When I was young, my family lived in the squatters’ area and we could not afford to buy our own house.
During those times, I experienced several demolition events in our area. It’s really a terrible experience for a kid like me.
There was still a funny side after all. After every demolition and when the sheriff left already, all the houses will be built again for any possible way. It turned out that our property space will become smaller overtime.
There was a time that we went to our mayor’s house to ask for help but nothing happens as expected.
I dreamed when I grow up that it won’t happen to my future family and we will have our own house. However, there was a little doubt in my head that says “it’s only for the rich”.
Discovery of Foreclosure Investment
In 2012, when I was an OFW in Singapore my friend recommended this book “Rich Dad Poor Dad” by Robert Kiyosaki and I realized that this is the wise approach to invest in Real Estate which is thru Foreclosure.
When I came back home for good, I read a lot of books, blogs and attended seminars about foreclosure investing.
Then, I’ve started to search online for foreclosed properties listing in each bank. Despite lack of sleep, I scouted the Metro Manila to get my hands dirty and apply what I’ve learned. I attended foreclosed auctions and sent offers to some banks.
I realized that the key to success is to apply the knowledge and take action despite of discomfort and fear of failure
Why Foreclosed Property?
Foreclosure is the legal process of selling properties acquired by banks or other institutions from borrowers who stopped paying mortgage.
Normally, the banks sell it below the market value because they only need to recover the loan borrowed by the homeowner which is 80% or below of the property’s value. These properties are non-performing assets so the banks want to dispose it quickly to cut the expenses of maintaining the property.
The general rule in foreclosure is “you will earn money when you buy not when you sell“. It’s a bit of an odd statement but when you analyze it carefully, it says that you must buy a property which is below the market value and sell it for a higher price. Thus, from the time you bought the property you already have a great chance of earning profits.
If you invest in Real Estate, it can help become rich
Historically, real estate properties increase in value especially if there is a continuous progress in an area such as new hospitals, roads, railways or MRT, malls and others.
I discovered that the house of my wife’s parents in Fairview area increases the value to 1000% after more than 20 years. They bought it in 90’s at PHP90,000.00 and the value now becomes almost 1M already.
When you come to visit in some business districts like Ortigas and Makati, you will see a lot of buildings owned by banks because that’s where they invested the money of their depositors.
Let me ask you, do you know the common thing to this Top 3 Richest Tsinoys (Henry Sy, John Gokongwei and Andrew Tan)? They are investing in real estate properties such malls, condominium and office buildings that is why they are rich.
The foreclosed property I bought last year which is closed to MRT-7 station that was already an approved project under PPP (Public-Private Partnership). Once it’s completed on 2020, I believe that the value of our property will increase dramatically and I will become rich then. 🙂
Most people knew that they need a big capital to invest in real estate property. That’s actually a big myth. You don’t need millions of pesos to invest in real estate.
Most banks will only require you pay 10% or 20% of the total value of the property as down payment. The remaining balance will be loaned thru banks or Pag-ibig.
I can suggest you 3 ways to raise your capital for your foreclosed investment:
- Your own savings. As they say “cash is king“. If you have enough capital to pay the property in full amount, you may get a discount and will save huge amounts of money from the interest rate.
- Partnership or joint venture with your family or trusted friends. If you know someone from your family or friends that you can partner with so you can raise enough capital to invest. Just make sure that you have a common understanding on this venture because you will share the risks and profits at the same time. You can also create a signed agreement.
- OPM (Other People’s Money). This is where you borrow money from other people like your parents, relatives or friends and use it as capital in an investment. You can also call it as personal loan which is more advantageous than borrowing money from lending institutions because of low interest rates or nothing at all.
NOW is the best time to invest in real estate because our country and every location in the Philippines will continue to progress without YOU.
I hope you find this post valuable and will help you in some way. This was written by Marvin Basa as a guest post on this blog. You can connect with him thru his own blog here.
Also, he has a special gift for you. You can download his FREE eBook “SUCCESS BLUEPRINT FOR BEGINNERS IN FORECLOSURE INVESTING” here.