Moving around and getting a feel for the place! Part 1

Flowers from WowPhilippines

On this blog, I have long advocated renting your house first when you move here. Why? Isn’t it a waste of money to rent? Actually, it is not, and we’ll talk about that later in this post. But, putting money issues aside, do you realize how advantageous renting can be? It can really give you a chance to move around, get a feel for your new home country, learn a few new things, etc. Let me give you a little rundown on my experiences.

Let me say first, that we have moved more than we intended to, no doubt about that! It’s been a good experience, though, and quite helpful to me.

When we first moved here, Feyma and I lived in General Santos City. We rented a beautiful house from a British man and his Filipino wife. This couple had moved here and built the house, then they had some marital problems (due to another subject I’ve talked about – aggressive women chased the guy and he enjoyed it!) they split up. He stayed in the Philippines and she went back to Britain. The house was very nice, and we rented it very cheap, since they had a hard time finding a renter. As I recall, the house had been marketed for sale at P5 or P6 Million. We paid P11,000 rental. Under the rules of real estate that I knew back in the States, a house should bring the owner about 1% of the property value per month in rental to be a money maker. If they had been able to rent that house at that percentage, they would have gotten P50,000 per month. So, I paid about 1/5 of what the owner should have wanted to get in rent for a property of that value. Nice deal, don’t you think? We liked the house, it was beautiful – big yard, marble walls and floors, etc. – but we decided that General Santos was not where we wanted to settle down. We lived there 2 years before moving to Davao City.

Moving is never fun

Moving is never fun

When we moved to Davao City, the housing market here was tight, it was hard to find the right place to rent. We ended up settling for a nice place, but the size was only about half of what we needed for our large family. We paid P12,500 per month for rent, which again was quite reasonable. But, we were very cramped there. We signed a one year lease on the place, but after less than 6 months we found a more suitable place, so under the terms of our contract we moved out and forfeited our security deposit (as I recall it was 2 months rent).

After moving from that place, we ended up in Marfori Heights Subdivision in a very large older house. The house was built back in the 1960′s. It had a wonderful huge yard, and the house was absolutely huge too! We actually called the place by the nickname “The Auditorium” because it was so big. We really liked this place, and we lived there for 2 years. We would have stayed longer, but we had some trouble with the landlord, which I have also written about here on the blog.

WowPhilippines Gift Delivery in the Philippines

When we moved from Marfori Heights, we ended up in a gated subdivision, Woodridge Park Subdivision. It is a very nice place, akin to some of the nice neighborhoods in the States, with large stately homes and such. We moved out after one year because the house had a lot of things wrong with it, and the landlord was unwilling (read – he didn’t have enough money) to fix the problems. Broken water pipes underground caused our water bill to be 10 times what it should be, toilets and showers leaked water all over the place, etc. And, this was a relatively new house, and an upper class house at that! We were paying P50,000 per month in rent, and the place was falling apart, so we decided to move.

We always loved living in Marfori Heights, it was so near to everything, so we decided to move back there after leaving Woodridge. As a matter of fact, we moved into the house right next door to where we had lived before, and we are still living in this house. We really like it here.

Now, why all this moving, and why am I recommending that you rent for a while and do a little moving around like we did? Well, every time we move we learn a little bit about what we like and what we don’t like. We always thought that those gated subdivisions were so nice, but after a year of living there, we found that we didn’t care for that lifestyle. Renting allowed us to re-evaluate our decision to live in General Santos City, and I’m glad that we moved to Davao City, because we both love it here. See, every move taught us something that we would not have otherwise known. This is why I feel that for somebody who is new in moving to the Philippines, this is a very desirable thing to do. Look at the British/Filipina couple that we rented from in GenSan, they built a beautiful house, and it didn’t work out for them. In the end, they had to get whatever they could for their house and try to rebuild their lives. Don’t let that happen to you!

