Questions You Need to Ask Yourself Before Buying a Condominium as Investment

Have you approached by real estate agents trying to sell you a condominium (as an investment)?

Investing in real estate properties (like condos) has been a popular option for many Filipinos who want to diversify their investments beyond stocks and mutual funds. But, unlike those more mainstream investments, there’s more to this type of investment than just choosing the right property and looking for a tenant to lease it to. Owning rental properties can require significant hands-on work, including dealing with tenants and keeping up with maintenance. Before you take the plunge into condo investments, there are some questions you must ask yourself before you invest in a property.

#1 Is this really an INVESTMENT property?

When investing in real estate, the goal is to put money to work today and allow it to increase so that you have more money in the future. Simply stated: “An investment is something that makes you money.” So if you or your family will be living there or you have no plans of having it rented out or selling it at some point, that property is NOT an investment.

#2 Am I ready?

Am I ready to be a landlord? Before you buy a rental property make sure you are prepared for the hard work that is to come. Investing in a condominium isn’t like investing in a mutual fund (wherein someone manages the fund). You will be spending your time screening and managing tenants, tending to maintenance and repairs and paying property taxes and association dues. If you are not quite ready to take on the extra responsibility then perhaps you are better off putting your money in a mutual fund.

#3 How do I plan to earn from it?

A rental property is only a worthwhile investment if it makes money. There are two ways you can earn from an investment property: real estate appreciation (aka selling the property) and cash flow income (aka renting out the property).

  • Real Estate Appreciation: This is when the property increases in value due to developments within the surrounding area, or upgrades you put into your property to make it more attractive to potential buyers. If you buy a property at market value, you would have to wait several years for the value to increase before you can sell it for profit. If you buy a property at “cheaper” pre-selling prices, you would have wait for the unit to be turned over to you, before you can sell it. Can you afford to have your money frozen that long? Can you afford the risk?
  • Cash Flow Income: This type of real estate investment focuses on buying a real estate property and operating it so you collect a stream of cash from rent. Is your property located in an area where there will be potential renters? Will your rental fee be more than the monthly mortgage you’re paying?

#4 Can I afford it? (A Very IMPORTANT Question!)

Make sure you have enough money to accommodate the monthly amortization you’ll be paying for your condo investment. For pre-selling condos, expect to pay a reservation fee (more or less Php20, 000), then a sizeable downpayment of 10% to 20% of the total price over a period of up to 36 months (depending on the developer) and the remaining 80% to 90% of price to paid upon turnover (which you can take a loan from a bank, HDMF (Pag-ibig) or from the in-house financing service.) Also, take into consideration possible one-time payments that you will have to cover like the costs of transfer tax and the registration of the condo title in your name.

In addition, take into account maintenance costs, association dues, upgrades, renovations, repairs and vacancies. Aside from condo dues, as a real estate property owner, you will also need to pay for annual real property taxes and insurance. These costs will vary depending on the size of your condo unit, and the type of services and amenities available to unit owners.

Keep in mind, unlike paper assets such as stocks and mutual funds, a real estate properties (like condominiums) is not easy to sell and requires time to liquidate.

#5 How well do I know (and trust) the developer?

Check the developer. Look into other developments that they have done in the past to ascertain whether they have a good track record in delivering the unit and the quality of construction. Ask some unit owners or tenants from their previous projects if they are satisfied regarding their residence experience.

#6 On Condo Ownership – Is this a leasehold or perpetual?

There are two types of condo ownership. Leasehold Ownership or Perpetual Ownership.

Leasehold Ownership

  • The developer DOES NOT own the land where the condo is built. They are leasing it from the land owner usually for 50 years, after which they can either extend the lease for 25 years or return the property to the land owner. There may be a chance that the condo owner can only use the unit until the lease expires.
  • If the condo building has been in existence for more than 50 years, it will be considered as obsolete and should be subject to demolition. If it has been decided not to be restored, then it will be sold or demolished so that a new property will be developed on the area. Condo unit owners will get their appropriate share of the proceeds of the sale of the building.

Perpetual Ownership

  • The developer owns the land where the condo is built. Therefore, all condo unit owners owns a fraction of the land. There is no expiration for the use of the unit.
  • After 50 years, since the building is deemed obsolete, the condo unit owners will jointly have to decide what to do with both land and building. Since they both own the land and the building, they will get their appropriate share of the proceeds of the sale of the building and the lot in case they decided to sell it.

#7 Does it meet my needs and requirements?

On Location. Location is the primary selling point that condo buyers consider nowadays. How convenient is it for the residents? Does it have nearby establishments in it such as malls, schools or office buildings? Is it accessible via public transportation? Is the area not flood-prone? What are the amenities in the condominium building?

On the Floor Plan Layout. For most pre-selling condominiums, you can only rely on the layout of the unit. Do you like the position of your bed, kitchen, living room, and toilet and bathroom? Check the layout of the whole floor where your unit is located. How many units are there in one floor? Is it near the elevator or stairs? Also, check the finishes of your condo upon turn over. What are the finishes of your bathroom, living room, bedroom and kitchen that are included upon turn over?

High Floor vs Low Floor. Higher floor condo units tend to be more expensive because of the view. Make sure that your tenants don’t have a fear of heights. In addition, with higher floor units, your tenants may have to wait for the elevator a little longer. In case of earthquakes and strong typhoons, tenants will experience more shake than lower floor unit owners. Lower floor condo units, on the other hand, are cheaper in terms of price and are closer to the amenities. If the tenants are in a hurry, they can avoid the long wait in elevators and go up and down to the condo using stairs.

On Parking Space. Parking space prices are expensive. But, take into consideration if you the needs of your possible tenant/s or if the condo is accessible to public transportation. Take note also that if you own a parking space, there will be an additional cost to your association dues, property taxes and insurance.

On Restrictions. For the common good of all unit owners, your condo will be governed by a Master Deed and Declaration of Restrictions. Ask for a copy and read through it. What upgrades or repairs am I allowed to do with the unit? Are pets allowed? Are LPG stove ranges allowed for use? How and where can I dispose trash and garbage? What type of equipment or appliances are not allowed within the unit?

#8 Will this property attract the right type of tenant for me?

If you are purchasing an investment home in order to rent it out, you might want to determine how easy it is to find renters in this area. Will you be able to find a tenant as soon as the unit is turned over to you? It’s important you identify your potential tenants and know what they would be looking for in a rental property. Would you rather deal with student or families or professional couples or transient travelers? Having an understanding of what types of tenants you are confident dealing with will help you choose the property and market it to your tenants better.

#9 Will I be able to sell this property?

When getting involved with an investment property, you need to consider your exit strategy in the future. No one wants to be forced to own on a property for years without being able to sell it. Consider whether or not the property is marketable. Is on a good location and in good condition that I can get a buyer much quicker?


Buying rental properties is a great way to make money. It may seem daunting, and yes, there is a lot to learn about buying and managing a property. Keep in mind, buying rental property is not for everyone. It should be an investment option you consider only once you’ve achieved a certain level of financial independence.

Do you own a rental property or condominium for rent? What have you learned from the experience?


One thought on “Questions You Need to Ask Yourself Before Buying a Condominium as Investment

  1. so true with my home mortgage …
    I am feeling the weight now for paying the loan. But i am trying to work it out by renting the space for a bit cheaper than monthly amortization. whatever is short i add up my own money..
    I came across your blog and everything is easy to understand! Thank you!!!!

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