My wife who has become so obsessed with finding a new house we can call our home shares updates on what we are thinking of doing with our old house that was devastated by Ondoy, what things to consider, our target locations, finding not just a house but also a sound real estate investment by searching foreclosed property listings, and applicable tax exemptions and pending articles about this and other taxes that apply to real estate, which I hope she finishes soon…
I’m just glad that I was able to convince her to buy a property the way true real estate investors looks for a good deal. Knowing how stubborn she is, I was surprised how easy it was for me to convince her that this is a perfect opportunity for us (as a team) to find a really sound real estate investment that will produce a good positive cashflow if we decide to have it rented out, or sell it for a significant profit down the road. This can only happen if we buy a house well below market value and apply Rich Dad’s principle “… You make money when you buy, not when you sell” as often mentioned by Robert Kiyosaki, best selling author of “Rich Dad Poor Dad”.
Our journey to our new house
By Cherry Castillo
As most of you may already know, we are looking for a new house, as our old house was totally devastated by Ondoy. I am sure many of you are in the same boat as ours. Of course, our decision to move entails more decisions with regard to the next steps, such as:
1. What do we do with our old house? Right now, we have a payment holiday until January 15 with Pag-Ibig. But after that date, we have to continue paying the monthly amortizations. Admittedly, the market value of the house is in question, and it’s not practical to continue paying the amortizations which was based on the market value of Provident Village prior to Ondoy. The next question is, do we sell it now, do we let Pag-Ibig foreclose it, or do we surrender it through a dacion en pago (a.k.a. payment in kind – that is, we give the house as payment for the loan)? If we sell it now, we will be selling it at a loss, but we will be cutting our losses since we will stop paying the high monthly amortization. If we let Pag-Ibig foreclose it (or if we surrender it through dacion en pago), how do we go about it? While it is clear that my husband will no longer be able to take out another housing loan from Pag-Ibig, would it also affect my husband’s credit rating and prevent him from taking out a loan from banks?
2. Granted that we will be moving, where do we go? We can go anywhere! Anywhere where there’s no flood of course. And since we are now so paranoid of natural (and man-made) calamities, if we are to move, we have to make sure that the area is one that was not reached by floods and that there is at least a second floor. I don’t want to be in the mountainside too for fear of landslides. We are now open to condominiums (unlike before, when I really could not imagine living in one), but not those that are too high, as I am also concerned about earthquakes. You may have noticed that there have been a lot of news about earthquakes in the Asian region and in the Philippines in particular. I have been telling my officemates that the best place to be is in a low-rise condominium, somewhere in the 3rd or 4th floor, since it will not be reached by floods, the structure will be strong enough to withstand earthquakes, and if there’s a fire I can jump out of the window and just have broken bones, or, if there’s a swimming pool nearby, I can just go straight to it. I know it’s a bit on the psycho side but you really get to think a lot about these things if you’ve gone through the great flood brought about by Ondoy. Oh, I forgot, I don’t know how to swim. I better join my son in his swimming lessons this summer! And time to turn into reality the Ondoy-related ideas I have thought about.
3. Where are our target locations? I have narrowed down our choices to the elevated portions of Kapitolyo, Pasig, San Juan, and Quezon City near UP. Aside from the earlier-mentioned considerations, it is very important for us to be near to a good co-ed school for our son as he will be turning five in January 2010 already and it won’t be long before he enters elementary school. I have sort-of developed loyalty to Mother Goose Playskool and Grade School (This is my son’s school in Provident Village, Marikina which was also devastated by Ondoy. Because they have several branches, they allowed my son to finish the rest of the school year in their Makati branch. Mabuhay ang Mother Goose!) so I want to find a house near a Mother Goose branch. As for my work, I am currently working in Makati but I am open to moving to Ortigas or QC, or maybe if my husband’s business picks up, I might just help him in the business. One of the best lessons I learned in the past years is that TIME is the most precious commodity. There are only 24 hours in a day and spending it on the road is totally useless. So the house should be near the place of work and study. In the course of my research, I have learned that prices are really so steep in the good areas.
4. This of course led me to search our site for foreclosed property listings (In the right side of the this page, you can use the “search” function to look for listings in this site.) I have also called several banks so I have updated listings with me, which my husband will be posting soon. I have also revisited my husband’s post on the Ultimate List of Bank Websites and I have found some updated listings there too. I have found a lot of promising properties and I must admit that it’s really exciting looking for good buys. I have been a bit depressed since last week, after I visited our old house and saw its sorry state. I determined that the only way for me to get out of depression is to finally have a new house! I have been joking that leaving our house is like breaking up with a boyfriend of 5 years – the only way to have closure is to have a new house/boyfriend! The process of looking for and deciding on the perfect place to grow our roots is both tiring and exciting. I do hope we find the house meant for us soon. We have visited a foreclosed property in Mandaluyong last week, full of excitement, only to have our bubble burst because of the really bad neighborhood, one of the worst as my husband put it (And he grew up in Mandaluyong! I really don’t understand why the Mandaluyong local government spends so much money fixing the islands when they have so many squatters!). My husband reminded me that it should be the other way around – we should find the worst looking house in a good neighborhood. I have also selected several properties and when I called up the bank, I discovered that they either have pending cases or encumbrances, or the bank does not have possession. Hay! I guess we have to look at more foreclosed properties (Around 100 more according to my husband – that’s a lot!). In God’s time, I know we will find the one for us.
5. Applicable taxes and tax exemptions? Being the tax person that I am, I really have to consider taking advantage of the capital gains tax (CGT) exemption from the sale of principal residence. I also need to create a post about this and all the other taxes – real property tax (RPT), percentage taxes, VAT, etc. (Okay, I’m really delinquent I admit!).
So basically, we will be going through the entire process of choosing a property that will also be a good investment. We are also looking at other properties, though not foreclosed but are rather houses for sale by owner (FSBO), but which look like good deals. We will do our best to document each step of the way so that it can be a handy and useful guide for everybody, much like a walk-through of the process. Wish us luck!
Cherry is my wife. She is a certified public accountant (CPA) and lawyer.
My vision – financial freedom for all!
Real Estate Investor
Real Estate Broker License #: 20056
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Text by Jay Castillo. Copyright © 2009 All rights reserved.
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PS2. Larry Gamboa and Bo Sanchez will give the Think Rich Pinoy Seminar this November 21 at the Philamlife Building in UN avenue in Manila. Larry will discuss his unique Real Estate methods, buying foreclosed properties and turning them around for passive income. You’ll also get to play Robert Kiyosaki’s CashFlow 101 Game and learn! To attend, click here now!
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