Foreclosure Philippines » Real estate

4 reasons why we need to be financially literate real estate investors

Jay — Mon, 06 Sep 2010 06:45:51 +0000

In a recent post where I tackled the frequently asked question: “Are foreclosed properties good deals?”, I mentioned that financial literacy is a prerequisite to real estate investing, and with good reason. I believe that the lack of financial literacy will certainly lead to financial failure! Sometimes we need to fail but not like this!

Let me give you four reasons why I believe we need to be financially literate real estate investors.

Reason #1: You will eventually be able to save enough money to finance your own deals

As I have said in my series on managing finances, you need to learn how to manage your finances to get ready for your first real estate deal, and you do this by taking care of your finances by becoming your own Chief Financial Officer, who is always on top of one’s cashflow by properly tracking income and expenses and proper money management.

Still have nothing to invest? Buried in credit card debt? Living paycheck to paycheck?

As Rich Dad would say, “It’s not how much money you make, it’s how much you keep.”

Why not take a deep hard look at how you manage your money and take the next step?

Reason # 2: You will become trustworthy when it comes to money

Think about it, would you do business with someone who is not trustworthy?

This not only applies if you do decide to get other people’s money or OPM to finance your deals, you also need to be able to trust yourself. If you trust yourself, I’m assuming you really are trustworthy and you act in a trustworthy manner.

As they say, “If you want people to trust you, be trustworthy.”, and you start by being trustworthy with your own money, not with OPM.

If you can’t even trust yourself to handle your own money well, don’t even try to get into real estate investing.

Reason # 3: When you get your own deals, you will be on top of your finances with regard to your investment properties

So you got a deal, finally! But how do you know that you are doing good? You’re an investor and you need to know if you really are making money!

If you are financially literate and manage your finances the way you should, you will know at any given time if you are really making money or losing money, you will be on top of your cashflow.

What if you eventually got your very first real estate deal but never really learned how to manage your money? You might lose track of your expenses and then you end up wondering what’s happening to your cash, or even worse, you might even lose track of important payments like monthly amortizations or you simply have no money left to settle your obligations and end up facing foreclosure.

On the other end, you might lose track of your receivables and end up NOT getting the money that is rightfully yours, some if which are meant for mortgage payments, maintenance, etc.

Things get even more complicated once you acquire more and more deals, so without financial literacy, you might end up with nothing but a financial mess.

Reason # 4: When you do start earning money from your investments, you will certainly not end up like a lot of Lotto winners

In a recent talk during The Feast at the PICC, Bo Sanchez mentioned stories of Lotto winners who lost all of their money, get buried in debt, ended up with broken marriages, etc. (Actually Bo also wrote an article that mentioned this and you can read it here: How To Use Your Pain To Achieve Great Success). These are perfect examples of what can happen if one who is not yet financially literate gets a big amount of cash. Sad but true.

Earning money from real estate investing, though not as big as Lotto winnings(at least not at the start ), can still be considered as a big windfall of money, especially, if your real estate investing strategy is more focused on capital gains. If you are not financially literate, you might not be able to handle the sudden windfall, and you may end up just like those Lotto winners mentioned by Bo, where money became a curse.

On the other hand, imagine if you were financially literate, and you earned a lot from your real estate deals (or if you won the Lotto), you will be able to handle it well, you won’t go into a shopping spree, you won’t go for instant gratification, you won’t accumulate liabilities, you will focus on real income generating assets, you will be generous, you will spend wisely, you will be in control. You will be able to manage it well and put your new found wealth into good use, it will become a blessing.

There you have it folks…

You need to start by working on your financial literacy first, it cannot be just an afterthought.
To be someone who can be trusted, you need to become trustworthy, and that definitely applies to money and real estate investing.
Financial literacy will let you know if you are really making money with your deals, and help you run your business through proper cashflow management. Yes, real estate investing should be treated as a business. The importance of managing your finances well will get magnified as your business grows.
If you are financially literate, more money will be a blessing to you and the people around you, it won’t be a curse.

Remember we are just stewards of the wealth and abundance that come our way, and being financially literate helps ensure that we become worthy stewards.

“From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.” – Luke 12:48

What do you think?

To our success and financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter:http://twitter.com/jay_castilloFind us in Facebook:Foreclosure Philippines facebook page

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Are foreclosed properties good deals?

Jay — Sun, 29 Aug 2010 22:00:36 +0000

It depends! Obviously not all foreclosed properties are good deals.

It’s common sense that not all properties are good investments, foreclosed or otherwise, you don’t need to be a real estate investing guru to know this. However, based on the number of times I’ve either heard people ask or get asked this very same question, I feel that a significant number of people out there either have a misconception about foreclosed properties, or they are simply clueless.

Let me make it clear, NOT all foreclosed properties are good deals, and it would be foolish to think all of them are.

Don’t ever expect all foreclosed properties to be good deals because if you do, you are setting yourself up for frustration, disappointment, and failure, especially when you start finding foreclosed properties that turn out to be horrible deals. More on this later.

“Hey Jay, are you saying foreclosed properties are no good?”, you might be asking.

As I said, it depends. No, I’m not discouraging you, I’m just trying to help with managing expectations. Admittedly there are more bad deals out there than good deals, but there are still more than enough hidden gems out there that can make worthy real estate investments, and the key is finding them. One needs to look at a lot, and when I say a lot, I mean a lot of properties, to find those hidden gems, after all, investing in foreclosed properties is a numbers game.

Investing in foreclosed properties is a numbers game

I’ve said it before and I’ll say it again, investing in foreclosed properties is a numbers game.

: Image by nickhall via Flickr

The greater the number of foreclosed properties you look at, the greater the chance that you will find those good enough deals, and even some great deals. However, you will find a lot of bad deals in the process, but that’s just part of the game. It’s okay to find horrible deals, as long as you find out before you bought the property, and move on.

Keep in mind that one cannot just give up after looking at a few properties. I often hear people get frustrated with foreclosed properties after looking at just one or a couple of properties, or even with just one listing that really did not have many properties to begin with. And then they give up and say things like “I’ll never find any good deals…” or “The numbers will never work…” or “This is too hard…” or “I’m just wasting my time…”. Sorry, nobody said foreclosed real estate investing is easy! It may sound simple, but it isn’t easy.

The 100-10-3-1 Rule

You basically need to look at a significant number of properties to find those properties that are worth a second look.

How many would that be? The general recommendation would be to find about 100 properties worth a second look, after doing initial shortlisting. Out of those 100 properties, you will probably find 10 worth inspecting. Out of those 10 worth inspecting, you might find 3 properties that are worth giving offers for or bidding for, if they were for sale through a public auction. Out of the 3, you may end up buying 1.

That’s a brief overview of the 100-10-3-1 rule. I’ve read many variants of this rule from books and also from some of my mentors but they are basically the same. You analyze 100 properties, inspect 10, submit offers on 3, and end up buying 1. These are just average numbers, but you’d be surprised how accurate this average can be in real life. Been there, done that!

Other numbers to consider

Of course there are other numbers to consider when applying the 100-10-3-1 rule and when “doing the numbers”.

Numbers like After Repair Value (ARV), projected repair costs, target profit, Maximum Allowable Offer(MAO), Cash on Cash Return (CCR), Return-On-Investment or Return Of Investment(ROI), Net Operation Income(NOI), Cashflow, etc., to name a few, also need to be considered. For each of these numbers, you as the real estate investor will ultimately have to decide what is acceptable for you. These numbers will determine if a foreclosed property is a good deal or not.

If this sounds too daunting and tedious for you, I would be the first to say that this might not be for you. But there’s no harm in trying right?! Imagine what could happen if you consistently did this until doing the numbers became a habit and you actually became good at it!

No, I won’t have time to explain all of these numbers now, but one by one, they will be covered here soon.

Sometimes it’s all in the mind

I still remember during the early part of 2008 when I found myself unable to find any good deals in any of the listings of foreclosed properties that came my way.

I was still recovering from feelings of being betrayed after how Dinna Revilla, a former real estate mentor, got arrested and became a “fallen real estate guru”, and in disgust of what she allegedly did to those who trusted her(as far as I know, the case is still pending), I just decided to invest in mutual funds instead of real estate.

My respite from real estate investing however was short-lived because I eventually met another mentor, Doctor Jon Abaquin, who was also featured in Larry Gamboa’s book “Think Rich Pinoy”(see page 155), who later challenged me and a couple of my friends to each buy a property within 90 days.

Lo and behold, from the same listings lying on the table in my bedroom where I could not find any suitable properties, all of a sudden I was able to pinpoint at least 3 very promising foreclosed properties from 3 banks and I ended up submitting an offer for the most promising one. Later, that one offer got accepted. That experience opened my eyes and from that point onwards, I truly believed that there were good, and great deals out there, I just had to look a little bit harder!

But what if I do find a good deal but have no money to invest?

My take on this: Financial literacy is a prerequisite to real estate investing. Being financially literate leads to proper management of one’s money and finances, which should then help one save enough capital for investing. When that right deal comes, you will be ready. If you think that would take too long, then another option would be to find investors for your deal, although personally, I would recommend that beginning investors do it by themselves, especially on the first few deals.

I believe you should build your track record with your own money first before risking other investors’ money. If you can’t even handle your own money, how do you expect to be able to handle the money of investors?! Sorry if I may sound harsh, but hey, this is just my opinion.

So how many properties have you looked at?

Have you looked at 1, 2, 3… and have given up already? Are you looking hard enough?

Remember, the more you look and do the numbers, the greater the chance that you’ll find that real estate investment for you.

Next time someone asks you, “Are foreclosed properties good deals?”

I’m pretty sure most of you out there will eventually encounter this question once you decide to invest in foreclosed properties and people learn what you do. Well, I hope to help save you the trouble of coming up with your own answer, which can turn out to be a very long one, just like mine. If you want, you can just send them over here, and I hope my answer above will be of help.

Next question please!

Good luck and happy investing!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

Real Estate Broker License #: 20056

Blog: http://www.foreclosurephilippines.com

Follow me in Twitter:http://twitter.com/jay_castillo

Find us in Facebook:Foreclosure Philippines facebook page

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

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Real estate brokers exam postponed… again?!

Jay — Thu, 19 Aug 2010 06:30:13 +0000

I received information from a very reliable source that the much anticipated real estate brokers exam and real estate appraisers exam which are to be under the PRC have been postponed. The real estate brokers exam schedule was apparently set for December 5, 2010, while the real estate appraisers exam follows on the next day, December 6, 2010. Please refer to a message below for more details.

Dear Rebap Team,

I just got confirmation from PRBRES Chairman EG Ong, that the Brokers and Appraisers Exams to be held on December 5 & 6 respectively, is hereby POSTPONED.

The new date of said examinations will be on FEBRUARY 5 & 6, 2011.

Pls inform your chapter members and committees concerned.

In the meantime, we wait for future announcements and guidelines from the board.

ONE with you,

EMILY QUEVEDO-DUTERTE
Certified Real Estate Broker
REBL No. 8836

NATIONAL PRESIDENT
Real Estate Brokers Association of the Philippines, Inc. (REBAP. Inc.)

Source: http://rebapmarikina.com

Although this message was posted in the official website of the Real Estate Brokers Association of the Philippines – Marikina River City Inc. (REBAP-MRCI) chapter, where I am a regular member, I also received a copy of the same message through e-mail as a member of REBAP. As I said, this came from a very reliable source, as it comes from CRB Emily Quevedo-Duterte, who is the National President of the Real Estate Brokers Association of the Philippines, Inc. (REBAP. Inc.).

Why was the real estate brokers exam postponed?

In 2009, the real estate brokers licensure exam scheduled for October 2009 was postponed when the RESA was signed into law. This time around, I can only assume that the brokers exam was postponed to give more time for those in charge of the exams (PRC in this case) to prepare, and also for those who plan to conduct Certified Real Estate Seminar and Review or CRESR’s to prepare and be able to fulfill the one hundred twenty (120) credit units of real estate subjects and training, which is one of the requirements for those who want to take the exams. I suppose this also helps give them ample time to become duly accredited service providers, and to actually have enough time to conduct the seminars.

Does 120 credit units translate to 120 hours?

During a recent regular meeting of REBAP-MRCI that I attended, a fellow member raised the concern that the 120 credit units might not necessarily translate to 120 hours. Actually, that was the first time that I thought about it that way, and his concern made sense. I remember back in college, 21 units is already considered as a full load for a whole semester. What if the 120 credit units of real estate subjects were treated the same? Imagine how many semesters in college it would take to finish 120 credit units? I just hope that those concerned can shed more light into this and help clarify the issue.

If in case it does translate to 120 hours, it would still require many months to complete such seminar. If a 24 unit CRESR normally took six weeks (at a rate of 1 meeting consisting of 4 hours per week) to complete prior to the RESA law, imagine how long it would take to finish 120 hours. Aside from the long amount of time it would take, imagine the cost for such seminars. Most people say that a 120 hour seminar would cost about Php20,000 pesos, and you still have to pass the exam to make sure your money does not go to waste.

More time for aspiring licensed real estate brokers

I suppose those who plan to take the real estate brokers exam would welcome this development as this would give them more time to attend the seminars prior to the exam, there would be more accredited service providers, and hopefully the competition would bring down their seminar fees, and lastly, aspiring brokers will have more time to review and actually pass the exam. I’m just glad I was able to take and pass the November 2007 Real Estate Brokers exam.

A reminder for real estate investors

If you are planning to take the real estate brokers exam because you plan to invest in real estate and think that being licensed is required, think again. In my opinion, being a licensed real estate broker is not required if you want to invest in real estate. As an investor, you are the owner, and you don’t need to be licensed to sell your own property. Let me quote Section 28-A of the RESA Law IRR:

“SEC. 28. Exemptions from the Acts Constituting the Practice of Real Estate Service

The provisions of this R.A. No. 9646 and the IRR shall not apply to the following:

(A) Any person, natural or judicial, who shall directly perform by himself/herself the acts mentioned in Section 3 hereof with reference to his/her or its own property, except real estate developers who are regulated by and registered with the Housing ang Land Use Regulatory Board (HLURB) pursuant to law and other resolutions/regulations such as but not limited to Presidential Decree (PD) 957, as amended,and Batas Pambansa Blg. 220 and their Implementing Rules and Regulations;

xxx”

Need I say more?!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

PS. Trace Trajano has created a coaching program for beginning real estate investors and I am part of the team that will help Trace with the coaching program. Click here to learn more! Hurry, only 9 slots left!

