Personal Finance: Lessons Learned From Our 1st Real Estate Investment As OFWs

We have closed our 1st big purchase late last year after working for five years as overseas Filipinos in Taiwan. But first, let me qualify one important thing.

This didn’t happen overnight. I’d like to state that fact, because when overseas Filipinos share their story about purchases and investments, others automatically think that this was because everything is just that easy overseas. Something like, “you know, I feel like buying a property today…Done!”

Nope. It wasn’t like that for us. And for overseas Filipinos planning to purchase a real estate property, I’d like to share with you four main lessons we’ve learned along the way. (Note: I also created an OFW take-home primer for our participants in our 1st Abroad Me Live seminar to flesh out some of the details.)

1) It pays to start early.

My husband and I decided to make our purchase in our mid-20s, almost two years after moving overseas. I pushed for that decision because, in Taiwan, real estate properties are way too high. It was very clear to us that while we’re staying here, we’d be renting our place and that’s actually more economical for us.

We also have another problem. You can’t easily purchase or loan a home here unless you are a Taiwanese citizen. Even as renters, we have to have a Taiwanese guarantor so we can rent without any issue. It’s a little bit frustrating but it’s a reality we have to face.

So there was my challenge early on. Our rent money is just going out from our pockets. I discussed this with my husband that we have to start early to address this issue. Buying a real estate property in the Philippines as a “quasi-investment” was our best option. We thought that, even if we’re renting out here, we can generate a passive income if we rented out our place in the Philippines.

Some financial advisers are against this investment strategy and I have stated in my previous post that they have valid reasons. However, if we didn’t start early on, we won’t be able to get a property near Ortigas (a prime location) at a much lower rate compared to what’s being priced now and even in the future.

2) Know what and why you’re buying. 

My husband and I have this funny rule before and after deciding to purchase a property: “Bawal ma-in-love.”

In other words, we were firm that we can’t get too attached with this investment because we know exactly why we are buying it.

Our purchase is what Biggerpockets.com stated as “quasi-investment”. While buying a house and lot appreciates more than buying a condo unit, we opted for a condo unit because it’s cheaper. It’s easier to purchase, rent out, and maintain. And we’re hoping that it’s easier to dispose in a few years’ time as well (this is not always the case…that’s why we chose a good developer and great location).

Here in Taiwan, condos are everywhere. We seldom see a “standalone” house. One of our colleagues mentioned that if you own a house and lot in the city, you may be sitting in a gold mine.

In the Philippines, we are still used to the idea of having a backyard, spacious rooms, “second-floor”, and so on. If our country really is moving towards the forecast progress, then it’s very likely that we’ll see real estate to be vertical like our neighboring countries.

After identifying our “what” (that is, condo unit), we also were clear with our “why”. As a quasi-investment, we aim to generate passive income from rent but if we don’t get a regular stream of income from it, then our property can also function as a safety net for us when we decide to come back to the Philippines for good, whether as our home or something that we can sell as leverage.

3) Know where you currently stand.

There’s no investment strategy that’s a perfect fit for every situation. For us, renting (in Taiwan) and paying mortgage (back home) will be costly. So, my husband and I agreed that if we are to buy our 1st real estate purchase, we can’t go with having a mortgage.

We opted to increase our down payment to 50%, and then save up for the other 50% before the turnover (three years after making the decision). First, we asked ourselves if it’s doable. Then, if we are to pay out in full, it means we have to make serious lifestyle changes and budget cuts. We also have to keep track all of our expenses.

Saving up requires a lot of discipline and we needed all the motivation in the world. First, I printed out our payables for the next four years and I crossed out what we’ve paid out every month.

Second, we listed down our quarterly financial targets. We made a few mistakes (forgot to allot some funds or spent it in another) but we came back to what we have committed to deliver. We also rewarded ourselves for the goals completed.

It also meant passing up on some things, like weekend day-out, fancy dates, shopping budget, and big-ticket purchases. Sometimes, it felt like a long and winding road but when you’re committed to save and invest, you let go of the now and commit to the possibilities in the future.

Lastly, we also know that we can’t do it our own. We need someone to help us with our overseas transactions and paper work. We connected with a very good friend, Bernadette “Detdet” Tuazon, who became our trusted broker and go-to person for questions and concerns (thanks Det!). My mom, as a real estate investor herself, acted as our attorney-in-fact.

4) Commit to the future. 

Committing to the future doesn’t just mean saving up and penny-pinching. It means not stopping to learn, to invest, to diversify, to plan ahead, and to get back up when you fail once in a while.

While it’s too early to tell where our investment story will take us, we are moving forward and making progress. Right now, we are learning the ropes on how to turn our purchase into a passive income and we’re seeing a lot of potential. While we have a few regrets here and there, we are happy with our investment because we started with a vision (something that I shared in my book, Abroad Me: 22 Success Strategies for Young Overseas Filipinos).

So, there you go. I hope this can shed some light to some overseas Filipinos about real estate in the Philippines. I’d like to stress that this isn’t a bad investment when you are prepared for it. For sure, this isn’t also an investment for everyone. You have to take time to evaluate if it fits you, your investment strategy, and your vision as an overseas Filipino. Actually, there’s no better time to do this than now.