How to Survive Housing Downturns


Last week we discussed the problem with Cebu, namely a pretty hefty glut of properties (read more here), but how do you survive a market downturn like the one Cebu is starting to experience, and is likely to experience for the next 18-24 months?

Option 1: Hold Fast. Don’t Sell.

Think hard about whether you really really need to sell up. A properties is, after all, a fundamentally slow moving investment, whether you like it or not, and if your friend managed to buy and flip in an piping hot market, it had less to do with his incredible intellect, and more to do with luck.

So how bad is it really? Let’s say you’ve bought a place to renovate and sell, and it’s market value has fallen. If you didn’t need to sell right then and there, would it really matter? You don’t really lose anything until you actually sell, and historically, real estate markets have always trended upwards.

The option to sell a property should never be a quick “get out of financial jail” card, it should be part of a well thought out financial plan.

Option 2: Add Value, Generate Cash Flow, Run it like a Business

But, let’s say you actually do need some money coming in. One of the most profitable ways of employing your real estate in the Philippines is to lease it. What many of us don’t realize is that the Philippines still has some of the most attractive rates of yield in the region at an average of 7.51% per annum, although upward trending vacancy rates have dampened the previously excellent results.

So, clearly there is still demand, but, in case you do find it difficult to find a renter, or even a buyer, for your property look for a way to create more value (rather than pushing the price down as a first resort). Remember, regardless of whether your leasing, selling or selling on finance, you’re selling vision. If no one is biting, ask why? Is there a way to add more value by making it more desirable for the buyer/renter? One of the easiest ways to do this, discussed in a previous weekly market insight, was to furnish your property or even just adding features that people want but are not easily found.

In uncertain times, we can help you be level headed, thoroughly research the market, and figure out what to do next without panicking.

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