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Allied Bank properties for sale (ROPOA) as of June 30, 2010

Jay — Thu, 05 Aug 2010 04:30:58 +0000

As promised in my previous post, I shall be sharing copies of listings of foreclosed properties/acquired assets that I was able to get during the 4th Philippine Real Estate Festival. For this installment, I’ll be sharing the ROPOA properties for sale from Allied Bank which I got from their booth during the Real Estate Festival. By the way, ROPOA stands for Real and Other Properties Owned or Acquired.

This listing from Allied Bank contains more than 300 properties for sale located nationwide and even includes a couple of properties located in Guam.

Click here to download a copy of Allied Bank ROPOA properties for sale as of June 30, 2010 - (Note: If your browser does not open the PDF file in a new window, just right-click the link above then click “Save as…” to download this PDF file. To open PDF files, you need to have a free PDF reader like Foxit PDF Reader, or Adobe Reader version 9.0 or higher installed on your computer.)

Yes, I know that this list might be outdated as it is as of June 30, 2010, but this was what I got during the real estate festival. Anyway, according to the list, an updated list can also be accessed online at their website, which was what I did, and I was also able to download a list in excel format. Click here to download a copy(excel format).

Reminders – Please read!

For inquiries specific to any of the properties on the list, interested parties may inquire DIRECTLY at:

SPECIAL ASSETS GROUP

Allied Banking Corporation
11th floor, Allied Bank Center
6754 Ayala Avenue, Makati City

Trunk-lines: 816-3311 to 50; 818-7961 to 69

locals: 3651; 3217; 3620; 867-1158(telefax)

Look for: Erick, Mylene, Ninie or Tats

You can also access their listing at http://www.alliedbank.com.ph

Click Products & Services and select Properties for Sale

Please keep in mind that I am just posting this as a public service to readers and subscribers of ForeclosurePhilippines.com

For other questions, please post them through a comment below so that others with the same questions may also benefit from the answers. Thank you!

Happy hunting!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

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Buena Mano Visayas and Mindanao Q3-2010 catalogue now available!

Jay — Mon, 19 Jul 2010 06:15:48 +0000

Here is the latest list of properties for sale from the Buena Mano Visayas and Mindanao Q3-2010 catalogue.

You will notice that Buena Mano has combined all of their Green tag, Yellow tag, and Red tag listings into a single catalogue, where the properties are color coded so that you can easily identify their classifications. Learn more about these property classifications below.

What are Green tag, Yellow tag, and Red tag properties?

Green Tag properties are real estate properties with titles and tax declarations duly consolidated/transferred under the name of the bank which foreclosed the properties. The bank holds possession of the foreclosed properties with its authorized caretakers, particularly those with improvements and can be visited/inspected anytime.

Yellow Tag properties are real estate properties with any of the following “special concerns”: Titles and tax declarations are still in process of transfer to the name of the bank which foreclosed the properties; Titles are already under the name of the bank which foreclosed the properties but the properties are still occupied by the former owners, tenants or illegal occupants; or there are property documents that still need to be updated.

Red Tag properties are real estate properties specifically with pending court cases (under litigation) filed by the previous owners against the bank. Titles of these properties are with annotations, adverse claims or Lis Pendens.

Click here to download the Buena Mano Visayas and Mindanao Q3-2010 catalogue (Note: this is a 2.4MB file, downloading may take sometime to complete, depending on your internet connection speed).

Remember, I am a duly accredited broker for this listing so If you are seriously interested in any of the properties on the list, just let me know through the comments section below so I can have one of my agents assist you. If you have any questions, please leave a comment below so that other people with the same question will also benefit from it. Thanks!

Looking for Metro Manila and Luzon properties?

Don’t worry, I was also able to secure copies of the Buena Mano Greater Metro Manila, and Luzon catalogues for Q3-2010, and I will post them next.

Don’t forget to subscribe to e-mail alerts and get notified when these listings are posted.

Happy hunting!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

PS. Attend the first ever Internet Marketing Boot Camp in Manila on July 29 and 30, 2010. This event was created by Internet Marketing Maven Anton Diaz together with Larry Gamboa and Randy Manaloto (I consider Anton, Larry, and Randy as my mentors!). There will be 16 speakers in this two-day event in Dusit Hotel. The focus of the Bootcamp is to teach attendees various business models on how to earn dollars while staying here in the Philippines. Click here now for a sneak preview(featuring Bo Sanchez)!

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How passive income through real estate investing can lead to financial freedom

Jay — Thu, 24 Jun 2010 06:22:54 +0000

Welcome to the fourth part of this series on the 3 types of income one can get through real estate investing. This is actually part 2 the third type of income which is passive income. Before you begin reading this article, I recommend you review the first three parts:

How to get portfolio income through real estate investing

Earned income through real estate investing

Passive income through real estate investing – the path to financial freedom(Part 1)

In the first part about passive income, we defined what passive income is, showed some examples of it, listed down advantages and disadvantages, and some key points we should remember about it. Now let’s continue…

Before I talk about how passive income from real estate can lead to financial freedom, let me first try to define what financial freedom is for me.

What is financial freedom?

For me, financial freedom is having the freedom to do the things that are truly most important in life for you, the things that you really want to do, not the things you have to do, the things that you would do if you had a choice, and you can do all of these without worrying about where to get money to provide for your family, because there is more than enough cashflow in the form of passive income that can sustain all of your needs, without the need for job or a life where you are stuck in the rat race.

More importantly, financial freedom also means having time freedom, and if you think about it, time is really the most precious commodity we have. Once it passes, it cannot be brought back, and it is gone forever. I’m sure most of you out there would agree that when you are stuck in the rat race, there is no such thing as time freedom.

What is the “rat race”?

Just what is the rat race? Wikipedia defines the rat race as an endless, self-defeating or pointless pursuit, often used to describe work, particularly excessive work; in general terms, if one works too much, when one is in the rat race. Most often in the rat race, one can expend a lot of time and effort, but ultimately achieve nothing meaningful.

Another way of looking at it would be to realize that living life in the rat race becomes pointless if it becomes detrimental to your family, relationships, health, and to your life in general. What’s your rat race?

How much passive income do we need to be financially free?

Okay, so how much passive income does one need to get out of the rat race. The answer is simple, it should be more than enough to cover one’s monthly expenses.

Going back to our previous assumption that we need to earn at least Php100,000 per month to cover our monthly expenses (and also have enough for our other “money jars“), how many passive income deals like our previous example do we need? The number of deals would be equal to our monthly expenses divided by the monthly positive cashflow from passive income which we computed as Php4,057.41/month

Number of passive income deals = Php100,000 per month / Php4,057.41 per month

=24.6 deals or 25

You might be saying “What the… it would take that many deals just to get out of the rat race?!“.

But don’t forget that if you focused on flipping, even if you made 25 deals already that each made Php100,000, you will still have to continue flipping properties, and it would be an endless cycle, much like that in the rat race.

If you focused on true cashflow generating properties, and even if each only made a measly Php4,057.41 of positive cashflow per month, your 25th deal can be your last because you already have accumulated more than Php100,000 of positive cashflow from passive income! You can stop and retire if you wanted to because you are already financially free!

Getting out of the rat race faster

I know I know, a lot of you out there might still be saying “I need to buy 25 rental properties just to get out of the rat race?! That could take forever!”.

But there are ways to get out of the rat race faster, let me show you a couple of examples:

1. Instead of rentals, go for a rent-to-own scheme

What if you bought a foreclosed property for Php1Million by putting down 20% downpayment or Php200,000, with a remaining loan principal balance of 80% or Php800,000, let’s assume the balance is payable in 10 years at 12% annual interest rate(this is the current rate for most banks).

This results in a monthly amortization of Php11,477.68/month( You can verify this by using our mortgage calculator). You will notice this is even higher than our previous example.

This time however, instead of renting out the property, what if you sold it through a rent-to-own scheme at a contract price of Php2M @ with 10% down with the balance payable in 15 years at 15% annual interest rates? Your tenant-buyer would then be paying you Php25,192.57/month for the next 15 years.

Assuming monthly expenses all add up to about Php4,000/month just like ion our previous example, the resulting monthly positive cashflow would be:

Monthly Cashflow = Monthly Rent-to-own payment – Monthly Expenses – Monthly amortization

=Php25,192.57 – Php4,000 – Php11,477.68

= Php9,714.89/month

How many passive income deals like this do we need to get out of the rat race?

Number of passive income deals = Php100,000/month / Php9,714.89/month per deal

=10.29 or 11 deals

Wow, from 25 deals down to 11 deals, now this is more like it! But wait, there’s more! What if you and your tenant-buyer agree to shorten the payment period?

2. Shorten the payment period

What if instead of having a rent-to-own agreement that has a payment term of 15 years, you go for 10 years instead? Your tenant-buyer would then be paying you Php29,040.29/month for the next 10 years. The resulting monthly cashflow would be

Monthly Cashflow = Monthly rent-to-own payment – Monthly Expenses – Monthly amortization

= Php29,040.29 – Php4,000 – Php11,477.68

= Php13,562.62/month

How many passive income deals like this do we need to get out of the rat race?

Number of passive income deals = Php100,000/month / Php13,562.62/month per deal

=7.4 or 8 deals

Wow, from 25 deals down to 8 deals! Actually there are a lot more things one can do to get out of the rat race faster. One way is by increasing the net monthly cashflow by lowering maintenance/property management expenses. another way would be to refinance your loan with another bank at lower interest rates, etc.

I won’t discuss them here for now, I would not want to get anyone out there to become overly optimistic and want to get rich quick. Keep in mind that investing for passive income is not a get rich quick scheme!

Again, we also need to consider that for rental income, taxes range from a low of 3% percentage tax to a high of 12% VAT, which are mutually exclusive. You pay one or the other, depending on which is applicable. As mentioned previously, the taxable income can be reduced through allowable deductions, thereby lessening the payable taxes. Let’s discuss more about taxation of rental income in a future article.

Another thing about rent-to-own deals, keep in mind that your cashflow stops at the end of the payment term as you no longer own the property. But still, your cash comes in all throughout the duration of the rent-to-own agreement, which is 10 years in my last example above. Anyway, I believe one can “create” a lot of other passive income streams in 10 years time to replace one rent-to-own deal right?

Passive income will help you stop living life passively

One thing I failed to mention in the first part about passive income is it really helps one to stop living passively. When I say living passively, it’s like one is going through life like a zombie who just accepts what’s happening, instead of taking charge of our lives.

For example, one just goes through the motions of being an employee, yet there is more to life than just being an employee. There is a way to live where you don’t need to spend most of your time making a living and you can actually focus on the “living” part. One does not need to live life passively because we always have a choice. Bo Sanchez explains this best in his article “Don’t be a Zombie”

Can it really be done?

Yes, it can really be done, you can trust me on this. The key is persistence, commitment, perseverance, bias for action, the drive to keep moving forward in spite of failure, having courage to face your fears and get out of your comfort zones, and the will to succeed! If you don’t believe it is possible, then you might be surprised when you read this!

Where do I start?

“All this talk about passive income and financial freedom sounds nice but how does one start?” you might be asking.

Most focus on “how”. Just like what most of my mentors and books I’ve read say, I believe you should first focus on “why”.

Why would you want to start this journey to financial freedom?!

That “why” should also be big enough to sustain you and see you through until you succeed!

You need a big enough reason to start, an emotional why, a higher purpose, something worth fighting for. Think about your rat race and why you would want to get out of it. What would you do once you are free? Find that purpose and use it to fan your burning desire and your passion to achieve financial freedom.

If passive income is easy, everyone would be doing it right?

Yes, if it were easy, everyone would be doing it. But I did not say getting passive income is easy, because it’s not. It may sound simple, but it is not easy, and it is probably the hardest of all real estate investing techniques to do, and with good reason. It is harder to find those positive cashflow generating properties than properties that can be flipped for a profit.

But let me tell you something that I have learned through firsthand experience. Sure it may not be easy, but it is definitely easier than most people think! This is coming from someone who is doing it.

I also believe that you can do it too!

Coming up next: Summary and wrap-up on the three types of income one can get through real estate investing

Yes, you read that right, there will be a fifth and last part of this series where I will summarize everything and add some more of my insights (yes, there’s more!), and yours as well, along with any other questions you may have.

Go ahead! Please write them down in the comments section below. Thanks!

To our success and financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Mobile phone (Call/SMS): +639178843882
Follow me in Twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

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A financial independence day story: Cross-over from IT to RE

Jay — Sat, 12 Jun 2010 08:08:08 +0000

It’s hard to believe it’s already been a year since I first greeted you all here with a financial independence day greeting. This time around I would like to greet you all again by sharing a story of how an Information Technology professional was able to cross-over to Real Estate investing. I hope this inspires not just IT professionals but also just about everyone out there that it can really be done.

Cross-over: from IT to RE

(The Philippine Star) Updated June 11, 2010 12:00 AM

MANILA, Philippines – For Jay Castillo, crossing over from heading the IT department of a multinational company to investing in real estate seemed like a very big risk at first glance. But there’s no denying now that he’s enjoying real estate investing and making good money out of it.

Jay wanted to get his feet wet in real estate investing after reading Think Rich Pinoy by Larry Gamboa. He still had a lot of unanswered questions, though, on how exactly he could start investing. Fortunately, he was able to attend Urban Institute of Real Estate’s Investing in Real Estate Series. “I also attended Urban Institute’s Comprehensive Real Estate Seminar and Review (CRESAR) to gain knowledge in real estate and I also passed the real estate broker’s licensure exam a month after,” Jay shared.

At present, Jay continues to look for bargain and foreclosed properties to buy and sell. He is also considering buying lots where he can build townhouses which he could sell or rent out afterwards.

“This would be a big departure from what I did last year which was to buy and renovate foreclosed house and lots and then sell them through a rent-to-own scheme” Jay said.