Now, why do I say that renting is not a waste of money? Well, you have to consider the cost of money. For example, I pointed out above that we rented a P5M house for P11,000 per month. Let’s break that down and see how much of a waste of money that was:

  1. To buy this house, it would have cost P5 Million. Let’s just say that the dollar is at P50:$1 (I know it’s not, but we are just making an example here, and the math will be easier). To buy the house would have been $100,000.
  2. If I had taken that $100,000 and invested it in a secure investment instead of spending it on a house, how much money could I have earned on it? Well, let’s say that a very conservative investment would have brought me 5% return. So, $100,000 would have brought me $5,000 per year.
  3. My total rental payments would convert to $220 per month, so one years worth of rent would be $2,640.
  4. By putting the $100,000 into an investment, and paying rent out of my returns, I would keep the $100,000, pay all my rent, and still walk away with $2,360. Not bad, huh?

So, as you can see in my example, I would actually make a profit by renting rather than buying in this case! No matter what the exchange rate, if the rest of the numbers in the example were the same, the results would not change, it is cheaper to rent than buy!

Tomorrow I will have the second half of this article about my future plans for a home.

Post Author: MindanaoBob (935 Posts)

Bob Martin is the Publisher & Editor in Chief of the Live in the Philippines Web Magazine. Bob is an Internet Entrepreneur who is based in Davao. Bob is an American who has lived permanently in Mindanao since May 2000. Here in Mindanao, Bob has resided in General Santos City, and now in Davao City. Bob is the owner of this website and many others.

Author Info

Comments

  1. Kevin K. says

    Hi Bob,

    I agree with you wholeheartedly. The value in learning where and what you like and don't is worth ten times the amount of rent paid. I used to work for a real estate development company which transferred a vice president from Cleveland to our Phoenix office. He was the consummate real estate professional. Yet instead of buying or building a house, he and his wife rented for the first year or two that they were in Phoenix so they could really get a feel for where exactly in the metro area would be best for them, as well as the architectural style and features that would work for them.

    I expect that someone will challenge your financial analysis with the counterpoint that if you purchase a house you get the gains from the appreciation in value of the real estate. To that I say, yes, but much of that gain is offset by maintenance and repair costs, and it still is not worth it if you prematurely design your house without features you don't yet know you want, or if you place your house in an area that turns out not to be the best spot for you.

  2. says

    Hi Kevin K. – Only problem on the "appreciation" argument is that if you build the kind of home that most ex-pats on this list would be looking for, it really doesn't appreciate in value! Maybe over a LONG period of time it might, but slower than the inflation rate (which means it loses value). Several people (especially Louis) have mentioned on the comments on this blog that an existing house of the same quality and size can be purchased for way less than the cost of building the house. Fact is, that when you get to a certain price point, it is very hard to find a buyer for that house here in the Philippines. You end up having to dump it for whatever you can get. Because of that, I do not believe that the "appreciation" argument holds water.

  3. says

    Good thoughts, Bob. This mainia for buying … and thinking of a house as an investment … is not always what it is cracked up to be. Just look at the current foreclosure rates in the US and the number of houses for sale in the Philippines that have bene on the market for years.

    When you find a place you _know_ you want to live, fine, then buy when you are sure you know what you are doing … but the Philippine real estate market is _not_ the US real esate market an dno matter how clever you think you are when you arrive, you'll just be another babe in the woods like the rest of us newbies ;-)

  4. says

    Hi Dave Starr – Thanks for your comment. So far, I have been quite happy with renting, but I admit that I do look forward to custom building "just what I want" on our land in Samal! The thing is, though, I've paid the dues, learned through my experiences and I feel that I am finally at the point where I can build or buy a house with my eyes open and not make a mistake. Well, maybe not a big mistake anyway! :lol:

  5. Louis says

    I decided to buy because I found an excellent deal on a house in a nice subdiv. I've said it before, I'll say it again… houses don't appreciate in value over here, land does. The amount of wear and tear a house goes through in the tropical environment over here makes certain that there are no old houses over here. A shame really, I grew up in a house built by the Hopkins family (Johns Hopkins Hospital) in 1840. You don't see that over here. I certainly suggest going with the rental before settling down. I might have bought the townhome I live in now, but it's pretty much falling apart and the landlord refuses to work on it. You just have to look at the pros and cons:

