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Metro Manila, Philippines
As teenagers grow into their much more mature stage in life, a recurring issue that is prevalent among their age range would be the allocation of the new money from their freshly-released paychecks. Even though it is highly possible that there would be multiple financial advice from the guardians in their family, it is still a huge probability that they would turn to splurging and unnecessary spending that might not benefit them in the long run. From here, the idea of doing real estate investments arrives as an option to wiser financing and properly saving up assets for the future.
Real estate, as sometimes referred to as ‘real property’, is the land ownership below and above the ground, including all tangible things upon and within the land like the building or house planted on it. On a more business-like point-of-view, it is the producing, buying, and selling of property. Land with the mentioned building, houses, septic system, or anything similar are often referred to as ‘improved’ land while land without it are considered to be ‘unimproved’.
Under this article would be a general guide to real estate investment, especially to those who are still foreign to some technicalities and basic yet necessary information regarding land ownership.
IN THIS ARTICLE:
Types of Real Estate Properties to Consider
To start, there are four types of real estate that every buyer should know:
Residential Real Estate
As consideration with the term, residential real estate pertains to properties for residency, both with newly-constructed buildings or houses and resale homes. With the high demand in quality housing within the Philippines, there are multiple residential properties that are willing to keep up with the demand.
Commercial Real Estate
Under commercial real estate are buildings and properties that are utilized for business purposes and public use. It could include hospitals, shopping malls, educational buildings, and hotels. Apartments, although they are residential, are also considered to be under commercial real estate properties as they are possessed to gain income.
Industrial Real Estate
Industrial real estate are also owned for business purposes, however, industrial real estate properties are more on the larger part of enterprises. This could include factories, warehouses, or anything that could be used for research, production, storage, and distribution of goods and products. This is differentiated from commercial real estate as properties under this category are dealt with a different approach and assessment.
Vacant Land
Vacant land is simply vacant lots or any property that is not utilized for any specific purpose at the given time. Under vacant land could be undeveloped, undergoing early development or reusage, subdivision and site assembly. In reference to those, vacant land could either be improved or unimproved land and might be used by someone else.
Real Estate Laws in the Philippines
First thing to learn would be the real estate laws within the country. Considering that real estate is no easy commitment and investment especially financially, it is very favorable to have the assurance that these laws provide. After all, the money that one will spend in their investments will range from thousands to millions of pesos — basically, never an amount to fool around with and carelessly misspend.
- The first on the list would be the Subdivision and Condominium Buyers’ Protective Decree (P.D. No. 957). This presidential decree regulates the process of dealing with the sale and the projects for subdivisions and condominiums in the Philippines. It also includes the role National Housing Authority (NHA) plays regarding the regulation of trade and business and the guarantee of following the procedures before announcing the registration.
Read more here. - Another would be the Maceda Law or Realty Installment Buyer Protection Law. In considering today’s economy and the majority of the working class, it is a much more preferable choice to do installments than full payment as it is not too heavy on the financial side in that way. Although it prolongs the payment period, this law comes in protection of the buyers regarding the installments of a real estate property.
Also known as Real Estate Buyers Protection Act for Real Estate Transactions, this law addresses the right of the buyers to pay their unpaid installments within the grace period if, and only if, they are successful in paying at least two years worth of installment. If they still haven’t completed an installment of two years, the law also ensures that buyers have the rights to settle with a maximum of sixty (60) days after the last due date for installment.
The Maceda law also covers a few more points regarding the contracts between the buyer and the seller. This law basically exists to draw a definite line in transactions and will ensure the protection of both parties, especially the buyers.
Read more here. - The third to include in the list would be Republic Act No. 9161 or the Rental Reform Act of 2002. This act ensures that the owners that are running their business for home or property rentals are not charging more than what is legal and under the law. This also includes the regulation of rentals in residential units in the National Capital Region (NCR) and other highly residential units, as well as those that fit outside the category.
Read more here. - The last and very important to have knowledge about would be the Real Estate Tax Code. There are a lot of points involved under this code, but this law mainly provides computations for a real estate property’s tax rates, the tax base, the valuation rules, and the local government’s limits.
Read more here.
General Documents Received Upon Buying
Documents are the most important when it comes to dealing with transactions of properties and contracts. Granted that there is a lot needed to provide and accomplish in binding with a seller-buyer contract, there are also certain documents that buyers should be aware of. It is important to check that the basic ones are already given to the buyers in order to show the eligibility and legalization of oneself as a new owner of the real estate property. Under this section are some of the documents that a buyer should have:
Contract to Sell (CTS)
This document is produced in order to provide the indication for transferring the property’s ownership, granted that the people involved in the transaction are successful in completing the necessary requirements of the deal.
Deed of Sale
This binds up the transaction as it includes the terms and transfer of ownership between the seller and the buyer. Deed of sale is a formal document that certifies the responsibilities and authorization of the buyer once they have acquired the property. This further legalizes the transaction and is given right when the payment is complete.
Condominium Certificate of Title
Issued by the Land Registration Authority (LRA), the Condominium Certificate of Title is documented proof upon one’s ownership over a condominium unit. There are multiple documents to be submitted in order to receive this certificate, however once received, Condominium Certificate of Title affirms that the property bought is free from previous lien, mortgages, and encumbrances or any equipment or apparatus.
Declaration of Real Property
As mentioned, paying taxes is important in buying a real estate property. A Declaration of Real Property is a document that ensures the records and assessments that are used as reference for the market and are needed for the evaluation and collection of the property’s tax. It is also considered a strong proof to a transferred ownership of a property.
It is very important to ensure that documents like these are all in the hands of the seller that your real estate agent would be referring to and keeping in contact with. It is extremely risky if the basic documents are not shown to you as a client as it decreases the credibility of the agent, the seller, and the supposed trust in dealing with any financially abundant transactions.
There is a lot more to consider when handling real estate investments such as finding and ensuring the legitimacy of the real estate website that you are going to look into. You can check out some of the legitimate real estate websites and dealers in the Philippines here: 7 Formidable and Legitimate Real Estate Property Websites in the Philippines and hopefully discover the type of properties that you are more drawn investing into.
As a young adult, there is a lot to invest into as there are a lot of suppressed wants and needs that former teenagers only have the freedom to buy upon earning their own money and not depending on any adult or elder figure. However, nothing beats the preparation and the insurance for a better future just like a real estate investment; as it eases the problem of acquiring one’s own property that you could use for a future business or even utilize for the benefit of a future plan of your family.
