Our Investing Psychology is usually driven by emotion and not by the right investigative mindset..

Wanna know why is this a fatal mistake if you are emotionally driven in every aspect, as part of Pinoy culture? Read on.

An article by Rose Fausto, a finance coach and personal finance advocate, she says.. But now that we [Pinoy] know that we are the worlds most emotional bunch of people, we should choose to make the important decisions in our lives when we are not in the state of emotional influx Well, the obvious is not to make life altering decisions when you are too happy, sad, mad, fearful, depressed, etc. .in the matters of our finances.We are not always rational when the actual decision-making comes.

Source: The Philippine Star Lifestyle section: Were the Worlds Most Emo Nation!

So to solve this Emo! Nation syndrome of Pinoy, we have to check also the Disadvantages and Risks of Pre-Selling Condo... And we gonna tackle that on the next part of this Case Study

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