Those who took accounting subjects it was taught to us that a house is an asset.Our professors are correct but in personal finance we treat house as a liability. Why? We spend money for the maintenance, utilities, furniture and fixtures. It is a total cash outflow. If you would like to make it an asset, you have to think of ways to make your house earn money. Can you launch a business in your garage? can you convert unused space for a boarding house? Can you make a home-based business?. There are myriad of ways but first we have to accept it is a liability in order for us to be on our toes to make it as an asset.
Those who will buy real estate there are several factors that will contribute to the increase of market value of your prospective property. My stint as an appraiser during my 3 years stay at Pag-IBIG Fund taught me the following:
1. LOCATION is a primary factor. Appraiser always give a high appraisal for those real estate that are near commercial areas, schools and church. They gave low appraisal for those property located neat a creek or river that has history of overflowing. Transportation is also a factor- real estate where 24 hour transportation is present is always priced high.
2. CORNER LOT AND FRONTAGE.If you have an opportunity of buying a real-estate that is located in a corner lot ,has a wide frontage, heavy traffic of people and wide streets with pedestrian lane, you hit the jackpot. Buy it now, the increase of market value will double or even triple in 5 years time.
3. DRAINAGE AND SEWERAGE SYSTEM. You should be very careful on buying property where drainage and sewerage system is defective or non existent. The risk of your property being flooded during the rainy season is high hence the market value will be low. Therefore generally property located in elevated area fetch higher that those in low-lying area.
4. CLEAN TITLE. In our country there are people who are expert in making bogus documents and Jose Pidal is their hero. Therefore you have to be careful by checking with the register of deeds the property that is offered to you. When we say clean title it is registered and free form liens or claims. Check also the tax declaration to make sure the real property taxes are paid regularly.
These are the 4 ways I know that can help you decide based on my three years stint as appraiser of Pag-IBIG Fund Lucena City.
Happy hunting, then.
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* thank you greaterlearning.org for the photo featured here.
hi insan...thank for this informative post.
ReplyDeletewould you recommend buying a property and have loans via pag-ibig or bank loan?
my brother is looking for one..and where would you recommend it like the place...do you think cavite area is a worthy place to choose for a property?
Choose Pag-IBIG Fund. They offer the lowest interest rates in the country. Properties in cavite are always good investment. your place is at the top of CALABARZON in terms of business and economic actvity.Just follow my simple advise above and you can not go wrong. Regards!
ReplyDeleteThanks Sir Arnel for this informative post. I am an Accountancy graduate and it took me time to really consider a house as a liability. (But now, I'm able to).
ReplyDeleteThanks for this informative post. I will keep this in mind once I venture into real estate investing. =) Sa ngaun, still saving for the capital.
Since na-mention po dito ang Pag-ibig Fund, meron po ako tanong. Nag-cha-charge po ba ang Pag-ibig ng pre-termination fees if mabayaran po ng full ang Pag-ibig loan bago ito umabot ng maturity date? At anytime, pwede na po bang mabayran ng full ang Pag-ibig? What will be the time covered ng interest payment?
ReplyDeleteThanks much, Sir Arnel! =)
Lyn-lyn, in my experience if you paid in full your pag-ibig housing loan before the maturity date they will deduct certain amount in the interest payment hence saving you money. You may pay in full your housing loan which I did 20 years before maturity thereby saving me more than two hundred thousand pesos.
ReplyDeletePag-IBIG charged a fixed interest. For example 6% for P100,000 housing loan payable for 5, 10, 15, 20, 25 years of your choosing. Anytime you can pay in advance and any advance payment means deduction in your interest payment.
Regards.
Arnel