Choosing to lease or buy a condo comes with its respective benefits. On one hand, you may want to purchase a property that you can use for the long-term, and eventually turn into a source of rental income. On the other, renting property can provide greater flexibility and lower maintenance costs.
That said, there is no right or wrong choice when it comes to opting for the lease contract or putting a downpayment on a brand-new unit. The bigger consideration is your current and future needs. After all, investment decisions are as practical as they are deeply personal.
So what to consider when buying a condo unit, or leasing one? In this article, we take you through the advantages of both.
The Benefits of Buying A Condo
According to Colliers’ report for the second quarter of 2021, residential projects are projected to begin recovering in 2022. This is due to several factors: businesses picking up, remittances from Filipinos working abroad, competitive mortgage rates, and the COVID-19 vaccination program.
If you choose to purchase a condo unit this year, expect to reap these benefits:
Real Estate is one of the key investment types that should be included in one’s portfolio alongside savings, bonds, stocks, and other tangible assets. A diverse portfolio allows you to better manage risk by spreading your money across various tools that lets you grow your wealth.
As a common example of a tangible asset, real estate investments are more likely to withstand inflation. Despite recessions such as the one created by the COVID-19 pandemic, real estate still manages to rise in value. In fact, from 2015 to 2020, the Philippine market saw a 27.1% rise in property values.
Value appreciation of investment
However, no real estate investment is the same. Assess your property options carefully. Consider buying a condo from a reputed developer. Look into the historical performance of that developer’s properties–and how they have grown in value over the years. Rockwell Land, for example, has been cited by RE/MAX Philippines as having one of the highest resale values. RE/MAX named developments like Edades Tower seeing its units rise in value by 92% from 2009 to 2017.
Source of Passive Income
Say your family has grown and that one-bedroom condo unit is no longer sufficient, or you need to transfer to a different city for work? Once you move out of your condo unit, you always have the option to put it up for lease.
Rent is a good source of passive income. And if your property is located in a prime area such as a business district or economic zone, the potential of finding more prospect lessees increases. This includes individuals with work in the area, or a family with children attending nearby schools.
As far as legwork is concerned, as a landlord (lessor), you will need to accommodate any ocular visits with potential lessees, facilitate the signing of a lease contract, and coordinate with them for any move-in requirements. You may of course opt to work with a licensed real estate broker, or enlist the leasing services provided by your developer.
On the other hand, you may use your property for rental income as soon as it is turned over. Ideally, your unit should be self-liquidating, so that the income it earns is paying for any monthly mortgage on the property.
In this case, you can make your condo even more attractive for potential renters. For example, if your unit comes semi or fully-furnished, it can be an option for expats who have short-term work contracts in the country, and for whom purchasing new furniture would not be ideal.
Opportunity to buy from the resale market
As a buyer, the resale market provides more options to choose from. Resale is particularly attractive for investors especially if you would like to buy a specific condo type, say, a two or three-bedroom, in developments that have run out of inventory on brand new units. This is especially true for older yet prime developments that have high value appreciation.
In some cases, the resale market may also have properties on fire sale, which is common for sellers who need to liquidate fast. This is an opportunity for you to get a good deal on the condo unit you are eyeing.
The Benefits of Leasing
Flexibility is perhaps one of the biggest benefits of leasing. This in turn is dependent on your needs and capability. For example, a solo-dwelling young professional may find it more feasible to rent a studio unit while saving enough funds for an eventual purchase. The same may be true for a newlywed couple, who is still planning for a family.
Halfway rental homes are also common for those whose permanent addresses are at a considerable distance from their place of work. For instance, this is ideal for individuals who live in the province but run businesses in Metro Manila.
If you find yourself fitting the same profile as these types of renters, renting will give you the best flexibility. Some things you can negotiate with the property owner include:
- Monthly rent. Negotiating for a smaller monthly rent can save you thousands of pesos every year.
- Duration of the contract. You can opt to do short term–as little as six months–or long term, such as two years or more, depending on what is amenable to the lessor.
- Renewals. Standard lease contracts have the option to renew. If you wish to extend your stay, you have the freedom to do so within the stipulations of the contract. This means you need to advise the lessor of your intent to renew within a specific number of days before the lease period ends.
Lower cost of maintenance
As lessee, maintenance costs are usually limited to minor repairs. Again, your lease contract will spell this out by indicating the minimum value for a major repair, which should be on the account of the lessor. In the long run, this translates into savings on overhead.
No property taxes and monthly amortization
In addition to maintenance costs, the usual expenses that accompany ownership like property taxes are also on the account of the lessor.
You likewise need not worry about paying monthly amortizations for properties on loan. This may be seen by some as a disadvantage, since monthly rent can sometimes be as high as a mortgage, but consider this: moving into your own place comes with intangible benefits.
Living in your own place builds life skills and emotional intelligence, and provides a greater sense of independence. Think of it as a viable option to buying property, but one that can be rewarding in ways that benefit your happiness and sense of achievement.
Find the right condo with Rockwell Leasing and Secondary Sales
Choose from various communities, all bearing the signature Rockwell lifestyle and unparalleled exclusivity, safety, and security. If you need to refine your list, you can even compare options to ultimately find the unit that best suits your passions and needs. And if you wish to list your resale unit or condo rental, you may register your unit here.
Contact Rockwell Leasing and Secondary Sales to learn more.