Why renting is the best way to go

We rent our house. Buying a house in the Philippines is not really something we have ever considered. Why? There are a number of reasons, but I’ll come to that later. Real estate articles on here tend to get emotional responses. What I’ve written is my experience only. Some people may have done things differently.

Renting a place to live in the Philippines is somewhat different than in many other locations in the world, particularly in the United States. Though, before moving here I had rented abroad previously, some expectations I had got quickly changed once I rented here. Some common things that are different:

For Rent

For Rent

1. Locating a place. In the United States and the UAE, if you wanted to find a place to rent, you got online or got the local classifieds. Generally, the rents were spelled out, fixed based on the unit or square footage, and are accurate and up-to-date for the most part. Trying to rent a place in the Philippines while you are still abroad is a nearly impossible task. Listings online or in the paper frequently are months old, rents are typically unspecified or not accurate, or the photos posted might not match. The landlord can pretty much choose the amount he will rent to you. Discrimination is not only legal, but many Filipinos expect it. If you are moving here from abroad, it is best to budget a few weeks in a hotel and search in person. If not, at least a couple of days and pick an initial, short term rental until you can find time to really look. Additionally, having a Filipino, say a relative of asawa or girlfriend, search for you will surely lead to disappointment. How can they possibly know what you really want? If you are working here, or going to school (or you have kids), traffic in Manila should dictate where you live more than any other factor, unless you want to spend a quarter of your life sitting on EDSA and commuting. You cannot know some of these things until you first stay here a while. If you bought, you are pretty much locked-in.

2. Move-in rents typically require four months minimum rental deposit. (Usually First, Last, and at least two months, usually more, security). This is pretty standard here. Compare versus the States where a typical flat might only require two months all-in.

3. Furnished apartments here typically have furniture that is the absolute cheapest possible. Executive long-stay places are not nearly as common here as in major business centers (Though they do exist).

4. A common practice here is for landlords to collect twelve post-dated rent checks in advance of move-in, and with lease renewal. Not all, but many, if not most, do this. Some landlords will allow the deposit to be used as last-month rent if they are allowed to inspect for damage before the lease expires.

5. Retrieving security deposits is not as easy as it may seem. Many renters here have great difficulty retrieving deposits. A good tenant/landlord relationship makes this much easier.

6. Annual rent increases are capped by law at 3%… How many landlords observe this law? Not many. Again, a good relationship with your landlord is critical. (In our case, she increases 3% every two years, which is fair and reasonable).

7. Typically, the renter is responsible for any and all maintenance (Something that is very different from renting in the USA). This includes things like plumbing, electrical, and upkeep. We were able to negotiate with our landlord on a leaky roof and some termite damage, but some landlords hold you to the letter of the agreement.

8. Most flats, houses, and apartments here are basically nothing more than four walls. On move-in, we needed to buy all appliances, aircon, water heaters, light fixtures, new locks, and shower heads. We were also responsible for replacing broken water fixtures if we didn’t want to use the broken ones. This is why I do not recommend renting from abroad… You never know what you will find until you move in.

9. Renters insurance, while useful in the USA, is effectively useless here.

Now, there are advantages to renting in the Philippines: Big advantages. We have had several opportunities to buy while living here. Passed on all of them. Some of the pros and cons of renting:

Renting pros and cons

Pros:

Rent or Buy

Rent or Buy

1. You cannot know the quality of a neighborhood from abroad. Relying on what family says is no good either. If you buy in an area, without knowing flood history, traffic, convenience, security in advance, you are opening yourself up to disappointment and a potentially large financial loss. If you rent and don’t like the neighbors, place, etc., you are limited only by the terms of your lease. How do you know that the neighbors’ roosters crow at 3:00am until you move in? Read Bob’s earlier article which detailed the call center that went up next door.  Before living here, I was told that I should look an area in Marikina. Wanna guess which area had massive floods? If I had purchased, I would have been stuck. Say you move close to asawa’s family, and there are problems. If you own, you cannot easily move away from the situation (I was lucky… No such issues). Place that house in the province… Now what ya’ gonna do? By renting, we have flexibility if we need it.


2. You cannot own anything here, except a condo. Yeah, people say they “own”. You own nothing. Your spouse or whoever you bought the house for owns it. If you are in a long term, stable relationship, then the difference is quibbling over terms. If not, a BIG difference, regardless of what anyone tells you the law is or how they “bought” some land. Say you lease land and build a house. You DO NOT own the house, but not the land, as has been posted many times online. Under Philippine law, the house becomes part of the land (same thing, BTW, if you make “improvements” to a rental… We added an gate to our house. When we move, the gate stays behind unless we but the house back to original condition). As to condos, they do not necessarily only mean an apartment. Many subdivisions with single family homes are designated as condominiums. Also relating to condos, their value is always dependent on how well they are maintained. Ever look at building maintenance here? Buildings, were they in the States, that would look 40 years old are often relatively new, perhaps only ten years. Now, Rebecca and I have been married four year, together nearly six, and known each other for nine years. We are stable, I trust her 110%, but we still rent. Why? Yeah, owning a place might give her a little more security, but she doesn’t want to be tied here permanently (What if I croak? What if I am transferred? Say that Juanito inherits… Does he want to live here?) Selling a property in the Philippines can be an exhausting, trying, and expensive task.

