A house and lot is a real estate investment that allows you to have a permanent place to settle in. Not only that, but real estate is also a tangible property with a long-term and steady growth in monetary value. Thus, unlike other possessions like vehicles or personal electronics that depreciate, the market value of the real property appreciates over time.
Additionally, the land is no longer as abundant as it has been before with population continuously surging throughout the decades. Therefore, due to high demand, the land has become a valuable resource and a physical asset which brings a lot to the table in terms of financial potentials.
However, with its extremely high purchase price, hefty monthly mortgages, and the additional fees for upkeep and maintenance, do the promising rewards make buying a residential property worth it?
Real Estate: A Worthwhile Investment
Many individuals may raise a brow over a house and lot that is called an “investment” because instead of raking in money, it’s usually the other way around — homeowners spend money on real estate. In addition, according to Listen Money Matters, when you add up the monthly mortgages and compare it to the appreciated value of your house years from now, the gap is not as significant as you would expect.
In addition, if you want to make money out of your house through selling it, you’ll have to wait until you have acquired full ownership so you can set a premium amount. Thus, you’ll still have to spend a lot in the meantime. Does this mean that buying a house and lot in Cavite or anywhere in the Philippines is not a sound financial decision? Not really.
Pursuit of Passion reports that a house and lot doesn’t only serve as a primary residential space, but also a source of passive income. In this article, we’ll tackle that idea and discuss several ways you can realize immediate profits through your house.
Lease it as a vacation rental or homestay lodging
The tourism industry in the Philippines is booming with lucrative opportunities. In fact, tourists have been found to be strongly interested in staying at suburban areas just outside Metro Manila due to the ease of access to roadways, different modes of public transportation, and tourist destinations. Moreover, in 2016, it has been reported that the tourism department of Cavite expected to hit about five million tourist arrivals, with areas like Tagaytay and the Kawit municipality having the highest number of tourist visits.
In line with that, there are plenty of people looking for a place with great amenities to stay. If your house is located in a residential village with 24/7 security, beautiful greenery, and well-equipped clubhouse, then you can definitely attract vacationers for short-term leases.
Generate long-term rental income
Aside from vacationers, you can also rent your house to long-term occupants. For instance, you can offer a room or bed space for young professionals or university students. You can then use some of the rental profits for paying the amortization fees or your monthly bills.
Build adequate home equity to qualify for a credit line
When you pay amortization, your house enables you to benefit financially through an appreciating asset. More specifically, once the sum of your amortization reaches at least 20% of your home’s total sales price, then you’ll have an adequate amount to build home equity. Home equity can be used as leverage for borrowing a line of credit for monetary ventures like starting a new business, paying for your child’s tuition, or getting a loan for another real property investment.
The world of personal finance is elaborate and complicated, making it harder for individuals to determine which investments are worthwhile. However, if you’re opting for both long-term and short-term turnover, then a house and lot may be the right investment for you.