    Home Ownership –
    Pros:
    -You own your home and your wife owns the land
    -possible Value appreciation on the land
    -Ability to expand the house if you have enough land
    -No rental costs
    -maintenace and land taxes are much cheaper here

    Cons:
    -Not easily sold unless in prime condition and in a good subdiv
    -Maintenance, major repairs (The roof isn't going to last forever)
    -You as the foreigner don't actually own the land
    -House depreciates over time (Can't think of the house as an ATM anymore)
    -Home loans carry higher interest rates

    Renting:
    Pros:
    -You don't have to pay for maintenance
    -You can move when your contract it up
    -You can try out several areas before settling down
    -You can rent fully furnished houses

    Cons:
    -If you move out before your contract is over you forfeit your sec. deposit
    -Landlords who don't want to do improvements on their rental properties
    -If the Peso get's stronger your rent goes up in relative value of your home currency

  6. says

    Hi Bob,
    I read your article with great interest. As you know, I recently moved to San Diego, purchasing a condo. I am also in the process of selling my house near Fresno.
    I agree with you about renting first and familiarizing yourself with the area. That was our original plan as well.

    We narrowed down our list of cities to move to based on weather, likability and our finances. The two cities were Austin, tx and San Diego. In the end, I could not fathom living so far away from the beach (its ingrained in me). The weather and cultural climate was just perfect as well.

    Next, we decided that like you, the best way was to rent and know the city first. But the current real estate climate offered many good deals. We did our research (both buying and renting) and the place we bought was just perfect for us in every way. Sometimes, a little luck is good to have.

    Now buying while just moving into a different country. There's so much risk involved. My advantage was that I've been in the US for a decade now (having rented and owned all over California) and I was somewhat familiar with SD and California from past visits. If we had decided on Austin, I would have rented first, no doubt about that. And that's just a state!

  7. Kevin K. says

    Hi Bob,

    Speaking of custom building, I know concrete is the way to go, have you seen the Dac Art system of building with concrete? In this system the concrete gets colored when you mix it, and then it is poured into foam molds. The foam molds can be customized to any shape. The advantages are, several. Because the concrete itself is colored you never have to paint, even if something chips off a bit. Secondly, you end up with kind of like Lego blocks that you just drop into place. This means you don't need workers with extra high skill levels in order to achieve extremely high quality work. Third, you can build in the rain. Fourth you can achieve a look that I think is very, very nice. Here's the link: http://www.scrapbookscrapbook.com/DAC-ART/dac-art

    That web page (as you scroll down) shows what the building method looks like. Near the top of the page are links showing the individual steps a husband/wife team did in building their house with this system. The reason I am sending this link is they do some pretty amazing things with their concrete floors for their front porch that would cost a fortune in labor costs in the states. Since you are in a low-labor cost place you could do something similiar without spending a fortune.

  8. Kevin K. says

    Hi Bob,

    The comment I made a few minutes ago that probably got kicked out to "moderator needed" because it had a web site link. In the comment I mentioned that you might want to look at how they did their porch floor. Just in case you don't spot the link right away, here's a little more direction. In the boxed in section near the top that is entitled, "See our Dav Art Construction Journal" near the bottom of that section is a link entitled "concrete acid stain floors". This made me think of the Philippines because of the artistic talent that is available there, and the creativity employed by this guy. He used Rice Krispies cereal to make his floor non-slippery! The cereal dissolved, but the impressions it left in the concrete achieved the effect he was after.

  9. Tina says

    Hi Bob,

    You're a very smart businessman, that I know. Don't know if you've read Robert Kiyosaki's "Rich Dad, Poor Dad". In that book, he mentions that owning a home is a liability, because it is not an income-generator but rather an expense-generator. Unfortunately, the appreciation of real estate in the Philippines is nothing compared to the States, especially in the metropolitan areas, where property values have quadrupled in the last 10 years. Buy or build a house in the Philippines because you want to live in it for a long time, not because you're looking to invest. So, it has to be in a location that you know you'll be happy with. Like they say in real estate – location, location, location. I know that you and Feyma found the perfect location on Samal. How many more years till the house warming, Bob? :grin:

  10. zois says

    Hi Bob yes speak good for me your advice help to me very much
    many thanks before I thinking I fix one house in philippines and after if I read your blog I change plan I am thinking it's better I will rent house in philippines. But you tell me only 5%
    if you take it's too little gain I am thinking 30% or 40%
    it's good gain.