According to Jay, the real estate business can be very lucrative if one focuses on bread-and-butter properties or single-unit houses and lots priced at P2 million and below. “These are the kinds of property many buyers are looking for.”

The other more saleable properties are single family homes below P2 million with 2-3 bedrooms, 1 toilet & bath, with a floor area of 50 to 60 square meters (sqm), and lot areas of around 100 sqm.

Jay’s first completed deal is always the most memorable for him. “For my first completed deal, I bought the property through an auction after many attempts in bidding for properties at public auctions and not winning anything. After I won a bid for the first time, I was very happy, but a feeling of anxiety also began to set in: “What if I am not able to rent out or sell this property?” “What if I encounter a problem with the title of the property, the taxes, the house’s structure, etc?”

His fears were unfounded after all. That property was a perfect example of a great investment as he was able to have it tenanted in just 55 days. “I learned so much from that deal,” he enthused.

One of the more important considerations a serious buyer asks is whether the property is flood-free and was not affected by Ondoy. “Of course, buyers would also want to know if the property is accessible to public transport and near their place of work, in a safe and secure location, and has good investment potential.

Is it true that to be able to sell a property, you must be able to fully explain or answer all the questions a buyer may ask? “Yes, and one also has to be able to answer sincerely,” replied Jay. “I credit Urban Institute of Real Estate for giving me the kind of training and know-how that gave me a lot of confidence in dealing with clients,” he added.

Jay believes that Filipinos have become more intelligent and discerning buyers seeking more value for money and looking for sound investments like real estate.

Before enrolling in Urban Institute, all Jay knew were general concepts on real estate investing but had no idea how exactly they can be done.

“At Urban Institute, I learned exactly how real estate transactions are conducted considering the laws, rules and regulation, taxation, etc. When there’s a difficult question I encounter, I can ask Urban c/o Engineer Enrico Cruz “Engineer Cruz has probably encountered just about everything there is in real estate investing so he is able to answer all of my questions quickly.” Cruz is the president of Urban Institute of Real Estate and has more than 40 years of working experience in the field of engineering, construction, real estate, and education.

(For details about real estate courses at Urban Institute, call 509-7402 or 796-8019, or CP# 0916-426-9174 or 0939-137-9242 or email at info@urbanet.ph or urbanet.ph@gmail.com.)

Article source: Philippines Star, June 11. 2010 (page C-3 on the printed edition)

Here’s a little trivia, if you will notice my picture on the printed edition, I appear to be very serious and somewhat concerned. This was because I was checking what was my maximum allowable bid as I had a lot of competitors who were also bidding for the same properties during this auction of UCPB foreclosed properties. I did not win in any of my bids for properties I was bidding for during that auction but I was able to win three months later with another bank. I guess persistence really pays off!

Happy financial independence day to all!

To our success and financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Mobile phone (Call/SMS): +639178843882
Follow me in twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

PS. What are you waiting for? Learn from 16 successful entrepreneurs, investors, best-selling business authors, sales superstars, and money experts including Trace Trajano and Eden April Alemania-Dayrit. How? Attend the Money Summit and Wealth Expo 2010, the BIGGEST wealth building and income opportunities super conference and expo in the Philippines, on July 2-3, 2010 in RCBC Plaza, Makati City. Click here for details! I will be attending this and I hope to see you there!

PPS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

PPPS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Inbox getting full? Subscribe through my RSS Feed instead!

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Passive income through real estate investing – the path to financial freedom (Part 1)

Jay — Thu, 10 Jun 2010 04:02:55 +0000

Welcome to the third part of this series on the 3 types of income one can get through real estate investing. This was supposed to be the third and last part which is about passive income, but it has turned out to be a huge article in itself (more than 4000 words) , which is why I will have to split it in two. This will be the first half .

Before you begin reading this article, I recommend you review the first two parts about portfolio income and earned income:

How to get portfolio income through real estate investing

Earned income through real estate investing

Next we continue with passive income…

What is passive income?

Wikipedia defines passive income as income from “trade or business activities in which you do not materially participate.” Furthermore, the IRS website defines that “in general, all rental activities are passive activities, even if you do materially participate. You materially participate in an activity if you are involved in the operation of the activity on a regular, continuous, and substantial basis.” These may sound complicated so I would rather stick to the simpler definition that passive income is income that comes in consistently without having to do much physical work.

Examples of passive income are dividends from paper assets like stocks, bonds, and mutual funds, interest income from certificates of deposits, mortgages, income from advertisements on the internet, income from a business where the business owner need not work in the business, residual income from royalties from the sale or use of intellectual property and multilevel marketing activities, and of course, rental income from the leasing of real estate.

Passive income from real estate investing

: Image by Jeremy Burgin via Flickr

In real estate, you get passive income by investing for cashflow. This is when you focus on buying properties whose rental income exceeds all expenses, including taxes, and any payments for loans, if any. Basically, the monthly cashflow would be the monthly rental income less monthly expenses less the monthly amortization you pay to the bank if the property was bought through financing.

Using our previous example again, where I bought a foreclosed property for Php1Million by putting down 20% downpayment or Php200,000, with a remaining loan principal balance of 80% or Php800,000, let’s assume the balance is payable in 20 years at 8.5% annual interest rate(this is the current rate for Pag-IBIG for a loan of Php800,000).

This results in a monthly amortization of Php6,942.58/month( You can verify this by using our mortgage calculator)

For this example, lets also assume that my monthly expenses as the landlord are monthly homeowners association or condo dues, maintenance, property management, real property taxes(I just divide the annual real property tax by 12 to arrive at monthly figures), maintenance reserves, etc. all add up to about Php4,000/month and the property can be rented out at Php15,000 per month.

My monthly cashflow for the example above would then be as follows:

Monthly Cashflow = Monthly Rent – Monthly Expenses – Monthly amortization

=Php15,000 – Php4,000 – Php6,942.58

=Php4,057.42/month

Do take note that the cashflow figure we arrived at above is before taxes, more on the applicable taxes later.

Examples of rental income

Rental income can come from the leasing of houses, lots, house and lots, townhouses, condominiums, parking slots, apartments, buildings, hotels, office-space, space used for cell-sites, billboards, or just about any residential or commercial space. Did I forget any?

One can even earn passive income by having a real estate business, more on this later.

Advantages of passive income from real estate

Least taxed – Passive income in the form of rentals is the least taxed among the types of income one can get through real estate investing. Remember, income in the form of capital gains are taxed at a rate of 6%, while earned income is taxed up to a high of 32% in the form of income tax.

For rental income, the taxes range from a low of 3% percentage tax to a high of 12% VAT. Please take note that percentage tax and VAT are mutually exclusive, you pay one or the other, depending on which is applicable.

The lease of residential units where the monthly rental per unit exceeds Ten Thousand Pesos (P10,000.00) but the aggregate of such rentals during the year do not exceed One Million Five Hundred Pesos (P1,500,000.00) are exempt from VAT, and shall be subjected to three percent (3%) percentage tax.

It follows that the 12% VAT applies to the lease of other properties not covered by the statement above. Please refer to this article: Save Money On Taxes: Exemptions From VAT On The Sale And Lease Of Real Estate for more information and a sample computation.

Of course, income tax is still applicable. The good news is you can still lower your taxable income through allowable deductions, thereby lessening the payable income tax. My wife will create a more detailed article about this in the future. I will force her to do this if needed.

Income comes in without the need to sell the property – An obvious advantage with passive income through rentals is you have income coming even if you don’t sell the property. If you don’t have to sell the property, you obviously do not need to pay any of the major taxes like Capital Gains Tax (CGT) for capital assets or Creditable Withholding Tax (CWT) for ordinary assets, whichever is applicable.

Less affected by a recession or financial crisis (at least for residential properties) – If you invest for passive income, I believe that you are less affected when a recession or financial crisis happens, unlike flippers who might get devastated because they will no longer be able to sell their properties at their desired selling prices as property values plummet.

Even if flippers rented out the properties they could not sell, most may still end up with negative cashflow because the cashflow was not considered at the very beginning. It is easier to find a property that can be flipped for a profit but has negative cashflow, than a property that has both positive cashflow, and can be flipped for a profit. If that were the case however, I would think twice before I sell a passive income generating property as it is like a goose that lays golden eggs.

Without the need to sell a property, investing for cashflow is simply less vulnerable and less risky, in my opinion.

In addition, I believe that demand for residential properties that are for rent would still be pretty high, as people still need a place to live in, even if there was a recession or financial crisis. It would be logical to conclude that the people who would forego buying their own homes would just rent. On the other hand, commercial properties that are for rent would face less demand in times of a recession or financial crisis and would most probably be greatly affected.

Provides a consistent stream of income – Passive income in the form of rentals of real estate provides a reliable and consistent income stream that can really replace a person’s earned income that comes from having a job.

Money works for you - We often hear about the sayings “instead of working hard, we should work smart” and “instead of working hard for money, money should work for you” and passive income from real estate fits the bill. By finding a good rental property, the work is front-loaded, and the rest is just maintenance, and yet the money just flows into your pocket. Now that’s working smart!

You get to enjoy the fruits of property ownership - As you remain as the owner of the property, you also get to enjoy the fruits of ownership like gaining equity as time passes where part of your rental income is paying off your loan, if any, and you also have the benefit of any future appreciation of the property, if you do decide to sell or refinance the property down the road.

The disadvantages of investing for cashflow

Smaller income as compared to capital gains - The example above illustrates that the passive income we can get from a rental property looks small compared to the capital gains that we can get through flipping. Php4,057.41/month versus Php100,000/property(assuming you can really flip at least 1 property per month with a net profit of Php100,000). However, I still prefer rental income because in the long run it will help you get out of the rat race, more on this later.

Furthermore, you can have bigger passive income by focusing on properties that command higher rental rates, decreasing expenses through better and more efficient property management and maintenance, increasing the loan payment term to lower the monthly amortizations, etc. You can even go for a rent-to-own agreement where the option to own the property justifies higher monthly payments, resulting in bigger positive cashflow.

Requires property management – Property management is not really a problem if you have 1 to 4 rental properties. Beyond that, property management would probably feel like you you are back in the rat race , another 9 to 5 existence where the only difference is you own your job. This is just my opinion. Again, you can eliminate this by going for a rent-to-own scheme as the tenant-buyer will the one to manage the property as the property owner.

It is harder to find properties that can generate positive cashflow – Like what I mentioned earlier, It is easier to find a property that can be flipped for a profit but has negative cashflow, than a property that has positive cashflow. If you are consistently doing the numbers with the free foreclosed listings that you get from foreclosurephilippines.com, you would know what I am talking about. If you are not doing the numbers, what are you waiting for, Christmas?! Knowledge gained left unused is knowledge wasted!

Rent control – The coverage of the Rent control act of 2009 include all residential units in the National Capital Region and other highly urbanized cities, with a monthly rent for each of which ranges from One peso (Php1.00) to Ten thousand pesos (Php10,000.00) and all residential units in all other areas, the total monthly rent for each of which ranges from One peso (Php1.00) to Five thousand pesos (P5,000.00).

One can avoid this by investing only in properties that command a rent higher than Php10,000, although this could mean VAT becomes applicable. Another option to avoid rent control is to use a rent-to-own agreement, although in effect you are already selling the property, even if you still get positive cashflow for the duration of the rent-to-own agreement.

You get all the expenses related to property ownership – Expenses like maintenance, cost for fire and acts of nature insurance, real property tax, property management, and other expenses that cannot be passed on to your tenants, remain to be your responsibility as the property owner, unless you enter into a rent-to-own agreement. Monthly dues, utilities, and other miscellaneous expenses can be passed on to the tenant.

You might encounter tenants from hell – Tenants from hell are probably the most dreaded thing that would-be landlords are afraid of. Yes, it happens to the best of us, it even happened to Larry Gamboa, which he shared during the recent Think Rich Pinoy Seminar. The only way to get around this is to pre-qualify your would-be tenants or tenant-buyers.

Things to remember about passive income from real estate investing

Each passive income generating property is like a goose that lays golden eggs – If you remember Aesop’s fable “The Goose That Laid the Golden Eggs”, the goose laid a golden egg consistently each and every day. A rental property is just like that as it lays “golden eggs” in the form of passive income every month.

Passive income generating real estate still needs maintenance and some work; you still need to take care of your “goose”

You need to have property management which can be done by you if you have 4 rental properties or less, or you can just outsource it to other competent people who can do it better than you if you already have more than 4 properties. Take note that the 4 properties is just my own estimate. You may even start outsourcing property management with your first rental property, as this will make it truly passive, and avoid those things that go with property management that might turn you off, like fixing toilets at 3am.
If you don’t take care of your property and your tenants, either the golden eggs will become smaller and smaller as expenses begin to pile up because of deferred maintenance that eventually catches up with you, or the eggs will just stop when the goose dies as you lose your tenants or when your property becomes unlivable, whichever comes first.

Don’t sell the goose – If you sell your property that lays “golden eggs”, then you will obviously have no more eggs, just like when the farmer decided to kill the goose to get all the golden eggs inside of it. But unlike the farmer who found no golden eggs inside the goose when he killed it, you might end up with a big golden egg in the form of capital gains if you sold the property, but that would be the last golden egg, and you will have to find another goose. It is always tempting to make a lot of money quickly. Don’t be too greedy!

How to turn earned income to passive income – There are actually ways to convert earned income into passive income. Here are a few of my ideas:

A. Treat real estate investing as a business – The key is to set it up like a business where you are the business owner who works on the business, and not in the business. You need to systematize your real estate business and delegate as much as possible, among a number of things, that would help make a business like this succeed, and this will turn you into a true business owner, not just someone who owns your job.

It would be like setting up your real estate business to function like it was a franchise of McDonald’s or Jollibee, where the least skilled can do most of the work, which lets you, the business owner, work on the business. Some aspects can even be outsourced like internet marketing for example, which can go for as little as USD2.00/hour, right here in the Philippines, as mentioned here by Yaro Starak. A working system used for such a real estate business can be easily replicated and can even be turned into a turnkey operation like a franchise, as described in the book “The E-myth revisited” by Michael Gerber. I believe this is also Larry Gamboa’s goal when he started his Think Rich Pinoy Franchise.

