Advice Needed: First-time Buying Condo as Rental Investment

Welcome Bob.  Not sure how easy it would be for you to manage a condo from California, and hiring someone to do it for you may negate any money you could earn, having to pay the monthly fees etc.  The general rule for expats is to rent for at least a year before purchasing any real estate.  If you read other threads you will find rents are not high, and if you can afford to buy a condo you would probably be better served in some other safe investment the next few years.  In addition, if your total foreign deposits are $10,000 or more, even for one day, then there is extra forms to file with your federal income tax forms.  Even if your income is low enough to not have to file a form 1040, you will still be required to report the balances of your foreign accounts  You have at least two years, why Philippines?  Exmilitary?

Thanks, mugtech! Definitely some things to consider. My brother is a cpa, so I will consult with him about the IRS issues.

I wonder if I don't rent it out, what would be the downside? Then I wouldn't need to hire someone to manage it.  From my initial research, it seems like housing prices have been steadily climbing at a decent clip for the past 15 years.

Why the Philippines?  I just see that as an attractive option for retirement. I love the people and the culture.  Can't afford to retire here. Other options include Thailand, Vietnam, Portugal, South American, etc. But the Philippines is more friendly to American lifestyle, I think - especially language.

Thanks for your thoughts and advice!

Bob

bobquinn0801 wrote:

Thanks, mugtech! Definitely some things to consider. My brother is a cpa, so I will consult with him about the IRS issues.

I wonder if I don't rent it out, what would be the downside? Then I wouldn't need to hire someone to manage it.  From my initial research, it seems like housing prices have been steadily climbing at a decent clip for the past 15 years.

Why the Philippines?  I just see that as an attractive option for retirement. I love the people and the culture.  Can't afford to retire here. Other options include Thailand, Vietnam, Portugal, South American, etc. But the Philippines is more friendly to American lifestyle, I think - especially language.

Thanks for your thoughts and advice!

Bob

There are monthly maintenance fees to pay, real estate taxes are few.  Perhaps you should rent for your next trip in the condo development where you want to buy.  Have read about condos in places like Makati that are noisy constantly, neighbors can be a problem.

I agree with your assessment of the Philippines,  the other places you listed, while perhaps similar in price, do not compare to the people and the amount of English spoken there.  Then again my wife is a dual citizen and we own a house in Ilocos Sur, so life is cheap and easy.

Thanks again, mugtech!  I must say that I'm envious of you guys already living the life there!  😊

bobquinn0801 wrote:

Thanks again, mugtech!  I must say that I'm envious of you guys already living the life there!  😊

I did not retire until 2 weeks after I turned 68, nothing to be envious of for sure.  As long as you feel you are ready financially to retire the rest is easy.  My last three years I only worked December through April, often 60 hours a week.  I miss the people, but not the schedule.

Were you an accountant?  December to April sounds like tax season!  (I used to work in public accounting...)

bobquinn0801 wrote:

Were you an accountant?  December to April sounds like tax season!  (I used to work in public accounting...)

Mostly corporate, partnerships and individual taxes the last 3 years.  Someone else got my 990 clients, did a few financial statements, but we were too small, gave up reviews and audits.  I trained a replacement all last tax season, she quit in July, and the firm got rid of many of my old clients.  I could have worked every tax season forever, but this is much better.  It's great to read books instead of tax updates and court rulings.

Amen to that!!   

Thanks again!!

I’m buying a condo now and I intend living there initially but same as you, rental longer term. Do you know where you intend looking? I have an English friend with a filippina wife and they are basically estate agents in Cebu if you want there detail let me know.
However I did it through a new build that’s Korean owned, and used their agents. One thing to be aware of, new builds often need the sales to continue building, they use the funds to finance the completion.
The legal system here is very close to the European system of law due to the Spanish influence, so although corruption is an issue the process can be understood easily.

I've only been to the Manila area before, so that's my initial thinking. However, on my next visit in May, I'm planning to explore other places like Cebu and Davao to learn more about where to buy and where to live when I retire.

Thanks!

Bob

Bob hello I’m an American living in a
Rented condo in davao owned by a Japanese investor,

He had to have a real estate agent shown as the leasing party leasing -  to me on the lease  because you have to
Pay income tax here on the rental income and if your not a citizen here  or regiisterd company you can’t legally lease it because of the tax implications from my understanding.

Need to check with a real estate management company - and see how that option is
Managed and your ROI after paying a management company for that process ,

Kind regards

Larry

Thanks, Larry for the info!

Be sure to examine carefully the Master Deed. Most are scams that rely on the owners being abroad. Those residing are usually disinterested and don't wish to acknowledge their folly so the Developers get away with dishonesty. I imagine that this is typical of condominiums all over the world. In my case, the Developer used half the building for their hotel operations. Hidden in the Master Deed is that the resident Unit Owners pay for the Hotel dues having hidden in said Deed that they declared he hotel areas as "Common Areas" making them subject to payment of dues. Meanwhile, it has been impossible and typical, to be unable to assemble a quorum  of owners in whatever kind of meeting, annual or special. This is what developers exploit. Look for other angles.

