A Guide to Buying the Right Condo Unit for Your Needs
November 26, 2020
Before buying a property, make sure that you’re buying based primarily on your needs, goals and financial capability. By Mel Cabral Given the ongoing pandemic, investing in a condo unit has never been more affordable. This is especially true given that banks and real estate companies have been offering lower interest rates and more flexible payment plans since earlier this year. But before you commit to purchasing a property, keep yourself in check by making sure that you’re buying based primarily on your needs, goals and financial capability. Unfortunately, many people mistake the latter for the former and end up purchasing a home that they cannot consistently pay the amortizations for, leading to the foreclosure of the property. To avoid meeting the same fate, make sure that you choose the right condo unit based on the following factors: It Should Have Broad Value-for-Money Appeal The perfect condo should meet your first need: a price that’s well within your means. That said, we recommend using the 30/30/3 rule to ensure that you don’t bite off more than you can chew: Don’t spend more than 30 percent of your gross income on your monthly amortization. The smaller your monthly paycheck is, the less you should be spending on your condo unit. Save at least 30 percent of the condo unit’s total value in cash or low-risk assets. The first 20 percent will go toward your down payment. The remaining 10 percent will act as an emergency cash buffer in case you lose your main source of income for whatever reason. The total value of your condo unit should not be higher than three times your annual gross income. This is a quick way to whittle down your options to the properties that you can realistically afford. It Should Be in a Good Location To successfully sell or rent out your condo unit, it should check off the next need: a strategic location. After all, even the most spacious condo unit would be difficult to turn a profit on if it was located in the middle of nowhere. Generally speaking, you can’t go wrong with a condo unit that meets most—if not all—of the following criteria: It’s in a good neighborhood. You’ll want to pick a place that’s accessible to various lifestyle essentials such as schools, grocery stores, and hospitals. It’s in a well-maintained building. Look for a condo in a development that enjoys an ongoing maintenance regimen, courtesy of a professional property management group. It’s in a highly-developed area. For example, condos in central business districts such as Makati and BGC tend to be in high demand. It’s in an area with room for potential growth. Aside from highly-developed urban areas, it may also be worthwhile to invest in a developing city such as San Fernando, Pampanga, or Tagaytay, Cavite. These places have the right building blocks for sustainable development, either completed or in progress: transportation infrastructure like freeways and rail links; communication networks like fiber and 5G; and quick access to airports and seaports. Its Appeal Should be Supported by the Evidence We understand the tendency to get carried away by your feelings while browsing through real estate ads online or viewing show units in person. However, you should invest in a property that meets the third and final need: success based on facts and data, not your emotions. That’s because following your heart can cause you to make irrational financial decisions that you may regret down the line, such as: Purchasing a condo unit in a holiday location. It can be very difficult to rent out properties in these areas during off-peak seasons. Buying a property near your current home. This is relevant if you’re planning to rent out your condo property. For your peace of mind, you might be thinking of choosing a condo next to your current residence, so that you can keep an eye on it better. However, doing so means potentially missing out on properties in areas that may offer a better return on investment. Not accounting for the occupant’s lifestyle. You should probably look for a unit that fits the life you want to lead long-term – a suburban home for a peaceful lifestyle, or a city condo for an on-the-go, yuppie-like lifestyle; don’t mix the two up! And If you’re renting the unit out, consider that your ideal tenant will likely have preferences and desires that are different from your own. The Bottom Line While you want to pick a property that prospective buyers will desire, it should still ultimately meet your own financial goals as well. So before purchasing any condo unit, take a step back and ask whether you’re buying one that truly meets your specific needs. Are you ready to give real estate investment a shot? Visit the Avida Land website and take a look at the condominium developments they currently offer in prime locations across the country. Owning a property is easy, convenient and safe, as Avida brings you contactless solutions with its Avida 360 Showroom – check out your Avida home here.