  11. says

    Bob,
    One thing I forgot to ask amidst the rambling was how you and Feyma feel about having your ex-landlord as neighbors again. I know you guys were not in good terms and it would bother me to have some sort of tension just next door. I normally would not revisit the hassle of living close to someone I have a problem with. Just curious.

  12. says

    Hi Macky – Actually, it is no problem. You see, the house is actually managed by the son of the owner, and he is in Manila. He is the one that gave us a hard time when we lived there. The person who is local is the daughter of the owner, and she was actually kind of on our side when all that happened, but her brother was in control. There were some minor hard feelings with the sister, but that has all been ironed out and we are on good terms with each other. The house itself is still sitting vacant at this time, so it remains pretty peaceful!

  13. says

    Hi Zois – Yes, when I said 5% return on the investment of the money that would be used to buy a house, I was being VERY conservative. I don't know about 30 to 40%, but certainly 10 to 15% has been possible in recent years.

  14. says

    Hi Tina – Can't say for certain when the house warming will be….. gotta keep earning some money before I can see our plan come to fruition! Don't worry, you and Ken will be invited, though.

  15. Jim says

    Hi Bob- Your advice is sound and I would encourage anyone who does not know so much about living in the Philippines to adhear to it. In our case we wanted to stay in an area that has no rental properties of a decent standard available. Already owning the land it was relatively inexpensive for us to build on our lot if you compare what you would get for the same money in the UK. We never built to make a profit but rather to enjoy our retirement in a place of our choosing in a property of a simple design and therefore easy to maintain. Whatever happens to it when we are gone is not an issue as either our children will use it as a vacation house or rent it out or sell it on as the land will be worth more than the property in time.
    I would not like to be elderly and renting a property and have to leave it for whatever reason and move to another to start all over again. I think this type of life style maybe OK when you are younger but not when you get on in years.

  16. says

    Hi Jim – I understand what you are saying. Your situation and mine are different, so our solutions would be different too. That being said, you already have a long history of visiting Talakag, and you know the place. You have done the research, and are ready to build the house! No problems there!

  17. Ian says

    Hi Bob,

    Hmmm, an interesting article.

    We thought about renting, hard and long, but then decided to buy. Why?
    well the price was good, the area is good, " being about 30-40 kilometers from Manila ", it has decent weather, so floods are rare, and it is fairly well protected from typhoons, the area is well known for its resorts, and not to put too fine a point on it, I wanted Myrna to OWN something there.

    It is costing us very little, and there is already the foundations for, I believe, a 100 sq mtr house, " to be confirmed ".

    Whilst it is costing very little, it does offer us more, by way of, giving us something to call our own, and giving us a firm base. Our circumstances dictate that we have a kind of a bolt hole, to return to.

    Of course, as per usual, we have a contingency plan in place, so that, if we find it isnt the " perfect place " for us, we can then rent a place, leaving the farm lot to be run by one of Myrna's brothers, and be used, by us, whenever we want a break.

    With relation to your estimate of the interest which you can get there,

    I too, " when making my calculations ", used 5% as my guide, knowing that I could get 9% just about anywhere, and maybe as high as 20% with certain banks.

    £100,000 @ 92 peso to the pound = 9,200,000 pesos, 9,200,000 X 9% =828,000 pesos a year, more than enough to cover our expenses.
    Added to this, the finances which we would leave behind in the UK, which would earn approximateley 5%, and as you can see, we should be ok, I emphasize, should be!

    In the end though, it is up to the person I think, everyones circumstances are different, all I will say is, be careful, make a contingency plan, and watch the pennies.