Hi Bob,  I'm a Filipino-American real estate broker in Flushing, New York.  My mom and sister are selling their Eastwood City 2 bedroom + 2 full bath + parking Condo in Quezon City. They're direct sellers, I'm not charging any commission.

It's advertised here in Expat, link below. Also, its website is condohouselot.com with all the information you need.

https://www.expat.com/en/housing/asia/p … condo.html      Thanks.  Ray

I wish i had more positive things to say about condos in the Philippines but here's my 2 cents.

My experience has been strictly renting/leasing a condo although i have relations that own and lease. Although construction standards in the Philippines may be similar to the US, the end product and regulations within the condominium can be entirely different. This is because the structure may not necessarily be to code due to bribery, short cuts and corruption. Case in point - SMDC's Messa Residences that leak water whenever it rains because water seeps thru the outer walls and in to the ceiling of every floor. Maintenance can also be horrendous such as plumbing and electrical due to quality issues. Your kitchen faucet can burst and flood your unit. Your generator auto transfer switch can be a constant problem.

The sad part is that developers and property managers will look at you straight in the eye and tell you everything is fine. Absolutely no disclosure of problems. And unit owners who are selling or leasing will do the same otherwise no one will buy their property. And good luck on taking them to court.

And did I mention smoking? Filipinos are not as health conscious with regards to smoking and will smoke inside their units even if it is prohibited. Smoke travels within the floor and to other units. Bad for your health plus annoying odor. And will affect resale once a potential buyer smells it.

Also, keep in mind that the high rise condominium market in the Philippines, especially in the metropolitan Manila area, is saturated!! The difficulty will be reselling.

Do not - I repeat - do not expect the same standards and accountability from property managers and developers as you would in the US. I have found that there is no accountability to the law so developers, property owners and real estate brokers will do whatever they can get away with.

You will find condominiums to rent or for sale in OLX.com and Craigslist Philippines.

I was actually in a situation where I could have purchased a condo a few years ago but am glad never did.

***

Hello,

Thanks for opening this thread.
I am really confused as I hear contradictory info from here and there.

I plan to buy a condo unit in the Philippines, I am a foreigner who will live most of the year in Europe.

Some people say I can rent my condo and just pay the property tax but won't have to pay anything on the rental income revenues .

That seems strange to me as any revenues normally must be declared and thus are taxable .

So if I rent my condo unit (studio or 1 BR) do I have to declare anything ? Will I have to pay tax on the rental income, and how much?

Any link to official website that explains that would be of great help.

Thank you in advance for your help.

I agree with your thinking - you will certainly have to declare that income somewhere - probably your European home country.

I looked at condos in Butuan recently, very affordable, it is on the north east side of Mindanao...very safe and pleasant...I run a resto-inn 2 hours from there called Klub Safari...you can also check out my youtube channel just search  my name: Francois Williams

Construction standards are very bad in the Philippines I don't stay in hotels over 2 stories, a few Condos here in Davao were damaged during the earthquake the owners were not allowed back in they will have to be destroyed,  I wonder what money if any they will receive

I agree with the others more research the better and travel around on your visits get to know as much as you can. Even rent as suggested for awhile as the first choice may change after a few months.
Another thing to consider seeing your of retirement age is Health and the availability of health services in any prospective area.
But at the end of the day take it slow, slow help avoid mistakes that could prove costly. Good luck

pnwcyclist wrote:

I agree with your thinking - you will certainly have to declare that income somewhere - probably your European home country.

Income earned in the Philippines must be declared in the Philippines.

I would assume that like the US that income must also be declared to the nation of citizenship.

European nations may have credits for foreign tax paid and other exclusions, as the US does.

There are safer places to invest large amounts of money though.

2 of the Condos damaged by earthquakes will be torn down I hear one will reimburse the owners the others are in a bind they cannot afford to destroy the Condo so they have left it to the Government, the owners are just left with the mess

If you want to read a horror story about what can happen to expats who buy into a condo and HOA check out Papa Jefe and his thread on the Ecuador forum titled The Elephant in the Room - Mirador San Jose Development in Manabi.  He has returned to Canada.

Latest update from Papa Jefe and his return to Canada now available on the Ecuador forum.  Scary.

I wouldn´t want to live in a condo in the Philippines because of earthquakes. I experienced 3 earthquakes in Baguio city and I was lucky I was renting a house at the time.

Spriggan wrote:

Hello,

Thanks for opening this thread.
I am really confused as I hear contradictory info from here and there.

I plan to buy a condo unit in the Philippines, I am a foreigner who will live most of the year in Europe.