B. Setup a passive “residual” income stream – Another way to turn earned income into passive “residual” income would be to set it up like a multi-level-marketing (MLM) company. For real estate brokerage for example, what if it was setup in such a way that real estate agents do most of the leg work for the licensed real estate broker they are registered with, who in turn earns an override for each sale? Lets say the agent and the broker split the 6% commission(now referred to as professional fee as real estate brokers are now under the PRC) with 4% for the agent and 2% for the broker. Sure, the agent does most of the legwork but they earn an additional 2%, twice what they usually get. You as the broker earn the 2% passive “residual” income. Do you think this idea of mine would work?

Devote time and effort in finding properties that generate cashflow – If you just focus on flipping properties, it would still be like a 9 to 5 existence because you will always have to flip a property to have cash coming in. If you invest for cashflow however, those small income streams in the form of rental income will eventually become as big, if not even bigger, than the income flipping can generate, as the number of rental properties increase.

The only difference is, if you reach your passive income monthly goal, you have a choice of stopping and yet the monthly cashflow still comes in. If you only have earned income, even if through real estate, you won’t really be out of the rat race.

Coming up next: Financial freedom and how it can be achieved through passive income from real estate investing

Now that you have a general idea of what passive income is, along with its advantages and disadvantages, I will next share my thoughts on what financial freedom is from my own perspective, and what it would take to become financially free through real estate investing.

I will also try to answer questions and statements like “Can it really be done?”, “Where do I start?”, and “In reality if it was easy, everyone would be doing it…”

See you next week for the second half about passive income which would be the series finale on the 3 types of income one can get through real estate investing.

To our success and financial freedom!

Jay Castillo

PS. Learn how to make money work for you! Learn from 16 successful entrepreneurs, investors, best-selling business authors, sales superstars, and money experts including Trace Trajano and Eden April Alemania-Dayrit. How? Attend the Money Summit & Wealth Expo, the BIGGEST wealth building and income opportunities super conference and expo in the Philippines, on July 2-3, 2010 in RCBC Plaza, Makati City. Click here for details! I will be attending this and I hope to see you there!

PPS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

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A busy yuppie that wants to have more time and money

Jay — Wed, 02 Jun 2010 09:30:49 +0000

A guest post by Sha Nacino

For the past few weeks, I have been on a six-day work week. This set-up really drained my energy. Most importantly, it made it impossible for me to go home to our province, a 10-hour bus ride from Manila. I miss my family so much! How I wish I could go home and see my family as often as I want.

Last Saturday and Sunday, I had no work – a very rare chance! I wanted to go home to our province but I was already so tired, physically and emotionally. I just decided to have a laidback weekend where I could relax, sleep, eat, read, think, and write.

: Image by Sha_Nacino

As I was reflecting, I noticed that there are so many interesting activities outside the confines of the corporate world. There’s toastmasters, a public speaking club that will help you develop your communication and leadership skills. There’s swimming, which is a good way to beat the heat. There’s travelling. Photography. Badminton. Running. Jogging. Volunteer work. And many more! I engage in all these activities and more! You could just imagine how physically taxing that was. Not only that, some of these interests could be expensive too!

I couldn’t juggle everything!

I want to do everything! Yet, I don’t have all the time and money to pursue everything at the same time. I have to cut down on some of these activities. Guess where most of my time goes? Yes, to my work because I spend at least 11 hours a day 5 days a week in the office (inclusive of travel time). Does my work make me happy? Let’s just say that I love a lot of things about my employer – the culture, the people, the activities, its corporate social responsibility projects, its personality development programs, and interest clubs.

But if money were not an issue, I would definitely be somewhere else. Yet, I cannot resign just yet because my work is my bread and butter.

I need more time and money!

I want to have more time and more money at the same time. I want to have as much time as I want to spend with my family and loved ones. I want to have more time to do volunteer work. I want to have more money to help our less fortunate countrymen. And I also want to have more money so I can do the things I want to do.

If I work overtime, I could increase my money but this also means less time for my family and other important things in life. How could I have more of both time and money?

What my mentors taught me

My mindset was limited because I knew only of one way to earn money – that was through my job in the corporate world. If I wanted to have more money, I needed to work overtime. I need to work hard for money!

Then I met my mentor Robert Kiyosaki through his book “Rich Dad Poor Dad”. I was shocked when he said that I could earn as much as I want even without working! He termed this as passive income. He also advised me that instead of working for money, I could make money work for me.

Wow! I felt so liberated! If I could learn the art of earning passive income and of making money work for me, then I could have more time to spend with the persons that matter to me most and I could also have more money to use to help others.

When the student is ready, the mentor will come

Last August 2009, I attended the Think Rich Pinoy Seminar of Larry Gamboa, author of “Think Rich Pinoy”, “Grow Rich Pinoy”, and co-author of Trace Trajano in “Think Rich Quick”. This got me really interested in real estate investing.

I guess I was ready to learn more about real estate because a few months back, I met my real estate mentor Trace Trajano. Trace taught me and my team how to invest in real estate with little or no money down. Trace conducted his first ever Think Rich Quick seminar in March 27, 2010. After learning from Trace’s teachings, my team was able to sell a condominium unit in just six days! Trace is really a fantastic mentor!

Would you like to meet my mentor?

What if you’ll have a chance to meet my very own mentor Trace Trajano? Trace Trajano alone could teach you invaluable real estate techniques that could bring you riches beyond your imagination.

But wait! What if you’ll get a chance to meet not just Trace, but fifteen other successful individuals who could teach you 16 different ways of earning money? Would you grab that opportunity? Click here now if you want to learn more!

Dedicated to your success,

Sha Nacino
RYP Realty Team

Sha Nacino is a teammate of mine in the RYP Realty Team. She currently handles marketing.

—

Jay’s thoughts

In a nutshell, Sha just wants to be financially free, who doesn’t?! I totally understand where she is coming from as I used to be as busy as her, if not even busier. I am happy for Sha because she decided to take action and make concrete steps to be financially free, just like my other teammates in the RYP Realty Team. Click here to continue reading the stories of my other teammates.

To our success and financial freedom!

Jay Castillo

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

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Earned income through real estate investing

Jay — Mon, 31 May 2010 06:44:41 +0000

This is the second part of a series on the three types of income one can get through real estate investing. If you missed the first part, please read it before reading this. You can find part one here – How to get portfolio income through real estate investing

Earned income is the type of income that only comes in if you work for it. Sometimes it is also referred to as active income. In real estate, we can get earned income by investing for capital gains, and also through commissions or professional fees by acting as a real estate broker or agent. For beginning real estate investors, earned income is arguably the easiest to earn.

Earned income through capital gains

: Image via Wikipedia

A common way to get earned income through real estate is by investing for capital gains. We can get capital gains through buying and selling properties quickly for a profit, which is more commonly referred to as flipping. Flipping can be further divided into wholesaling or retailing.

Wholesaling

From what I understand, wholesaling is when one ties-up a property under contract, turns around, and sells it to a buyer who is usually another real estate investor for a small but quick profit. The wholesaler basically buys a property below market value and sells it at a higher price but still below market value, leaving enough room for profit for the next buyer. Sometimes it is also possible to just assign the contract.

Retailing

Retailing on the other hand is when you buy a property, renovate or rehabilitate it (hence the term rehabbing), and then sell it for a bigger profit as compared to wholesaling. Although flipping is usually associated with quick deals, retailing is also often described as flipping, even if it obviously takes longer to complete.

Wholesaling and retailing examples

In our previous example on portfolio income, I bought a foreclosed property for Php1Million, renovated it, and sold it for Php1.5 Million. That’s a perfect example of a retail deal.

What if I just tied-up the property by putting an earnest money deposit, and then sold it to another real estate investor by assigning the contract to him for a total contract price of Php1.2Million, leaving him with still enough room for a significant profit if he himself would renovate and sell the property for Php1.5Million afterwards? That’s wholesaling! Your profit of Php200,000 is your earned income.

By the way, if one is investing for capital gains through flipping, one can be greatly affected when market conditions deteriorate and property values go down. One may not be able to sell the property at the desired selling price.

Earned income through commissions

Another way to get earned income through real estate would be through commissions, either as a real estate broker or agent. Take note that I said through real estate, not through real estate investing. In my opinion, when one is after commissions, it is not really investing in real estate but is rather selling time and effort, more on this later.

In the Philippines, the common commission rates for brokers are 3% to 6% while agents usually get 2% to 3%, at least that’s what I often see from other real estate brokers and agents. Remember, I am also a licensed real estate broker.

Advantages of earned income

1. You get quick cash – There is a potential for quick cash because of the quick turnaround time for selling the properties when filliping or acting as a broker. Obviously, there is still a need to actually sell the property and close the deals

2. Requires little capital – When you structure a wholesale deal, one might be able to tie-up or get the property under contract with just a little earnest money which means there is little capital needed. If you act as a broker, there is really no capital needed as you are just selling someone else’s property.

Disadvantages of earned income

1. No sales, no income. Effort driven – If you are unable to consistently (1) find a property to flip or to broker and (2) complete the deal by actually selling it and closing the deal, no income comes in.

2. Need buyers or investors lined up – For flipping to work, you obviously have to have a lot of ready buyers or investors lined up to buy the properties from you.

3. Highest tax rates – If you consistently buy and sell properties and the BIR sees that you are already habitually engaged in the real estate business, your earnings will get taxed at earned income levels, and you pay this through income tax. If you end up at the highest tax bracket, your income will get taxed at a rate of 32%, if I’m not mistaken. Take note however that one can still lower the taxable income through allowable deductions, thereby lessening the payable income tax.

In our example above where the wholesale deal netted a gross profit of Php200,000, one would have to pay income tax amounting to 32% of Php200,000 or Php64,000. If one is also habitually engaged in real estate (you already have at least 6 real estate transactions in the current year), you also have to consider Creditable Withholding Tax (CWT) and VAT if applicable. Yes, you read that right, CWT should be considered instead of Capital Gains Tax (CGT).

If you earn commissions by being a broker or an agent, you also have to pay income tax.

4. Earnings might be inconsistent – Earnings become inconsistent because there will surely be months with no sales or when there are no ideal properties to flip. In case market conditions go bad, one who is investing for capital gains through flipping, one can be greatly affected as market conditions deteriorate and property values go down. One may not be able to sell the property at all.

5. You are actually selling your time, instead of investing in real estate – One drawback is you really have to put in a lot of time and effort into this type of income. I can’t help but say that this sounds like you are back in the rat race.

6. You let go of a property and its fruits – When you flip properties, you let go of the potential cashflow it can generate, along with any appreciation that the property may have as the years go by. How many times have you heard other seasoned investors say that they regret selling a property because of the excellent rental income they could have had up to now, along with the appreciation of the property ? In a way, all the effort in finding a good deal goes to waste.

Is earned income through real estate for you?

I guess it depends on one’s answer to the question “Why are you getting into real estate investing?”

Is it for quick cash? Do you want to get rich quick? Or is it for financial freedom?

Either way, I suppose this is meant to replace the income you would get from a regular 9 to 5 job and right?!

To illustrate, let’s just say your target income is Php100,000 per month. Lets run the numbers and see how we can achieve this through flipping or through commissions.

How many deals would it take to make Php100K per month through flipping?

In my opinion, a wholesale deal worth pursuing should at least make a net profit of 100K so this means you need to complete a deal at least once a month. Again taxes must be considered, the Php100,000 should already be net of all applicable taxes.

If your profit will be taxed at a rate of 32%, then your gross profit should be at least Php100,000/(1-0.32) = Php147,058.82

For retailing, which usually takes 3 months to complete on the average, a decent target would be to earn at least Php300,000 of net profit. This means your gross profit should be equal to Php300,000/ (1-0.32)= Php441,176.47

Do take note that the above should apply when you are already categorized as someone who is habitually engaged in real estate by the BIR.

Again this is on target for the goal of making at least Php100,000 of net income per month.

But there’s a catch. If we apply the 100-10-3-1 rule where for every 100 deals we analyze, we can expect to have 10 worth inspecting, and 3 are worth making offers, to end up buying one, this means we need to have more than enough leads that would lead to 100 deals worthy of being analyzed and we have to do this each and every month, 12 months a year, or else your income won’t come in. And we haven’t even considered marketing which is needed to sell the properties, which is also very labor intensive.

How many deals would it take to make Php100K per month through commissions?

Let’s say you are a licensed broker and are entitled to a 5% commission for each sale of a property worth less than Php10Million. How much worth of properties do you need to sell just to make Php100,000 per month.

Assuming that you will have to pay income tax at the rate of 32%, then the actual commission one needs to earn would be Php100,000/(1-0.32) = Php147,058.82, similar to the example above for flipping. If this amount represents the 5% commission, then the property should be worth Php147,058.82/0.05 = 2,941,176.47. This means I need to sell about Php2,941,176.47 worth of properties per month just to take home Php100,000 of earned income.

Why does it feel like I’m back in the rat race if I focus on earned income generating activities? Is it just me or are you also beginning to feel that getting earned income through real estate is no different from having a job?!

So much work and taxes to pay and income stops when you stop working

If your goal is financial freedom, then earned income in itself might not be able to provide this mainly because of the amount of work to be done, the huge amount of taxes to pay, and the income stops once you stop working actively, unless you find a better way…

My thoughts on earned income

Earned income is okay if it will eventually be used to buy passive income generating assets. Earned income through flipping properties is great for the short term. The long term goal is to use these earnings to eventually buy properties that generate passive income.

I also believe it would be a good source of supplemental income as opportunities arise, where significant and quick profits are hard to ignore. Supplemental in the sense that it can supplement our income while we ultimately build our passive income streams.

Earned income generating activities as explained above like flipping through wholesaling/retailing and earning through commissions are okay if they can be turned into a business where you are the business owner. When I say business owner, I mean the business can thrive even without you. If a business can’t survive without you, then you own a job, not a business, as paraphrased from Michael Gerber’s book “The E-Myth Revisited”.

Let me try to explain these further in the next part of this series.

Coming up next: Passive income – the path to financial freedom

Coming up in the third part of this series, I’m going to tackle how one can build passive income streams through real estate investing, which I believe is the path to financial freedom.

