Real Estate

Living in the Philippines: The Best “Passive” Companies to Start

For those OFWs and foreigners who want to start a business, but do not want to get involved with the stress of a business involving daily operations, employees, owners, inventory, etc., there are several opportunities available to foreigners living in the Philippines. Buy superior properties to fix up, improve them, and then rent or sell them.

1. Buy superior properties to fix up, improve them, then rent or sell them. This is a great business for those of you who have experience in your home country buying, repairing, and renting or selling property. In the past 10 years, many people got involved in this kind of business in their homeland.

With the general economic problems in the world in recent years, the Philippines has not been immune, and there are many properties in disrepair, as well as many distressed and foreclosed properties.

2. Build an Apartelle. An Apartelle is an apartment building in which all units except one are rented out on a long-term basis, and you must operate on a nightly or weekly basis, much like a hotel, hence the combined name of Apartelle. These are common in the Philippines.

This business will require more capital investment, but with the right property and focusing on more rural areas or smaller towns, you can build a small 4-unit apartment building for Peso 3,000,000, not counting the cost of the land.

She would like to rent 3 units long-term and keep one for short-term rentals, for the many street vendors that frequent the countryside. They like to book such short-term apartelle units rather than the much more expensive hotels in the area.

3. Condotel. I have not given my approval to this business in all cases. Condotels have been heavily hyped and promoted in recent years and many, many new condos have been built in Manila, and now even in Cebu and starting in Davao.

The problem is that even though developers offer excellent down payment terms (typically around 30% down payment financed over 3 years) and in some cases hold the mortgage and finance for perhaps 10 years, the rates Interest rates are unbelievably high and the rents split with the management team runs around 50/50. There is also always a nominal monthly maintenance fee.

What seems like a “cheap” entry point and cash flow each month, in many cases simply becomes a gamble on long-term property appreciation: finding someone willing to pay you more than you paid for she.

This is because with all the inventory available, there is a surplus of condos that have been in hotel-type rental pools, but not enough visitors to rent them all.

Consequently, what an investor thought would be a good positive source of income turns out to be an ongoing negative cash flow, not what a new retiree in the Philippines is looking for to supplement their pension or annuity! This type of investment will only deplete his pension.

However, after writing all of this, I HAVE FOUND two exceptional condo investments in the past few months that DO meet my criteria of generating good ongoing rental income.

4. Agriculture. The likely termination of the Agrarian Agrarian Reform Program (CARP) will give the rural sector renewed confidence to invest in agricultural production capacity. CARP has retained investment in both production capacity and farm acquisition. The end of CARP will mean higher land prices, as land will be valued for its higher income-producing potential.

However, the higher land prices are simply a “fluke”, an added value, for the type of farm business I am writing about. I have found an extremely unique business opportunity, that will generate a great ROI (return on investment) and is completely passive. It has been structured by the developers (all foreigners) to be a turnkey investment price. The price includes the cost of the land, plus all
Clearing, planting, cultivation and harvest during the first 5 years.

The business has been priced to fit the capital investment budget of the average foreign retiree, and all owners will be members of a cooperative that will share farm equipment (tractors, equipment shed and others). The farm will be “grown” by the developer’s management team.

The hottest trend right now is organic farming, and yet it is only in its infancy in the Philippines. There is one export product in particular that has caught my attention: the pili nut. The Philippines is the ONLY country with which this nut is produced and processed in commercial quantity.

The present state of the pili is equivalent to that of the macadamia some 30 years ago. It has enormous potential to become a major industry. They are in demand not only in Hong Kong and Taiwan, but also in Singapore, Korea and Austria.

Leave a Reply

Your email address will not be published. Required fields are marked *