Buying an apartment complex in the Philippines.

[Teflon Don]

Hi Phils experts

This is an idea as a future semi retirement plan. I have experience in the management field but no experience in Asia. Are rental revenues on a basic complex a reasonable return on your money ? I don't want to buy anything that isn't an 8% return or better.

Where to start...

[Davis Knowlton]

Sorry, Don. No clue here.

[katie23]

To the OP: What kind of apartment are you referring to? Is it low-rise buildings (1-2 storey) or high-rise? If it's a high-rise (condominium), then there's no problem. But if you plan on building an apartment complex, or own a low-rise apartment complex, then you will encounter obstacles. I attended a seminar some years back (and it was also taught in college social studies) that foreigners are not allowed to own real estate in the Phils.

Upon googling, I've confirmed it. Foreigners are not allowed to own land, but they are allowed to own condominium units, provided that the maximum % of condo units sold to foreigners is 40%. There's this 60-40 rule in the Philippines. For businesses/ corporations, 60% must be owned by Filipinos, 40% by foreigners. To be considered as a corporation, there must be at least 5 incorporators. Foreigners also aren't allowed to be a sole proprietor of a business. As for land, foreigners are not allowed to own land, but can own the property (house, commercial building) built on the land. There are many proposals to amend these rulings, but as of now, they still stand.

The easiest way to go around the obstacle is to have a Filipino spouse or business partner, and have the land/business in the name of the Filipino. Many people do this, (either do marriage or set up dummy partners/corporations).

For more details, check out
Buying a House in the Philippines (or any Real Estate Property)

There's a section for a Special Resident Retirement Visa (SRRV), you must have USD 50,000 (age 50+) or USD 75,000 (age 35-49).
Philippines: Special Resident Retirement Visa (SRRV) Requirements

If you're interested in investing in condo unit(s), you can buy the unit(s) and rent or lease it/them. I don't know the ROI for that. I saw some condo units for rent/lease in Manila at airbnb.

On a personal note, I know of a Swiss national in my hometown who's married to a Filipina, and they have several 2-storey apartment units for rent.

[forreachingme]

I got a friend (Belgium) that will build a house around Subic Bay soon.
He told me that he want to add a few units for rent.

I told him that he shall rent only to holliday people a few month a year, less hassle.

He checked that way but it needs be licenced and foreigners are more monitored then the locals, so he will rent for the year to locals.

Building not far from a University is not bad i was told, the student are sponsored by parents and the rent comes in easier.

I am a foreigner but i have land at my name, the wife updated the registration papers and paid the late fees that family not took care off.
The wife wanted this land at her name but the office placed my name, she asked why that ? They said a men is better and we know him for years... so things remain flexible over here.

[Teflon Don]

To the OP: What kind of apartment are you referring to? Is it low-rise buildings (1-2 storey) or high-rise? If it's a high-rise (condominium), then there's no problem. But if you plan on building an apartment complex, or own a low-rise apartment complex, then you will encounter obstacles. I attended a seminar some years back (and it was also taught in college social studies) that foreigners are not allowed to own real estate in the Phils.

Upon googling, I've confirmed it. Foreigners are not allowed to own land, but they are allowed to own condominium units, provided that the maximum % of condo units sold to foreigners is 40%. There's this 60-40 rule in the Philippines. For businesses/ corporations, 60% must be owned by Filipinos, 40% by foreigners. To be considered as a corporation, there must be at least 5 incorporators. Foreigners also aren't allowed to be a sole proprietor of a business. As for land, foreigners are not allowed to own land, but can own the property (house, commercial building) built on the land. There are many proposals to amend these rulings, but as of now, they still stand.

The easiest way to go around the obstacle is to have a Filipino spouse or business partner, and have the land/business in the name of the Filipino. Many people do this, (either do marriage or set up dummy partners/corporations).

For more details, check out
Buying a House in the Philippines (or any Real Estate Property)

There's a section for a Special Resident Retirement Visa (SRRV), you must have USD 50,000 (age 50+) or USD 75,000 (age 35-49).
Philippines: Special Resident Retirement Visa (SRRV) Requirements

If you're interested in investing in condo unit(s), you can buy the unit(s) and rent or lease it/them. I don't know the ROI for that. I saw some condo units for rent/lease in Manila at airbnb.

On a personal note, I know of a Swiss national in my hometown who's married to a Filipina, and they have several 2-storey apartment units for rent.

Thanks for this.

I looked at a few listings online for commercial buildings and multi plexes. I am very surprised how expensive and low ROI I have seen so far. Even with the exchange rate.

The first 2 places I crunched the numbers on came out at a 2.75% and 3.4% return. Very low. It's not a good time to buy. At this rate, the only thing to do is wait for a recession

[katie23]

@forreachingme: The "no foreigner can own land" and 60-40 rule for corporations are the official laws, and that's what I learned in school and from a seminar. But then, there are always exceptions, and rules can be bent or broken, depending on who interprets the rules and the local officials involved...

As for your friend in Subic, Subic is a special freeport/ special economic zone, so there are different rules.

I'm glad you and your friend have land in your names.

Btw, not to hijack the thread, but how is your daughter? I hope she has fully recovered from dengue.

[marjorie]

I have always found that maintenance and troublesome tenants have eaten up whatever returns there were, not to mention times of no occupancy.

[katie23]

@teflon don: You're welcome. I don't know if there will be a further recession, but the economy here in PI is worse, compared to early last year. It's because of the supertyphoon last November - after the typhoon, stock market was down, the exchange rate was against the peso, etc.

What FRM said about university town - it's a good option. I lived for a while in a university town and dormitories/apartments were always in demand. If you're interested, you can PM me and I can give you more ideas re: college towns and their locations.

Good luck in your endeavours.

[forreachingme]

Katie, the daughter is fine now, she was 11 days in hospital and looked really pity at some point, liquid in lungs was hard time for her, all almost fine now, still a bit weak but good.

A son (22) of a doctor in the hospital where she was treated got dengue too, his brain got hemorrhage, he will prolly be with the IQ of a 5 year old !

My daughters wear OFF bracelets now, repellent with lemon, damn dengue, frightening.

[Teflon Don]

I have always found that maintenance and troublesome tenants have eaten up whatever returns there were, not to mention times of no occupancy.

That is the nature of the business. At the end of the day , you should make money. Not if you are buying over valued property. Anything yielding under 7% is over valued