Passive income through real estate investing – the path to financial freedom (Part 1)

To our success and financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Mobile phone (Call/SMS): +639178843882
Follow me in Twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

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There is a better way to make a living!

Jay — Mon, 08 Mar 2010 03:24:04 +0000

Have you ever endured being away from your family just to make a living? Have you ever found yourself asking if all the money you make in exchange for the freedom to be with your loved ones was worth it? Do you find yourself asking if there was a better way to make a living?

I used to be an employee and although I was based here in the Philippines, I remember that I still found myself asking the very same questions above, even though I still get to come home to my family everyday. What more if you were an Overseas Filipino Worker (OFW) and had to live in a foreign land away from your family and loved ones just to make a living, with the belief that this is for their own good?

I had a taste of how OFW’s feel because in a way I became one when I was tasked to be part of a team that deployed an ERP system in Moscow, Russia. During the first few days it was okay but as the days became weeks, feelings of doubt, homesickness, and anguish began to creep in. I stayed there for just about 2 months and I never went abroad for such assignments again, swearing I would never leave the Philippines just to make a living.

I would rather stay here in the Philippines and actually be with my loved ones. I guess deep inside I knew there is a better way.

There is a better way: The story of Bobet

If you have been reading the blog of Trace Trajano, best selling author of Think Rich Quick, you will recall the story of Bobet, just one of the countless Filipino nurses working abroad. Bobet worked overseas, was making good money, but really did not know much about managing his money.

While he was yet to receive his first paycheck, Bobet used borrowed money to buy doodads like a new cellphone. It was obvious that if Bobet did not change his ways in managing money, he would be doomed to working for money for the rest of his life.

Fortunately, Trace’s and Bobet’s paths crossed in the United States and Trace was able to explain to Bobet the secrets of wealth. Bobet was able to learn about passive income, the kind of income that comes in even if you didn’t work for it anymore as it is more like money working for you.

After Trace taught Bobet the concept of passive income, Bobet started a lending company, and then an internet café business in the Philippines. In a year, he became a millionaire. Soon afterwards, he opened his fifth internet café branch at SM in Bulacan. His lending business has also expanded and already operates both in the Philippines in the United States.

Yes, there is a better way! Trace mentored Bobet about the secrets of wealth and a year later he has become a millionaire. He no longer needs to work as a nurse in the U.S. He no longer misses his wife and kids. He can now kiss and hug them everyday. He has achieved in 1 year what most OFWs will never achieve in their lifetimes, unless they also learn the secrets of wealth.

Do you want to become the next Bobet?

If you want to learn about the secrets of wealth from Trace and become the next Bobet, then you have to grab this once in a lifetime chance to see Trace Trajano in person as he shares the same secrets he taught Bobet in a free mini-seminar on March 28, 2010 at the Garden Plaza Hotel, the same venue for the Think Rich Quick seminar that happens the day before.

You read that right, this is a FREE mini-seminar for all OFW’s. Why OFW’s? It’s obvious that Trace has a soft spot for OFW’s as his father was also an OFW but due to lack of financial literacy, he ended up broke and with nothing to show for thirty years of hard work and sacrifice. Trace does not want any OFW to encounter what his Dad encountered and he wants to help through this free mini-seminar.

The choice is yours to make

If you are an OFW, you just got to attend this seminar and learn:

The secrets of Wealth
How to generate passive income
How to generate active income in real estate

There are limited slots so register early. Early registrants also get the following surprise gifts

First 10 to register – “Think Rich Quick” book by Trace Trajano
Next 12 to register – Play Robert Kiyosaki’s Cashflow 101 boardgame for free!
Plus a chance to win one of 3 tickets to Enchanted kingdom

What more can you ask for?! Register now for this free mini seminar by calling the following:

Joy: +63927-5707599
Will: +63917-8580064 or (632) 9645512

Important things to remember

Don’t forget to bring your spouse and your kids (becoming a millionaire is a team effort and your family has to be ONE team). The only thing you need to pay for is for your own LUNCH (at the hotel).

Here are a few words from Trace Trajano:

“Don’t forget to bring your passport (to prove you’re an OFW) and my book “Think Rich Quick” (I will even autograph it for you! You can buy it at a National Bookstore). Your passport and the book will serve as your ticket for this seminar.” – Trace Trajano

Who is Trace Trajano?

Trace Trajano is a real estate investor, author of the best selling book “Think Rich – Quick” and a wealth coach to students around the world. His vision is to create directly or indirectly 1 Million Pinoy Millionaires worldwide by the year 2020. Trace himself is an OFW living in the Mason Ohio with his wife and 2 kids. You can learn more about Trace by clicking on the play button for the slides below.

To our financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in twitter:http://twitter.com/jay_castillo
Become a Fan in Facebook:Foreclosure Philippines fan page
Text by Jay Castillo. Copyright © 2010 All rights reserved.

PS. If you are an OFW who is lucky enough to be here in Manila, Philippines on March 28, 2010, REGISTER NOW and reserve your seat. Contact Joy or Will through the contact numbers above for seat reservation. Remember, this is a free seminar so seats will definitely run out fast, and there are only 100 seats available. Act now and learn the secrets of wealth!

PPS. If you have a friend or loved one who is an OFW or who knows an OFW, please do them a favor and forward this to them. This just might be help they are looking for!

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Larry Gamboa invites you to the Think Rich Pinoy Seminar on February 27, 2010

Jay — Tue, 16 Feb 2010 22:45:44 +0000

Larry Gamboa, bestselling author of the book “Think Rich Pinoy“, is someone who I consider to be a great mentor and inspiration. I remember it was already more than a year after I read the book “Rich Dad Poor Dad” by Robert Kiyosaki when I began to feel that the real estate investing concepts described by Robert Kiyosaki were hard to apply in the Philippine setting.

I realized I was wrong when I stumbled upon the book “Think Rich Pinoy” by chance.

Thanks to Larry’s book, I realized that it really is possible to apply Rich Dad’s real estate investing principles in the Philippines, which is exactly what I am doing right now.

Recently, Larry sent an invitation to his mailing list for the upcoming Think Rich Pinoy Seminar which happens on February 27, 2010, Saturday, 8AM to 5PM, at the PhilAm Life Building, UN Avenue, Manila, Philippines. I would like to share his invitation to all of you below…

Hi Jay,

A few days ago, I asked you to give me your two burning questions in real estate investing. The response I got was phenomenal, 186 questions from 93 people. I could spend the whole year just answering your questions.

But I noticed that most of the questions were all about “How do I Start in Real Estate Investing?”

That brought me back to how I started myself.

I knew nothing about real estate. I couldn’t identify a good deal even if it was staring me in the face. I didn’t know how to buy much less sell properties. I did not know how to compute ROI.

But as I started doing it, things became clearer, bit by bit, one deal after another. As I learned from people and from experience, I started to develop my own system of buying and selling real estate ‘rent-to-own’.

Through the years, I refined the system until I could write a book about it. I enjoyed it so much, I wrote 2 more books about it. But apparently the books were not enough because I would get question after question on how do I do it.

Finally, I called up Bo Sanchez (or he called me) and we decided to do a seminar on Financial Literacy and Real Estate Investing. Thus the Think Rich Pinoy Wealth Seminar was born.

Click here to enroll for the Think Rich Pinoy Seminar!

This is where the journey of a lot Pinoy Real Estate Investors started. You’ve heard the story of Eden and how she started with reading books and attending this seminar.(If you haven’t, just watch the video below)

She’s not the only one who started through the seminar. There’s Jessie who’s a seafarer and his wife Apple who used to work in a multinational bank. There’s also Kristine a former HR practitioner. And so many others. . .

If you’ve been wanting to ask me PERSONALLY about your burning questions on Real Estate Investing, here’s your chance. On February 27, 2010, I will be holding the next Think Rich Pinoy Wealth Seminar. This is my personal invitation to meet you.

Let’s talk about how you can start, how you can raise capital and how you can identify good deals. Let’s talk about what’s stopping you from starting. Or if you’ve already started, like Eden, let’s talk about your challenges.

The great thing about this is, it won’t be just me. We have a number of speakers lined up. Bo Sanchez, my life mentor, a preacher, entrepreneur and investor himself will be speaking. Our sponsor, Philamlife, will be sending a speaker on wealth management. A good friend of mine, who’s much bigger than I am in real estate and owns apartment buildings in Makati, will be speaking and sharing (mystery speaker).

Plus, you have young Think Rich Pinoy Franchisees who despite their youth and lack of capital, started to invest and make money in real estate.

So if you’ve been wanting to personally ask me a question, let’s meet at the Seminar. Meet me on February 27, 2010 at the Philamlife Training Pavilion, UN Avenue, Manila. Click here to reserve a seat. We have limited seats (120 at the most). So we will have to close down reservations Feb. 22, 2010.

Warmest Regards,

Larry Gamboa

P.S. I’m serious about meeting you and answering your questions personally. Every seminar is unique in that way because each batch brings out questions unique to their situation. If you want a definite answer to your burning question, click here and reserve your seat now!

P.P.S. Seat reservation/orders ENDS Feb. 22, 2010. After Feb. 22, 2010 you will be put in a priority list for the next Think Rich Pinoy Wealth Seminar.

By the way, If you are not yet part of Larry’s mailing list, what are you waiting for?! Click here to join and claim your free Silver membership NOW! Remember, Silver membership is absolutely free!

To our financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Click here to contact me via E-mail
Mobile phone (Call/SMS): +639178843882
Follow me in twitter:http://twitter.com/jay_castillo
Become a Fan in Facebook:Foreclosure Philippines fan page

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

PPS. If you feel that anyone else you know might benefit from this post, please do share this to them and don’t forget to subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. If your inbox is getting full, you may subscribe through my RSS Feed instead.

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How to keep the passion burning for real estate investing

Jay — Tue, 16 Feb 2010 03:16:43 +0000

When friends and people I meet learn about what I do and see my passion for real estate investing, I am often asked how I was able to get into it and sustain the passion for it. Just how did I end up having this burning desire to get out of the rat race through real estate investing? Read on to find out.

Let us first define what passion is. Wikipedia defines passion as “…an emotion applied to a very strong feeling about a person or thing. Passion is an intense emotion compelling feeling, enthusiasm, or desire for something. The term is also often applied to a lively or eager interest in or admiration for a proposal, cause, or activity or love.”

Robert Kiyosaki also often mentions in his books that passion is a combination of love and anger.

I agree with both definitions and I use these emotions to sustain my burning desire to have a better life. Let me try to explain further by citing the following examples.

What I love that fuels my passion for real estate investing…

These compel me to just keep moving forward.

I love having more time to live life to the fullest and not just for earning a living.
I love having time to be with my loved ones and friends and this is not confined to brief moments away from my job.
I love my family and I love having more quality time with them.
I love having more quality time with my loving wife.
I love being able to actually be with my son and be there for him as he grows up.
I love being able to help more people and make a difference in this world.

This list goes on and on…

What causes my anger which also feeds my burning desire…

Having to miss all of the above just because you have no choice because you are stuck in a 9 to 5 job. In reality, a 7AM to 9PM existence is more accurate and this usually gets worse as one climbs up the corporate ladder.
Having to be an employee until you are in your sixties and beyond. Yes, even if you become the president of a company, unless you own that company, you are just an employee working for someone else. That’s the bottom line.
Realizing that life passes you by as you do your best to earn a living while working yourself to death.
The empty feeling after a job well done where you realize that all the sacrifices, time, effort, frustrations, rewards(or lack of it) are not really worth all the trouble. The keyword here is “job”. Don’t get me wrong, I know there are people out there who really love their jobs and also get a fair and just reward for doing their jobs well; I congratulate all of you who are lucky to find such jobs. I don’t know, maybe in my field (I’m an Information Technology professional), things develop at such a fast pace that the system is unable to cope and somethings got to give, somewhere, at some point, and usually it’s our health(due to stress) or our relationships(due to lack of time freedom), etc.

Again, the list goes on and on…

The key is to focus your emotions

Instead of letting the emotions get the best of me which I believe is a total waste of time, I would rather focus them on productive thoughts and actions. I let my emotions of love and anger fuel my passion and dictate the choices I make in each precious day that God has given me.

It really is just a matter of having the proper mindset where I combine these emotions to sustain my burning desire to have a better life and guide me with each task that I shall accomplish which shall in turn lead to my objective which is to get out of the rat race through real estate investing.

In each new day I face, I have already programmed myself with this mindset so that I will continue doing what needs to be done to have a better life… and that my friend is how I keep my passion burning for real estate investing!

“Stay hungry and foolish”

Lastly, I want to share Steve Jobs’ Stanford commencement speech which he gave way back in 2005 which I believe hits the nail on the head.

Let me quote a portion below which has also fueled my passion:

“… for the past 33 years, I have looked in the mirror every morning and asked myself: “If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something “

How about you? What fuels your passion for real estate investing?

—

To our financial freedom!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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You are invited to the first ever Think Rich Quick seminar on March 27, 2010

Jay — Fri, 12 Feb 2010 16:45:01 +0000

Are you broke, with no rich friends…

and no banks will lend you money?

You… yes, even you can invest in real estate!

I am very excited to announce that my dear friend and real estate coach, Trace Trajano is coming to Manila and will give the first ever Think Rich Quick Seminar on March 27, 2010. If you have not read his book “Think Rich Quick”, you should. It has changed thousands of people’s lives and it can change yours.

What is the Think Rich Quick Seminar and book about?

People have the misconception that you need a lot of capital to get started in real estate (up to a certain extent, that includes me because I advocate being financially literate enough to be able to at least raise the 10% or 20% for the downpayment). “NOT true”, Trace says and he has a right to say this after having acquired and sold over $13 Million worth of investment properties, mostly with no money down. That’s P1 Billion worth of properties acquired without any money down.

Trace continues, “You can also get started investing in real estate without borrowing money from banks.” For example, in his book, he mentioned a deal he did by taking over the mortgage payments and then he turned around and sold that property via rent to own. It’s an amazing strategy and I believe you should learn about it.

Lastly, Trace dispels the misconception you have to wait years before you can make money in real estate. Trace says, “You can make money in real estate in a few months, a few weeks, sometimes, even in a few days.”