    Ian

  18. zois says

    Hi Bob yes you speak exactly for investment I forget to explain
    you for store for foods. I have one asia market (store) for
    asia foods in greece in athens I have foods from philippines
    thailand from china from indonesia from malesia from brasil mexiko
    colombia santo domingo etc. I have this store 10 years about
    but I close last year 2006 because because I pay to much tax
    for greek government and also come one big supermarket open
    nearly of me slow slow take my customer. If have gain 40% it's
    good for me but after I make gain 20% I can't keep this store
    and I close the store.

  19. says

    Hi Bob, I know we have discussed this very subject before, and you know my position, actually Bob your advice is sound and is the best way for most people, there will be situations where perhaps we cannot always agree on this, I had a number of reasons, suprisingly Ian has kind of taken the words out of my mouth on this one, oh though perhaps not intentionally.

    I am the same, you might find this a bit morbid, but I wanted Gina to own something just like Myrna from Ian, to be honest Bob, I thought if I fall off the perch, or kick the bucket, guys my age and build drop dead every day, (stop LOL you lot, I kow what youre thinking). then at least My widow would have something from me, we bought the land fairly reasonably priced, about 250 square metres.

    I remember telling you once before that the price of land actually seems to be rising faster than I had first thought, our circumstances see to be similar to Ian and Myrna's in that we kind of wanted a back up home for the future, actually at the moment Bob as you well know the house is tantamount to a holiday home.

    I have no problems with investing alot of my life savings in this project, I cant see my wife and I ending our marriage similar to the British-Filipino couple you mention, my comments are like this "Silly Boy" if he cannot keep his flirtatious ways repressed.

    And its a word of warning for any other couple who do buy real estate in the Philippines, as its conjugal property it would become difficult to dispose of if one person wants to retain it, secondly, as many of you have pointed out, real estate does not appreciate the same as it does paticularly in our country the UK, where property is the very cornerstone of our economy demand outstrips supply, hence high appreciation, as Ian says, everyones circumstances are different, but Bobs advice is as always sensible and renting is the preferred method.

  20. marygrace says

    Hello Bob, if you've continued staying at Woodridge, we could have been neighbors, and will get a chance (in future) to pass by at your house for dinner more often :lol:. Anyway, absolute agree with your advices on renting first especially if its d same case as yours. Goodluck on your Mansion at the Samal Island!

  21. says

    Hi Zois – Sorry to hear that your store was not making the profits that you needed and hoped for! I'm sure you'll find the right formula for success!

  22. Ian says

    Hi everyone,

    Bob, whilst I agree with Pete, ( I have replied to your post Pete), and am sure we have both done the right thing, (for our wives, who we love dearly ), I must admit, the renting thing came a close second with us. We were actually in negotiations with someone, to rent their house, when Myrna saw the farm lot, she absolutely fell in love with it….hahahaha.

    However, as usual, your advice is based on your, and Feyma's experiences, and is good advice for anyone contemplating moving to the Philippines. It is always worth while, to just sit back for a while, ( in rented accomodation ), before making the decision to rent, or buy.

    Ian

  23. Dick says

    I moved to the PI in 1988 and built a 5 bedroom house in Leyte. Over the years everyone but us moved out. So we moved a first cousin in it and went to Cebu and rented. I completely agree with you on renting, I have simplified our life and we can move anywhere we want too.

  24. says

    Hi Dick – Wow, you've been a long term resident here, almost 20 years! Congratulations on making it for the long run! I do believe that in *almost* every situation, renting first makes sense.

  25. angie says

    I have been reading this particular thread with interest as I've been approached many times to *invest* in Philippine real estate (Metro Manila area). The idea is that even if I decide not to live in the Philippines I could use it as a holiday home or rent it out to vacationing balikbayans or rent out long-term to expats.

    As I'm not too savvy with the situation there, I've held off. Some of my cousins though have succumbed to the pitch and have bought in an Eastwood project still in development. I'm not following anytime soon because it's just not a market I'm familiar with. For one, I *hear* that the development takes 5 years to complete but the payments will already start. (My question, does it really take that lonnnggg?? I guess I'm used to US pace where sometimes in weeks I'll see a building go up and completed in no time…). Another unique concept (unique to me at least) is as I was told, the buyer/owner is responsible for the interior layout?? I have difficulty assimilating this idea into my brains. I don't know if I'm not understanding it well or my cousin is not explaining it well. All the more it makes real estate investment in RP scary to me. Of course, I can probably call directly and ask for a sales agent but I'd rather not be pressured by a direct sales pitch at this time.