Some people say I can rent my condo and just pay the property tax but won't have to pay anything on the rental income revenues .

That seems strange to me as any revenues normally must be declared and thus are taxable .

So if I rent my condo unit (studio or 1 BR) do I have to declare anything ? Will I have to pay tax on the rental income, and how much?

Any link to official website that explains that would be of great help.

Thank you in advance for your help.

Hi,

some points of note first:

Taxation on income (includes all income such as wages or earning from a rental property):

Taxation on income will be declared in the country that you generate the income from.

There is also the consideration of your residency status (of course and your citizenship)

Also of consideration is if your home country has a taxation agreement (Tax Treaty) with the Philippines.  (i know Australia does)
https://treasury.gov.au/tax-treaties/in … x-treaties


For me, as a resident and citizen of Australia,
I do not generate income in the Philippines, if i did then here i we would have to declare income in both the Philippines and Australia.

If the tax is paid in the Philippines they will only be basing the tax bracket on my income here.  However if i had a large income from Australia, when the Australian government looked at my "end of financial year certificate" (Which covers income earnt and tax paid) from the Philippines they would then do the sums on my total income earnt from both Australia and the Philippines and the adjust my taxation to be paid in Australia accordingly.



Of course if the income is earnt by your Filipina wife (she owned the rental property) then I would think (only guessing) that she would not have declare it in Australia.  This raises the next question of social security benefits payable by your home country (if you are receiving them), then even though my wife was to be a resident of your home country yet a citizen of the Philippines, they social security departments in Australia want to know about the assets and income generated by  your spouse from overseas assets. 

I will not go on any more, as it gets complicated depending on the location of the assets and the citizenship and residency status of you and your wife.

I used to work in Vietnam and was a citizen and resident (for taxation purposes) of Australia.

Hope that this helps, of course the only way to be sure is to speak to a taxation person from your home country.

robal wrote:

I wouldn´t want to live in a condo in the Philippines because of earthquakes. I experienced 3 earthquakes in Baguio city and I was lucky I was renting a house at the time.

People in Ecuador have the same problem along the coast.

mugtech wrote:

robal wrote:

I wouldn´t want to live in a condo in the Philippines because of earthquakes. I experienced 3 earthquakes in Baguio city and I was lucky I was renting a house at the time.

People in Ecuador have the same problem along the coast.

Man, I had space available basis military flight from Dover to Quito and I absolutely enjoyed the flight with the general of Southern Command. I don´t care much abut the tremors as long as my house is built by a competent civil engineer.

hello Bob good day

Im Gil Obrino DMCI Homes Sales Manager.

If you are planning to invest  condominium in the philippines, i suggest to find a reputable developer.The good developer is they assist you after you purchase a unit.They have a leasing department that can check your unit for you and they find a people interested to lease.All developers are allowed foreign buyers and investor only for condominium.

Forget the earthquakes. That's the least of your worries. Read my post above.

You'll be dealing with shoddy construction, horrendous maintenance, poor upkeep from other condo owners, smoking issues, poor resale, bad renters....you name it.

Bump

gilshouses wrote:

hello Bob good day

Im Gil Obrino DMCI Homes Sales Manager.

If you are planning to invest  condominium in the philippines, i suggest to find a reputable developer.The good developer is they assist you after you purchase a unit.They have a leasing department that can check your unit for you and they find a people interested to lease.All developers are allowed foreign buyers and investor only for condominium.

What is the fee for this service?

After the earthquake here in Davao a number of buildings found to be to dangerous to occupy, one a 4 story school, 2 condos also, from what I have read the owners will not receive any money and may have to pay for the building demolition, warning there is no fire or rescue that amounts to anything in the Philippines, after the water truck is empty it is 5 gallon buckets

Been doing my research on developers and Ayala and DMCI appear to have good reputes. 

This is good info to know as I search for condos for rent in Caloocan City and later on in Angeles City -- the City of Angels..

@Big Mad Wolf (Its something wrong with the quoteing - and wasteing space by making biger space between lines than before.)

"Angeles City -- the City of Angels"

I didnt know gold diggers are Angels -  Or perhaps the name mean the city NEEDING Angel influenses most   

Been doing my research on developers and Ayala and DMCI appear to have good reputes. 

Please do your sums beforehand. Why would you waste monies on an overpriced condominium with a marginal rental return? You are better off investing in a property in your home country, and receiving the proceeds from there.

Condominiums are over priced in the Philippines. Usually of sub-standard construction, and subject to a prejudicial system regarding disputes. Why expose yourself to the hassle?

Allow yourself the freedom to travel in the Philippines, whenever, whatever. Believe me, being tied down to one place in the Philippines grows old.

Some people you can tell them till you're blue. They don't listen until they're burned. Maybe they're listening to "others" who only have one thing in mind....sorry but it's true. Seen too many cases. And the outcomes are not good.