Trace says, “But rather than boast about what I have done, I’ll just show you what my students have done…specially my students in the Philippines. I want to show you that this can be done anywhere, even in the Philippines.” Here are some of Trace’s students and what they have done (NOTE: they are all based in the Philippines!):

Thea Santos – made P260,000 selling a house in just 2 weeks using a strategy called Wholesaling. She sold the property quickly using one of Trace’s marketing strategy.

Gia Garcia – she bought a condo using other people’s money, she fixed it, then sold it. This is a strategy called Retailing. Gia said, “Trace’s advice on how to rehab the property saved me a lot of money!”

Julius Bernard Lopez – made over P300,000 by “syndicating” a deal. He found an investor who managed the renovation…he found another investor to put up the money and the only thing he did is find the deal. Here’s the thing… Julius did this AFTER reading the book “Think Rich – Quick”. Julius is not even officially Trace’s student or franchisee!

Eden April Alemania – she became a millionaire at age 26 (she’s now 27). This is after just 9 months after hearing Trace speak. Watch her video below:

Jessie Raquel and Apple Raquel – Jessie is an OFW struggling with a 10-door apartment he bought as it was only 30% occupied. At a seminar that Trace gave to the franchisees of the Think Rich Pinoy Millionaire Network, he gave Jessie a marketing plan. He implemented this plan and in just 2 weeks, he got his 10-door apartment 100% occupied. As a result of this, Jessie and Apple are now real estate millionaires. Trace even helped them raise capital from private lenders (not from banks!). Here’s the proof:

Ronald Cagape and Weng Cagape – also a husband-and-wife real estate team and now millionaires said, “Trace’s negotiation advice on one deal we were working on saved us P400,000!”

The list goes on and on.

What about you? Do you want your name to be included amongst Trace’s success stories? Then click “I want to be Trace’s next success story” to register for the seminar…

Yes, I want to be Trace’s next success story!

You might be asking, “SO how much will this seminar cost me?” Let me you ask you this…

“What amount of money will you pay to learn how to make millions in real estate?”

I don’t know the tuition fee you need to pay to become a good doctor or nurse or have a high paying job. Say the tuition fee is P50,000 per semester – so we have 2 semesters per year and then multiply that by 4 years…or P400,000. That’s a lot of money but it’s worth it because you can recover that money in just 1 year working as a nurse abroad. Right?

Here’s the good news: once you learn what Trace will reveal during this seminar, you can literally know how to develop a million-peso per year real estate business right here in the Philippines. Jessie Raquel for instance made P500,000 on just one deal. Eden April Alemania routinely makes P200,000 to P400,000 per deal.

The even better news is that you will not spend P400,000…not even P40,000…or even P4,000 for your tuition fee. Trace though can easily charge that amount or more. In fact, one student paid Trace P11,500 to have lunch with him for one hour. That’s right: one hour with Trace can easily set you back by more than P10,000. But at this seminar, you get to spend the entire day with him for less than half that amount.

Alright – I want to make millions…so sign me UP NOW.

In fact, it gets even better. Trace told me that he wants to give people a lot more value than what they’re paying. Trace is giving you not just one seminar but a series of online seminars (one every month – January, February, March and a follow up online seminar in May) as well.

In fact, the January webinar (online seminar) is already over and you might miss out on the February webinar as well (Trace told me though that if you register on or before February 14, he will give you the recording of the February webinar absolutely free!). The February seminar is about having “Millionaire Systems”.

I want the February webinar so let me in!

One more thing… this seminar is more of a workshop. You will learn how to talk to banks (and learn how to buy foreclosed properties from them), sellers, buyers, renters and lenders (or potential money partners) using scripts that Trace and his students used successfully in negotiating a lot of deals.

I want to attend the workshop!

Lastly, Trace told me he wants to limit the attendance to this seminar. Why? He wants to interact with the audience more and he wants to get to know you. He told me “I really don’t make money when you buy my book or even attend my seminar. I make the real money when I get the student to partner with me.” Shhhh….don’t let Trace know that I told you that. It’s supposed to be a secret. At the end of the seminar, he will announce a way for you to apprentice under him and even become his business partner as he puts up a real estate company in the Philippines.

I want to become Trace’s apprentice!

Sorry I digressed… Trace wants to limit attendance to only 100 people – 43 have already registered so there are only 57 slots left. The Think Rich Quick Seminar is being promoted by seminar promoters, wealth coaches, and Trace’s students and franchisees. Literally, this sales letter is going to be read by over 100,000 people and so you don’t want to be left out.

Let me in! I don’t want to be left out.

Just realize the price of admission (which is only $55 or its peso equivalent) is a small fee to pay to know powerful real estate techniques that will put money in your pocket. The seminar is also a good way to become Trace’s apprentice and partner. Take advantage of this opportunity NOW by clicking HERE!

—

Personally I look forward to learning more about wholesaling and how to invest in real estate without borrowing money from banks. I hope to see you at the seminar!

—

To our financial freedom!

P.S. You need to sign up before February 14 in order to get access to the online seminar (webinar) for February.

P.P.S. Right now there are 43 registered attendees so there are only 57 slots left. Register NOW to get IN. Once all the slots are filled, Trace will close this and you might need to wait 1 year to attend the next one! I don’t want to wait a year so SIGN me up NOW.

*Update – Other payment options:

1) Pay through Western Union. Here are the details:

Send $55 to TRACE through Western Union.
complete name: Trace Trajano
address: 9647 Cedar Knoll Dr., Mason OH 45040, USA

Email him here – moneyyoda@gmail.com and send him the Western Union tracking ID or number.

2) If you don’t have a paypal or credit card, you can also deposit your payment ($55 or peso equivalent) in this BPI account:
Account Name: Kristine Ann E. Aganon
Bank: Bank of the Philippine Islands, Tandang Sora Branch
Account Type: Current
Account No: 2385-0616-28

Related posts:

PRC and DTI joint announcement for real estate service practitioners’ renewal of licenses

Jay — Tue, 09 Feb 2010 02:43:16 +0000

Recently, the PRC and DTI issued a joint announcement on the filing of application for registration without examination with the PRC, for those whose licenses issued by the DTI have expired on December 2008 and onwards. This is good news for affected real estate service practitioners that include real estate appraisers, real estate brokers, and consultants. Please see below a copy of the announcement.

MEMORANDUM

For : ALL REGIONAL AND PROVINCIAL DIRECTORS/CARETAKERS

From : VICTORIO MARIO A. DIMAGIBA - Director

Date : 14 January 2010

Re : Announcement to Real Estate Developers and Real Estate Practitioners

_________________________________________________________

In reference to the attached self-explanatory announcement issued by PRC Chairman Nicolas P. Lapena and the above-signed, please disseminate the same for the information and guidance of all concerned.

Thank you very much.

ANNOUNCEMENT

TO ALL REAL ESTATE DEVELOPERS

& REAL ESTATE SERVICE PRACTITIONERS

“Pending the appointment of the Chairman and Members of the Professional Regulatory Board of Real Estate Service (PRBRES), pursuant to Republic Act No. 9646, all Real Estate Brokers, Real Estate Appraisers and Real Estate Consultants, whose licenses issued by the Department of Trade and Industry (DTI) expired on December 31, 2008 and onwards, are required to file their application for registration without examination under Section 20, Article III of R.A. No. 9644 [sic? 9646] from January 12, 2010 to July 30, 2011, stamped received by the Professional Regulation Commission and/or the PRBRES. Such application shall be deemed proof of authority for the lawful exercise of their profession until such time that the PRC and the PRBRES shall have approved it.

For the guidance of all concerned, the contact address of the PRC is P. Paredes St., Sampaloc, Manila,

Attention : Office of the PRB Secretary

________________________________

________________________________

Manila, 12 January 2010

(Sgd. ) NICOLAS P. LAPE?A, JR. (Sgd.)VICTORIO MARIO A. DIMAGIBA
Chairman Director
Professional Regulation Commission Bureau of Trade Regulation
- & Consumer Protection
- Department of Trade and Industry

I am quoting below Section 20, Article III of R.A. No. 9646

SEC. 20. Registration Without Examination, - Upon application and payment of the required fees, the following shall be registered, and shall be issued by the Board and the Commission a certificate of registration and a professional identification card without taking the prescribed examination:

(a) Those who, on the date of the effectivity of this Act, are already licensed as real estate brokers, real estate appraisers or real estate consultants by the Department of Trade and Industry (DTI) by virtue of Ministry Order No. 39, as amended: Provided, That they are in active practice as real estate brokers, real estate appraisers and real estate consultants, and have undertaken relevant CPE to the satisfaction of the Board;

(b) Assessors and appraisers who, on the date of the effectivity of this Act, hold permanent appointments and are performing actual appraisal and assessment functions for the last five (5) years, have passed the Real Property Assessing Officer (RPAO) examination conducted and administered by the Civil Service Commission (CSC) in coordination with the Department of Finance (DOF), and have undertaken relevant CPE to the satisfaction of the Board; and

(c) Assessors and appraisers who, on the date of the effectivity of this Act, hold permanent appointments and have at least ten (10) years actual experience in real property appraisal or assessment and have completed at least one hundred twenty (120) hours of accredited training on real property appraisal conducted by national or international appraisal organizations or institutions/entities recognized by the Board and relevant CPE to the satisfaction of the Board.

Those falling under categories (b) and (c) shall register with the Board after they shall have complied with the requirements for registration as real estate appraisers: Provided, That those seeking to be licensed to a new credential level shall be required to take the pertinent licensure examination.

Those so exempt under the aforementioned categories shall file their application within two (2) years from the effectivity of this Act: Provided, That the renewal of the professional identification card is subject to the provisions of Section 17 hereof.

While the announcement above is indeed very welcome news to those whose licenses have expired December 31, 2008 onwards, we still have a lot of questions left unanswered.

How about those who passed the most recent licensure exams but were unable to secure their licenses on time? How about those who want to get their new licenses as real estate service practitioners?

Your guess is as good as mine. I suppose we just have to patiently wait for the release of the implementing rules and regulations or IRR of RA 9646 which should be soon.

—

To our financial freedom!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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You are invited to a revolutionary workshop on becoming a wealthy real estate salesman

Jay — Tue, 19 Jan 2010 11:53:52 +0000

If you missed John Calub’s workshop on real estate selling held last October 24, 2009, you’re in luck! John Calub Training Incorporated will be having another round of the same workshop this coming January 23, 2010. Saturday, from 8 am to 6 pm. This time however, free entrance to the first 20 registrants will no longer be available for readers of foreclosurephilippines.com.

Anyway, the seminar fee is still at a special sponsored rate of only Php850.00 per person, inclusive of lunch, snacks, workbook, and a certificate of completion plus a money back guarantee (more details below).

John Calub promises that attendees will discover the 7 Secrets of Making BIG MONEY in Real Estate – through a revolutionary workshop on becoming a wealthy real estate salesman!

What you’ll uncover:

How to make a fortune in real estate selling whether you are experienced or starting from scratch.
The truth about why only 5% of real estate salespeople make a seven figure monthly income
The 2 most powerful real estate sales techniques that instantly magnetizes a sale

What this means to you:

Be able to attract millions in commissions effortlessly!
Become a super salesman in the field of real estate!
Sell millions in just 21 days

Workshop details:

Date: January 23, 2010 (Saturday)
Time: 8 am to 6 pm
Venue: G/F Sofia Tower, 85 Don A. Roces Avenue, Quezon City(please see vicinity map below)

Special sponsored Rate: Only Php850.00 per person (inclusive of lunch, snacks, workbook and certificate of completion)

To Register:

Contact Person: Francis Lumahan (call during office hours)
Phone Number: 744-2925 or 382-9997
Mobile Number: 0917-6101431
Email: johncalubtraining@gmail.com

Click here to download the official registration form

Deadline for Registration: January 21, 2010 (Thursday)

IRON-CLAD MONEY-BACK GUARANTEE: “If I don’t make you earn a 6 to 7 figure income in 21 days after you follow my proven action plan, I will refund your money in full, no questions asked!” - John Calub

This seminar is open to real estate agents, students, brokers, realtors, entrepreneurs, and all those who want to earn millions in income.

Personally, I was not able to attend the morning session of the workshop held last October although I was impressed with what I saw in the afternoon. It reminded me of T. Harv Eker’s Millionaire Mind Intensive Seminars. I’m still thinking about attending this one though, I really hope that I am free this Saturday.

Happy learning!

—

To our financial freedom!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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Don’t be a stupid real estate investor!

Jay — Thu, 07 Jan 2010 09:43:13 +0000

I hope that got your attention! As we start 2010, I’m sure a lot of you have a lot of New Year resolutions and plans. There’s really nothing wrong with that. However, I can’t help but throw the same question to you as I did to myself, when I started to make plans for 2010. Actually, I am throwing the same question not just to real estate investors, but also to just about everyone who happens to read this. Let me try to explain below.

Are any of your plans for the coming year the same plans that you made last 2009? If you actually failed to do some of them, then I guess it would okay to have the same plans, as long as you never really got around to doing them.

Maybe you were just too lazy or out of focus(ouch!!!).

However, if you did manage to do what you planned to do, but did not get the results that you wanted, then maybe it’s time to consider other ways or strategies. Don’t get me wrong, I didn’t mean that you should give up, what I meant was that maybe there’s a better way to achieve your goals or objectives.

If you believe that things did not work out the way they should for something, then ask yourself “How can I make this work?”, a question I often hear when listening to Robert Kiyosaki’s audio books. That something could be about getting started in real estate investing or finding more real estate deals, it could be about things getting better at work, it could be about your plan to lose weight (ouch again!!!), that something can be just about anything.

What’s important is that if you realize that you are not getting the results that you want, then by all means, sit down, think it over, learn a lesson or two, then go ahead and do things differently!

After all, “We all know the definition of stupidity is doing the same thing over and over again and expecting different results.” – as quoted from Robert Kiyosaki’s latest book – Conspiracy of The Rich.

