You might have an excess cash and you are looking for a place to invest them in which can bring you lucrative returns. You can either choose to start a new business idea, place your money in the stock market, or find a real estate property to purchase for land-banking and eventually do your first ever build-and-sell project. In this time of pandemic, many of those people who are residing in a condo are transferring now to new homes in bigger condominium units or opting to live in a house and lot in prime villages in suburban communities. And here I see a good opportunity for you to start your build and sell business.
Homes in luxury communities are less dense, there are usually only 5 to 15 lots per hectare, and offers a generous open space and outdoor living for its residents. It is indeed a better option for the affluent market who are looking for a ready-for-occupancy houses to buy. For this article, we are going to talk about the Top 10 Things to Consider before you Start your Luxury Home Build and Sell Business in the Philippines.
1. CHOOSE A TRUSTED REAL ESTATE PROFESSIONAL
Firstly, it is important that you find a licensed real estate professional whom you can trust and not just some fly-by-night individuals who just want to earn a one-time commission and can no longer be contacted after the transaction is finished. Choose someone who has enough exposure in the luxury market and is adept with the process of a real estate transaction from start to finish. Most especially, one that is keen to details stated in the contract you are signing. Although contracts can be reviewed by your lawyer, it is still better if your chosen real estate broker is meticulous in contracts and sees to it that you are protected. He or she must really be knowledgeable from choosing the best property for you in the market down to the end of the process and even good in the after-sales service.
2. BUDGET AND PRICING
Decide how much is the total budget you are allotting for the lot purchase and cost to build. In buying a lot, include the cost of taxes such as Documentary Stamp Tax and costs to transfer the property to your name like, Transfer Fees, Registration Fees, Notary and Processing Fees which approximately totals to 2.5% to 3% of the property value. Once you sell, include in the computation of selling price the 6% capital gains tax, 12% VAT (if applicable), and brokers fee ranging from 3% to 5% of the agreed price.
3. LOCATION AND ACCESSIBILITY
Is the village where it is located is in a strategic location? Is it located in a master-planned community where everything a family needs are within reach, such as high-end schools, hospitals, offices, hotels, leisure area like golf course, malls, restaurants? Ayala Land Premier and Alveo Land communities are one the top choices among real estate property investors because they are building a community and not just a stand-alone development. Some of master-planned communities where seasoned real estate investors are flocking into are in Nuvali in Laguna, Vermosa in Cavite, Makati Central Business District, Bonifacio Global City in Taguig, Arca South in Taguig as well particularly in Bicutan Taguig where the former FTI is located and Alviera in Pampanga, just to name a few. Another thing to consider is the neighboring communities and the infrastructures currently being developed and to be developed around the area.
Are there many accesses to the property like multiple express way exits and main roads leading to the property? This is also one the main driving factors of the value growth and saleability of the house you are building which leads to the next point—potential for value appreciation.
4. POTENTIAL FOR VALUE APPRECIATION
Of course, it’s a no-brainer that you have to choose a property that has more potential for value appreciation because it will equate to a good bottomline once you resell the house that you are going to build. It is not just the location but the branding and integrity of the developer which greatly drives the value growth. You can compare villages that are launched simultaneously, but after 5 years Village AAA has a higher price per sqm than Village BBB.
5. REAL ESTATE DEVELOPER
Choose a real estate developer that is known for its integrity in delivering what they promise from the marketing brochure to the actual turn-over of the village to the Village Association. The quality and type of the amenities, road width and quality, streetlights and utilities (better if wirings are placed underground) are some of the factors you have to look into.
6. A WELL-MAINTAINED VILLAGE AND GOOD SECURITY
Are the amenities well-maintained by the village association? Are there not many dilapidated homes in the village? A well-maintained village naturally commands a higher price. Luxury home buyers prefer to live where their families can access all the amenities most of the time and not to be hindered by a dirty pool area or malfunctioning fitness equipments. Security of the residents must be highly prioritized. Make sure that the Village Association is investing in an efficient security services.
7. TARGET MARKET
Decide who is your target market among the luxury market category. Are you building a house for early nesters who prefer smaller houses that are kid-friendly and are closer to the amenity areas? Or are you building a house for a family who has grown up children that requires bigger rooms and ample space for everyone’s privacy? Whichever is your choice would depend on your budget for the project.
8. THE VIEW
An amazing view from the house that you are building is a main factor to consider by the richest of the rich. So if you want to price your property on a higher range, consider buying a lot that has a good vantage point or highly elevated among its neighbors. Check if the lot has a panoramic view, or a beautiful view of the mountains, greeneries, ridges, ocean, a courtyard or adjacent to a park? The houses built on these lots command a higher price. Remember that the discerning affluent will pay for the price to drink his cup of coffee by the balcony facing a million-dollar view!
9. LOT CLASSIFICATION
Lots in prime villages have different classifications. There are inner lots that are less expensive. There are single-loaded lots, meaning, you don’t have a neighbor backing your property. Some home buyers prefer a corner property and along the main road of the village, these kind of lots have bigger cuts as well. But some home buyers prefer to live in a quieter side of the village and prefers houses along a spine road. The lot classification you will choose really depends on your budget and your target market. Avoid buying as much as possible lots adjacent to the perimeter fence or on a T-junction or “tumbok”. Most investors or end-user buyers don’t like perimeter lots due to security concerns, while “tumbok” properties are believed to be unlucky in feng shui beliefs.
10. RELIABLE HOME BUILDER
Same with choosing a real estate professional, choosing a reliable home builder is a main factor to your build and sell business success. In my experience of roaming around luxury villages catering to different real estate clients, I get across some houses that have been in the market for years and still not sold. It is usually because of its poor design and layout or substandard finishes. Ask for the project portfolio of different builders. Ask for photos of the actual houses they built and not just digital renderings of the houses. Find which builder is expert on the type of architectural design of the house that you plan to build. Whether it is a modern house, a tropical contemporary, or a Meditteranean design, be sure that it is their line of experty. You cannot slight the importance of asking for referrals from friends who just built their beautiful homes. They have first-hand experience with the home builder. You can also attend some Builder Expo events so you can check many options.
The things mentioned above are some of the major factors to consider before taking a leap on the build and sell business. Risks can be manageable if you are guided and educated properly. There are also build and sell seminars that you can attend to get a more in-depth knowledge about the technicalities, costing, strategies etc. You don’t even necessarily need to sell right away the house you are going to build. You can use it initially as your family home and save on rent while it is in the market for sale. It’s a dual purpose, you have a home, and you have an inventory that awaits its perfect buyer anytime.
If you have any questions or need help in selling your property or you are into landbanking and want to buy an ideal lot for your build and sell project, you may email me at mcanonoy.realestate@gmail.com or contact me at 0917.366.9038 (Viber/WhatsApp).