    It could be that my cousin got it all wrong (in explaining). But he's bought a unit as he plans to rent it out to vacationeers and hopefully retire in it in the future. Meanwhile, he's got plenty of time to mull over his intentions, if the development phase alone takes 5 years. :roll:

    Has anyone here look into any of the Eastwood development in MM? Would love/appreciate to hear some direct feedback

    Thanks much.
    -Angie

  26. Ian says

    Hi Angie,

    I dont know if its the same Eastwood, but we looked at buying a place in " Eastwood Residences ", and i think, if im not mistaken, that we found it through a website called bahay.ph.

    Im trying to remember what it was about the place that turned us off it. It could have been one of 3 things, it may have been prone to flooding, or the building practices might not have been to a high standard, or it could have been its position, Im sorry, I just cant remember……..:oops:

    Anyhow, if you take a look at the site, Im sure you will find something.

    Ian

  27. angie says

    It's Eastwood Parkview, a highrise condo in Metro Manila. Construction is still ongoing. That's where my cousins bought theirs. I think it's close to Greenhills. Is that the same Eastwood that you looked at? Are there other Eastwoods? (I have no idea if there are, so pardon this innocent question.)

  28. Ian says

    Hi Angie,

    Nope, sorry, I dont think it is the same place.

    If you can wait a little while, I will ask Myrna though, she is into condo's and may have looked at it, ok?

    Ian

  29. Ian says

    Hi Angie,

    The place we looked at is in Quezon City, is it the same place? I dont really remember it, though Myrna does, apparently, it all boiled down to price and size, " we couldnt get it cheap enough, or of a size for the 3 of us. We have looked at real estate for about 3 years now, trying to find " a perfect place ", but I am afraid condo's arent for us.

    It seems that this farm lot is as close as we are going to get……..:grin:

    Ian

  30. angie says

    Ian,

    That might be it. Apparently, Eastwood has several projects completed and it seems more are in construction. They're all called Eastwood something…

    So I think we are talking of the same Eastwood. Yes, from what I understand, it's apparently pretty upscale. I got some promo materials my cousin brought me when he got back (just a couple of months ago). I think it's the Parkview project that he bought into.

    Thanks Ian. Hi to Myrna, James.

  31. Ian says

    Hi Angie,

    we usually have some materials, either printouts, or brochures, but not in this case, sorry…..:sad:

    Myrna and James say Hi back……..:lol:

    Ian

  32. Ian says

    Hi pete, I have replied to your post on semi retirement, there are some things there for you, and anyone who wants to read them.

    Ian

  33. jul says

    Hi Angie:
    On #32. Are you only interested in MM area ? How about Mindanao like Cagayan de Oro, Davao or Bukidnon ? Ayala Devpt had a recent groundbreaking for it's high-end subdivision in CDO. If you want a developed area, there's Xavier estates and Pueblo de Oro. I'm sure you will love Mindanao. Just a thought…

  34. says

    Bob,
    We were ready to build our house in Digos but we changed our mind and have decided now to live in Davao. We would have a nice house in Digos, but I'm not sure that location would be the best for our growing family.

    We've decided to move to Davao and rent for a while to see which location best fits our life style. I want the kids to go to a good school and I think Davao is better for my science/ESL teaching/online business. Jaycee wants to build a rest house on Samal for us to visit and we think that's a good idea. I think living in Davao and visiting Samal for some scuba, swimming, and quiet time is the our future.

  35. says

    Hi Kevin – I think that you are making the right choice to rent at first and see how things go. It's hard to make a living decision without being here. I know that when we lived in the States I had my heart set on living in GenSan, but after moving here decided that Davao was a better choice for me and my family. What is best is different for all of us, but we also should keep an open mind. Good luck!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Current day month ye@r *