—

I wish everyone success this 2010!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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Bangko Sentral ng Pilipinas foreclosed properties for sale as of November 30, 2009 plus FAQ

Jay — Tue, 05 Jan 2010 12:37:59 +0000

This is the second installment of listings of foreclosed properties which I am posting for the benefit of those who were unable to attend the 4th Housing Fair which was held recently at SM Megamall and also for those who attended but were unable to get a copy. This installment features foreclosed properties from the Bangko Sentral ng Pilipinas (BSP) that are for sale as of November 30, 2009 along with Frequently Asked Questions (FAQ) about BSP acquired assets.

The BSP foreclosed properties for sale are from the following areas:

Luzon
Bataan
Batangas
Bulacan
Cavite
Isabela
Laguna
La Union
Nueva Ecija
Oriental Mindoro
Palawan
Pampanga
Pangasinan
Quezon Province
Rizal Province

Please refer to the complete listing below which includes property details like location, TCT/CCT No., Area (sq.m.), description, and selling price.

Click here to download the complete listing for BSP foreclosed properties for sale as of November 30, 2009.

I got this listing from BSP’s booth at the 2009 Housing Fair. I have already checked their website and it appears that as I write this article, the list above is more updated than their online list which was last updated on July 31, 2009 .

Complete descriptions of the properties are available at the Asset Management Department, Rm. 313, Five-Storey Building, BSP Complex, A. Mabini St., Malate Manila or you may call the following numbers:

Direct Lines: 523.3420; 523.3486; 524.9829; 525.0614

The “fine print”
The sale of the properties shall be “As is, Where is” and the awardee as may be approved by the Committee on Disposal of Real Properties or the Monetary Board shall undertake the responsibility to acquire and maintain peaceful possession and enjoyment of the property at his expense. Prices are subject to change without prior notice.

FAQ on BSP acquired assets

While I was checking BSP’s website, I stumbled on this FAQ which gives information about BSP’s foreclosed assets, how to buy them, requirements, and a lot more. Please refer to their Frequently Asked Questions (FAQ) on acquired assets below.

1. How did the Bangko Sentral ng Pilipinas (BSP) obtain its acquired assets?

When availing of the loan facilities of the Bangko Sentral ng Pilipinas (BSP), private banks assign to BSP their receivables including the collaterals. Upon failure of these banks or their borrowers to pay their loans, the BSP forecloses these real properties. Another mode by which the BSP acquires these assets is when the banks pay their loans with properties under a dacion en pago agreement.

2. What is a foreclosure sale?

A foreclosure sale is a public bidding of loan collaterals. If the creditor is the highest bidder for the property, the supposed proceeds of the sale are applied as payment for the loan. Thus, the creditor extinguishes the loan of the debtor but in turn gets a real property, which is the collateral for the loan.

3. Can an owner of a property subject to foreclosure sale reacquire his property?

The law allows the registered individual owner or mortgagor to redeem the property subject to foreclosure sale within one year after the sale of the real estate. The reckoning date of the one-year period is the date of the registration on the certificate of foreclosure sale with the Register of Deeds. A juridical person, whose property is being sold pursuant to an extrajudicial foreclosure, shall also have the right to redeem the property before the registration of the certificate of foreclosure sale with the Register of Deeds but not more than three months after foreclosure, whichever is earlier.

4. How much is the redemption price?

The redemption price is computed based on the amount due, plus the interest rate specified, on the mortgage deed as well as all the costs and expenses incurred by the BSP due to foreclosure and custody of the property. However, as assistance to the borrower-mortgagee, the BSP allows a revision in interest rate and penalty rate, that is, the rate specified in the mortgage document or 12 percent and five percent per annum, respectively, whichever is lower, computed from the time of assignment of the borrower bank to the BSP, until the date of payment.

5. Can the redemption period be extended?

The BSP allows the extension of the redemption period up to a maximum period of five years subject to interest at 12 percent per annum until full payment. Any proposal for a longer redemption period of up to ten years shall be subject to the approval of the Monetary Board.

6. If the previous owner fails to exercise his right of redemption, what happens to the title of the property?

The BSP shall implement the transfer of the title from the previous owner to the BSP.

7. If the title is already in the name of BSP, can the previous owner still re-acquire his property?

The BSP being a government institution is required, as an initial mode of disposition, to sell through public auction, all acquired properties already in its name. The previous owner may, thus, participate in the auction or negotiate for the purchase of the property in case there is failure of bidding.

8. Does the previous owner have the first priority to purchase the property in the public auction?

As the public auction is open to all interested buyers, no priority is given to the previous owner.

9. When is the public auction held?

The auction is usually scheduled once every quarter. An Invitation to Bid (ITB) is published in a newspaper of general circulation no later than 15 days before the auction date. The ITB states when and where the auction will take place, shows the list of properties for sale and the minimum bid price for each property.

10. Who conducts the public auction?

The Committee on Disposal of Real Properties conducts the public auction. This is composed of:

Chairman – BSP Managing Director, Regional Monetary Affairs Sub-Sector
Co-Chairman – BSP Deputy General Counsel
Members – Heads of five different departments in the BSP

11. What is the basis of the selling price of acquired assets?

One of the values considered in determining the selling price of a BSP acquired asset is its latest appraised value.

12. Is a fee charged when one participates in the auction?

The complete description of the properties, rules and regulations on the bidding procedures and the prescribed bid forms are available for a minimal fee of P50.00. The bid form can be obtained from the Asset Management Department (AMD), Rm. 313, of the BSP’s Five-Storey Bldg. The deadline for submission of duly accomplished bid forms is published in a local or national daily. Bids should be enclosed in sealed envelopes. All bids are opened immediately after the deadline for submission.

13. Does a bidder need to be present during the public auction?

A bidder may or may not attend the public auction. He may send a representative to observe. However the presence of interested parties is highly encouraged so decisions can be made on any issues that may be raised during the auction.

14. What are the terms and conditions of the auction sale?

The auction will be conducted on a cash basis and shall be under a sealed envelope system. The basic terms and conditions of the auction sale are:

Any qualified bidder shall accomplish a Bid Tender Form, clearly indicating the following, among others:

a. description of the items or lots with the corresponding bid offer clearly indicated in figures and words;
b. name and signature of bidder;
c. business or residence address of the bidder;
d. business license number, any government-issued ID number; or Tax Identification Number (TIN) of the bidder; and
e. terms and conditions offered regarding bidders bond, payment, default and delivery.

The bidder shall accomplish the Bid Tender Form, in duplicate, preferably typewritten. Erasures or interlineations should be avoided and if unavoidable should be duly initialed by the bidder.

The Bid Tender Form shall be sealed in an envelope with the TCT/CCT Number and location of the property written on the face of the envelope.

The envelope shall contain only one bid corresponding to each property. It shall also contain all bid documents issued by the Asset Management Department (i.e., Bid Tender Form and Instruction to Bidders and Terms and Conditions of the Bidding), the Bid Bond, and other attachments, as may be required.

All documents shall bear the bidder’s signature on each and every page. The signature of the bidder on the original Bid Tender Form and other bid documents constitutes acceptance of, and assent to, all conditions embodied therein.

The envelope shall be deposited in the designated box on or before the opening of bids.

15. How much is the required bid bond?

The bid bond required from bidders is equivalent to at least 10 percent of the bid price, and shall be made in the form of cash, manager’s or cashier’s check payable to the Bangko Sentral ng Pilipinas.

16. Can a buyer bid less than the minimum bid price?

No. The bid should be equal to or more than the minimum bid price.

17. When does the highest complying bidder pay the balance of his bid?

The highest complying bidder, whose bid has been approved, shall pay the balance of his bid within 15 calendar days from receipt of the Notice of Award.

18. What is a failed bidding?

A bidding may be declared a failure in any of the following cases:

There is no bidder; or

All bidders failed to comply with the terms and conditions prescribed in the ITB.

19. What happens if there is failed bidding?

In the event of a failed bidding, the Committee will immediately start accepting offers for negotiation and continue to accept offers through the Asset Management Department. However, the Committee may at its discretion, elect to immediately conclude the negotiation after a failure of bidding whenever there is a highest complying offeror ascertained.

20. What happens if two or more bidders submitted the same bid amount?

When two or more complying bidders make identical offers constituting the highest bids, a public auction viva voce between those who submitted identical bids shall be resorted to at a price not lower than the highest offered bid.

21. What documents are required to negotiate purchase of a property?

The offeror shall accomplish and submit the following forms to the Asset Management Department:

Negotiated Offer to Purchase form, in two copies;

Negotiated Sale Rules and Procedures, in two copies, signed on all pages;

Information Sheet;

If the offeror is a representative of an individual, corporation, partnership or any form of entity, a written authority to represent the individual or Secretary’s Certificate for juridical entities; and

The following documentary requirements as listed in the information sheet:

a. Individual:

Proof of Income

Employer’s Certificate

Proof of Bank Accounts

“2 x 2” ID Picture

Photocopy of any government-issued ID

Certification of good moral character and no pending case for government employees with permanent appointments buying a property falling under the socialized housing category, set by the Housing and Urban Development Coordinating Council (HUDCC)

b. Corporation:

Securities and Exchange Commission (SEC) Registration, Articles of Incorporation, Business Permit

Audited Financial Statements for the last two years

Board Resolution authorizing the purchase and designated signatories and Secretary’s Certificate

22. How much deposit is required?

For cash purchases, a deposit equivalent to at least ten percent of the offer price must be made upon submission of offer.

For purchases on installment, a deposit of at least ten percent of the offer price is also required, five percent of which, however, must be made upon submission of the offer to purchase, and the additional five percent to be remitted within 15 calendar days from date of receipt of Notice of Approval.

For purchases by government employees with permanent appointments of properties qualified under the socialized housing category, a minimum deposit of P5,000.00 is required.

The deposit may be in the form of cash or manager’s/cashier’s check payable to the Bangko Sentral ng Pilipinas.

23. Does the deposit form part of the purchase price?

If the offer is approved, the deposit forms part of the purchase price.

24. What are the terms of payment?

For cash purchases, the balance of the offer price (net of at least ten percent deposit) must be remitted within 30 calendar days from date of receipt of Notice of Approval.

For purchases on installment basis, the balance of the down payment, if any, shall be completed within 15 calendar days from receipt of Notice of Approval. The balance of the offer price (net of at least ten percent down payment) shall be paid within a maximum period of 180 months or 15 years. However, for properties with a selling price of P400,000.00 and below classified as residential or agricultural, which fall under the socialized housing category, the maximum payment period is 25 years.

Balance of the purchase price shall be subject to an interest rate fixed over the period as determined by the Committee. Properties classified as socialized housing shall be charged interest based on the rate defined by the Housing and Urban Development Coordinating Council as implemented by Pag-IBIG Fund.

Payments may be made on a monthly, quarterly, or annual basis. The first amortization is due 30 days after receipt of Notice of Approval; and

Payments may be made through availment of PAG-IBIG housing loan or bank loan subject to the condition that the Deed of Absolute Sale shall be executed and the title may be released, only upon receipt by the BSP of the documents evidencing payment guarantee issued by PAG-IBIG fund or the lender-bank;

Offers payable within 90 days from receipt of the Notice of Approval are not subject to interest charges.

25. If a buyer offers to purchase a property at the BSP minimum selling price and submits all the required documents, is he guaranteed that the sale will be awarded to him?

No. The Guidelines on Sale of Acquired Assets require a 15-day waiting period within which to accept other offers which may be in the best interest of the BSP. The waiting period is reckoned from the time the first Negotiated Offer to Purchase Form is received by AMD and payment of the required down payment. However, this policy does not apply for negotiation offers accepted/approved by the Committee immediately after failure of auction.

26. After the 15-day waiting period, is the offer automatically approved?

No. All the offers received are evaluated by AMD after the 15-day waiting period and submitted to the Committee for decision. The Committee meets only once a month – usually every third Wednesday of the month. For properties valued at over P 20.0 million, the Committee will submit the offers to the Monetary Board for decision.

27. How will the proposed buyer know that his offer is accepted?

The Committee sends a Notice of Approval for accepted proposals.

28. What happens to the deposit for offers not accepted?

Deposits of prospective buyers whose offers are not accepted shall be returned without interest by crediting their bank account, as stated in the Negotiated Offer to Purchase Form, under the Electronic Peso Clearing and Settlement System.

29. What happens if the buyer fails to pay the balance of the required down payment within the prescribed period?

If the buyer, whose offer was approved by the Committee or the Monetary Board, fails to pay in full the required down payment within the prescribed period, the BSP will cancel the award and forfeit 50 percent of the deposit already made.

30. Can a buyer withdraw his offer to purchase after it has been approved and accepted by the BSP?

Withdrawal, for any cause whatsoever, of the offer to purchase approved by the BSP, within 30 days from receipt of the Notice of Approval or failure to comply with the conditions of the sale, shall mean forfeiture in favor of the BSP of 50 percent of the deposit made and cancellation of the Notice of Approval.

31. If there are two or more offers for the same property, to whom is the sale awarded?

Where there are two or more offers for the same property, the best offer shall be determined in accordance with the following order of priorities:

First priority shall be given to offers payable in spot cash within 30 calendar days upon receipt of the Notice of Approval.

Second priority shall be given to offers payable in 12 months or less; and

Third priority shall be given to offers payable on installment over 12 months or up to 180 months.

The primary consideration, within the same priority, shall always be the highest offer price. Where the difference in the amount of the offers in the same priority is 5 percent or less, the offerors will be asked to resubmit on a designated date and time, improved offers in sealed envelopes to the designated officials of the AMD. In case the same offer price is received, the next consideration shall be the highest down payment. Finally in case the offers received have the same offer price and the same down payment, the shortest payment period will be accepted.

However, when there are two or more offers received, and one is a government agency or instrumentality, with the same offer prices, terms, and proposed down payment, preference shall be given to the government agency or instrumentality. However, where there are two or more government agencies or instrumentalities interested in the same property with the same offer prices, terms and proposed down payment, bidding shall be conducted by the Committee on Disposal of Real Properties to be participated only by such government agencies or instrumentalities.

32. What contract covers the sale transaction?

A Contract to Sell (CTS) is executed upon receipt of the required deposit/down payment. If the buyer fails to submit the signed CTS within three months or 90 days from receipt of the Notice of Approval, the BSP will cancel the award and forfeit the down payment. Upon receipt of the full payment of the purchase price, a Deed of Absolute Sale is executed.

33. Can a buyer pay the deposit and monthly amortizations at the BSP Regional Offices?

Payments may be made at the BSP Main Office or at any of the BSP Regional Offices or Branches nationwide. The Committee, however, encourages buyers to issue postdated checks.

34. Does BSP give a discount?

Discounts are granted on a case-to-case basis and depending on the condition of the property.

35. If a buyer purchases on wholesale, can they get a discount?

Yes, a buyer may avail of graduated rates of discount if he purchases on a wholesale basis.

36. What is considered as a wholesale purchase?

Offers to purchase may be considered as a wholesale transaction under any of the following circumstances:

Total area of the property or group of properties is at least five hectares;

At least five properties are purchased at the same time, regardless of the offer price or area; or

The offer price for the property or group of properties is at least P50.0 million.

37. Can a buyer shorten his payment period or prepay the principal without being penalized?

The BSP allows prepayments without charging penalties.

38. Can a buyer who has lost his Filipino citizenship still acquire BSP properties?

Yes, provided he complies with the limits set by law on land acquisition and issues a sworn statement to that effect.

39. If there are unauthorized occupants of the property, who is responsible for their eviction?

The sale of the properties is on an “As is, Where is” basis and the buyer shall undertake the responsibility to acquire and maintain peaceful possession and enjoyment of the property without seeking the assistance of the BSP.

40. Can the buyer assign his rights and obligations under the Contract to Sell?

Yes, the buyer can assign his rights over the purchase of a property but with the prior written consent of the BSP.

41. Who shoulders the taxes and fees for the transfer of title to the name of the buyer?

The payment of the tax due the Bureau of Internal Revenue is subject to agreement between BSP and the buyer. If the BSP shoulders the tax, this shall only be up to 6 percent of the selling price. In case the zonal value or market valueper tax declaration is higher than the selling price, any tax due on the difference between the selling price and the zonal value/market value shall be for the account of the buyer. The buyer shall, however, pay for all applicable local taxes, fees and assessments, such as documentary stamp tax, transfer taxes, registration fees, and all other expenses incidental to the sale. Real estate taxes and insurance premiums shall be for the account of the buyer accruing from the date of receipt of the Notice of Approval and full settlement of the down payment.

42. Does BSP allow the sale of properties through a broker?

Yes, the BSP allows the sale of properties through brokers who are accredited with the BSP through the Asset Management Department, and who have been issued an authority to sell on a non-exclusive basis. However, brokers cannot represent a client in a public auction.

43. If a buyer agrees to assume the payment of capital gains tax or creditable withholding tax, can he remit the tax due directly to the Bureau of Internal Revenue (BIR)?

No. The buyer should remit to the BSP the amount of tax due and the BSP in turn, would pay the BIR through a credit transfer to the account of the Treasurer of the Philippines. The credit advice covering the payment and the pertinent BIR form shall be presented by the buyer to the concerned Revenue Regional Office. A copy of the documents, duly stamped received by the BIR, should be returned by the buyer to the BSP.

44. Can a broker represent a proposed buyer who initially negotiated with BSP?

No. If a prospective buyer initially negotiated with BSP, he can no longer be represented by a broker later in the negotiation.

45. Can a buyer who was assisted by a broker in the purchase of a property from the BSP be assisted by the same or any other broker in the purchase of another unit or property located in the same condominium building complex, row house or subdivision regardless of phase?

No. A buyer who was assisted by a broker in the purchase of a property from the BSP shall not be allowed assistance by the same or any other broker in the purchase of another unit or property located in the same condominium building complex, row house or subdivision regardless of phase.

46. How can one be accredited by the BSP?

The broker has to be licensed and must submit the following documents:

Photocopy of valid Real Estate Broker’s License, duly certified by Department of Trade and Industry (DTI);

Photocopy of valid HLURB Certificate of Registration (for those selling subdivision lots and condominium units)

Certificate of Good Standing from a Broker’s Association;

Photocopy of Certificate of Registration Issued and Certified by the DTI;

Notarized Certification of no pending case (for corporations/partnerships);

Photocopy of Income Tax Return (ITR) for two years;

Photocopy of TIN Card;

National Bureau of Investigation (NBI) or Police Clearance;

Two recent “2 x 2” pictures;

Value Added Tax (VAT) or non-VAT Certificate of Registration.

47. What qualifications are required from brokers?

The Broker shall have the following minimum qualifications:

duly licensed;

in good standing;

of good moral character; and

must not have been charged with any crime or offense involving moral turpitude.

48. What are the duties and responsibilities of a broker?

Brokers are required to:

Inform prospective buyers of the BSP terms and conditions of the sale.

Obtain documents from the BSP to be furnished to clients.

Coordinate with the BSP Account Officer to be updated on new developments.

Ascertain and disclose to buyers all pertinent facts concerning every property.

49. Can the BSP revoke accreditation previously conferred on brokers?

Yes. The accreditation as a broker is a privilege and may be withdrawn anytime by the BSP, upon due notice. The grounds for revocation of accreditation are as follows:

The broker is no longer a member of good standing of the Association/Organization of which the broker is a member;

The broker has been found by AMD to have violated the Broker’s Code of Ethics;

The broker did not perform the duties as stated in the Notice of Accreditation;

The broker is a defendant/respondent in a case involving moral turpitude filed in court or quasi-judicial body; and

The broker has been convicted of a crime penalized by the Revised Penal Code or special criminal laws.

50. How much commission does BSP give its brokers?

A broker is entitled to a graduated rate of commission based on the selling price of the property; however, for sales to government employees of properties qualified under the socialized housing category, the commission is fixed at P2,500.00.

51. Under what conditions will a broker not be entitled to a commission?

The broker has no Authority to Sell from the BSP;

If the right to purchase will later on be assigned to the broker;

The sale is to: a) a government institution; b) a buyer who had purchased another unit or property located in the same condominium, rowhouse, or subdivision, regardless of phase; c) a BSP employee or a relative of the BSP employee within the first degree of consanguinity or affinity; and d) the former owner(s) or present occupant(s) of the property subject of sale; and

The broker did not perform all the duties and responsibilities stated in the Letter of Accreditation.

52. Will a BSP employee who brokered the sale be entitled to a commission?

No, BSP employees are not entitled to commission.

53. When is commission paid?

Commission is paid as follows: 1) cash sales- upon full payment of the purchase price and execution and return to Asset Management Department of Deed of Sale; 2) installments sale- upon full payment of the required down payment and execution and return to AMD of the Contract to Sell.

54. Does the BSP allow the lease of its properties?

Yes, the BSP allows the lease of its properties.

55. How long can the properties be leased?

Leases are mostly on a short-term basis. However, long-term leases are allowed on a case-to-case basis, specially for commercial properties.

56. How often do you increase your lease rate?

A multi year lease contract normally provides for an escalation rate of five percent based on the previous year’s basic rate, starting on the second year. However, for lease transaction covered by a contract on a month-to-month basis or for extension, the lease rate will be based on the prevailing rental rate.

57. Who shoulders the Value Added Tax?

The payment of the VAT is for the account of the lessee.

58. What other conditions do you require?

The lessee is required to pay two months security deposit and one month advance rental.

59. Is renovation of the property being leased allowed?

Yes, as properties are being leased on an “as-is, where-is” basis, the lessee is allowed to introduce renovations to the property subject to the approval of the BSP.

60. Who shoulders the cost of the renovation?

The lessee shoulders the cost of the renovation without remuneration after the end of the term of the lease.

61. Do you allow free rent during the renovation period?

Yes, the BSP allows on a case-to-case basis free rent for a limited period while the renovation of the property is on-going, provided condominium/association dues and utility costs shall be for the account of the lessee.

62. Who shoulders the cost of utilities and condominium/association dues during the rent period?

The lessees shoulder the payment of the condominium/association dues, in addition to the cost of utilities.

63. What happens if the property being leased is sold to another party?

If the property is leased on a month-month basis, the lessee is requested to vacate the property once the property is sold. However, for long term leases, the BSP requests the new owner to honor the existing lease contract.

64. Do you give discounts for prompt payments?

Yes, the BSP gives discount equivalent to one month if one year advance rent is paid within the first five days of the yearly rental period.

65. What happens if the tenant is in arrears in the payment of rent?

The BSP charges an interest of two percent per month for late payment of rent computed from due date to the date of payment.

66. What documents do you require from the interested lessees?

The lessee is required to accomplish a Lessee Information Sheet and to submit the following:

Individual:

Photocopy of Community Tax Certificate

“2 x 2″ ID Picture

Proof of Income (latest ITR, Certificate of Employment, Business permit, etc.)

Employer’s Certificate

Bank Accounts

Corporate:

SEC Registration, Articles of Incorporation, Business Permit

Audited Financial Statements for the last two years

Board Resolution and Secretary’s Certificate authorizing the lease and the signatories

Source: http://www.bsp.gov.ph/downloads/Publications/FAQs/assets.pdf

Happy Hunting!

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To our financial freedom!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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Act No. 4118 – An Act that amends Act No. 3135 which governs extrajudicial foreclosures

Jay — Sun, 20 Dec 2009 20:00:34 +0000

As mentioned in my previous post which contains the full text of Act No. 3135, I am posting here Act No. 4118 which amends the original Act 3135. However, after reading the contents of Act No. 4118, I am inclined to believe that the full text of Act 3135 which I shared in my previous post was already Act 3135 as amended by Act 4118.

Why am I posting these? For starters, I just want to be sure that we are all on the same page when it comes to extrajudicial foreclosure sales in the Philippines. Please continue reading to find out more…

ACT NO. 4118 – AN ACT TO AMEND ACT NUMBERED THIRTY-ONE HUNDRED AND THIRTY-FIVE, ENTITLED “AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES.”

SECTION 1. Section six of Act Numbered Thirty-one hundred and thirty-five, entitled “An Act to regulate the sale of property under special powers inserted in or annexed to real-estate mortgages,” is hereby amended to read as follows:

“Section 6. In all cases in which an extrajudicial sale is made under the special power herein before referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.”

SECTION 2. The following three sections are hereby inserted after section six of said Act Numbered Thirty-one hundred and thirty-five:

“Section 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

“Section 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.

“Section 9. When the property is redeemed after the purchaser has been given possession, the redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in case the property or any part thereof was rented; if the purchaser occupied the property as his own dwelling, it being town property, or used it gainfully, it being rural property, the redeemer may deduct from the price the interest of one per centum per month provided for in section four hundred and sixty-five of the Code of Civil Procedure.”

SECTION 3. The number of the present section seven of said Act Numbered Thirty-one hundred and thirty-five is hereby changed, making it section ten.

SECTION 4. This Act shall take effect on its approval.

Approved, December 7, 1933

Source: http://www.chanrobles.com/acts/actsno4118.html

To date I have only been featuring information and listings of two of the most common types of foreclosures we can invest in here in the Philippines. These are bank foreclosed properties or acquired assets and real property being sold through tax foreclosure auctions.

Soon I will be posting listings and information about a third type of foreclosures which are properties that are to be sold through an extrajudicial foreclosure sale. This is governed by Act 3135 as amended by Act 4118 hence if you are interested in participating in such auctions, you can use these as reference on how they are generally conducted.

Subscribe now to e-mail alerts if you want to be notified when I post these listings.

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To our financial freedom!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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The importance of time freedom, one reason why I want to be financially free

Jay — Thu, 17 Dec 2009 18:20:00 +0000

During our lunch break at the office yesterday, I begged off from doing something which I have dreaded for the past 12 years in the corporate world, Christmas party presentations! You might be asking what the heck does this have to do with investing in foreclosures in the Philippines? Read on to find out.

This year it is going to be different
During this time of year, most of us unlucky enough to be employed in a company who uphold traditions like Christmas party presentations that only cause undue stress and humiliation, dread the thought of going through it all over again. I really find it silly that people tolerate such a time wasting activity during the time of year when people who really do work are busiest because of the reduced workdays and tighter deadlines. I would rather have games and other really fun activities where people just need to attend the party and have fun, relax, and enjoy. That’s what having a party is for, right?!

Since I have already decided to quit the corporate world (my last day is at the end of December 2009… yipee!), I said to myself that enough is enough and I did not attend our group’s practice for our Christmas party presentation that was to eat up half of my lunch break. I decided to visit the bank officer handling my account instead to pay for the fire insurance for a foreclosed property I recently purchased.

We always have a choice but…
Wait, before anyone of you thinks of quitting your jobs to start investing in real estate, bear in mind that I am at this point after more than 4 years worth of preparations and I already have income streams other than my earned income from my job. Besides, with or without my real estate investing activities, I can see that I really would have called it quits for a lot of reasons that I would rather not discuss here.

Whew, with that out of the way, let me continue by saying that although we always have a choice, there are times when making the choice is really more difficult. In my example above, it was easy for me to choose paying for the fire insurance for my property over practicing for a dance number where a forty year old like me will have to wear a mini-skirt and dance to the tune of “Nobody nobody but you” by Wonder Girls… such an unpleasant thought, definitely not my idea of having “fun”.

But what if you had to make a choice between your son’s first ever recital and a conference call with your counterparts from abroad. How about choosing between being with your wife on her birthday or to be in Singapore for a regional meeting or spending your birthday with your wife and son or be in an annual planning session… the list goes on and on. I had to make these difficult choices in the past. Not anymore…

Just what is time freedom and how do you get it?
My definition of time freedom is being able to spend your time freely to do what you want, when you want, and with who you want. I believe that time freedom is a by-product of having passive income streams, and a good example would be those from passive income generating properties.

How? Buy a foreclosed property with a good enough net operating income to produce positive cashflow, fix it up, rent it out or sell it through a lease option. Might sound easy but it’s not, keep in mind it took me four years to buy three foreclosed properties. However, if this will help me get time freedom, then I believe it is all worth it. Besides, although it is not that easy, it is definitely possible and is not as difficult as you think.

So the next time you feel like giving up on real estate investing, just watch a video of your Christmas party presentations and ask yourself “Do I really have to do this…?!”. It just might help you snap out of it. Merry Christmas everyone!

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To our financial freedom!

PS. If you are a new visitor, please start here to learn more about foreclosure investing in the Philippines.

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