3. Rents are much cheaper in the Philippines than house payments. Typically less than 1% of the value. We rent because the economics work.

4. The real estate market in the Philippines is terrible. If you think you will make money by buying a house, think again (Unless you are in a very highly desirable location, like in the CBD, or on the beach, or something similar). Many foreigners start building something here and the project is abandoned (The relationship went sour, they ran out of money, they ran into squatter or legal issues). The area around Rebecca’s place has numerous gigantic houses built for foreigners or OFWs that are virtually unsalable (Too expensive for the region). If you are planning to buy or build something and live in it until you die, then perhaps this is not a concern, but it is unlikely that you will make money. Those who make money in real estate in the Philippines either are playing in the luxury market (very limited), or are dealing with multi-unit rentals. Over the years, in the States, I was always told that real estate was a great investment. For many years, it was. Many of those same people who hounded me have eaten those words.

5. Mortgages in the Philippines are very difficult to acquire, and offer terrible terms and APR. Though some foreigners can “help” by being listed on a mortgage, since you cannot own land here, the bank will generally not issue a mortgage in your name alone. Banks view foreigners as debt risks, so unless your asawa’s family is well-off and she has the ability to qualify on her own, you are most likely out of luck. Not impossible, but very difficult. If you are over the age of 50, then forget this option entirely. Banks in the Philippines can, and do, discriminate based on age. Since those over 50 are more likely to kick off before the mortgage is paid, you are therefore a greater risk, no matter how good your pension or how much money you have. Though we could likely qualify for a mortgage here (The way I set bup our accounts will do that… We were offered 35% DP and 10 years at 14%… Much higher foreigner rates), the financial requirements simply do not add up: We would lose a bundle except by paying cash, and even then the numbers do not make much financial sense.

Cons:

1. If you own, you can build, modify, add-on any way you damn well please. Zoning in the Philippines is either weak or non-existent in most places. You want to start a fireworks factory in a residential area? Paint it purple with lime green accents? Build a sari-sari? No problem in many cases (Though the HOA might have an issue with that). However, your neighbors are free to do the same. In the provinces, with land all around, then most likely no big deal. In Makati? Might be a big deal.

2. Asawa security. With no divorce in the Philippines, many Filipinas view a house as security in their old age. Now, in my case, Rebecca doesn’t hold that view. However, many people here do hold that view. For those dating online and such, when a Filipina asks you to build a house, in many ways it is security should you decide to dump her or leave the country. May sound harsh, but facts is facts. Home, or land, ownership is also the one thing that shows true social status in the community… More than money or anything else. When Rebecca grew up, those who owned land never went hungry. Is that the case today? Probably not. But when you are raised believing it, a very different view. Is it worth the risks and hassles? Only each individual can decide for themselves, but buying something immediately, or sight unseen, is simply asking for trouble, regardless of reason. In the Philippines, real estate and the laws related to it are completely different than what expats will be familiar. At least when you live here a while before buying, or building, you can truly know the reality.

Post Author: JohnM (207 Posts)

John Miele is a Citizen of the World, having spent time in many locations around the globe. Currently, he finds himself in Manila, but travels throughout the Philippines. John joined the Live in the Philippines Web Magazine in mid-2008.


Comments

  1. BillB says

    Great artical John, points out the good and the bad. Plus it’s great that Bob put yours and Paul’s artical back to back because it shows two sides of the story. This is one topic that is to each there own, and is different for everyone. You, me and everyone could give a reason for renting or buying but will never be the same for another person.

    My asawa and I choose to rent at this time but will be buying later, as in 2 or more years, but renting is the bust for us at this time. The thing is that may change as well and we may never buy, who knows.

    Thanks for the artical and letting people know what it is truly like here and not painting a picture that is not there. This is one thing I love about the people the write on this site, the truth as you see it and letting everyone no that it will not be the same for them.

    Again thanks.

  2. Paul Thompson says

    Hello John;
    When the housing market crapped the bed in the United States, my brothers asked me how much money I lost on my house. I explained that there is no way I could lose, as it will never be for sale, and nothing was ever owed on it as it was built with my cash. This house will remain in the family, being passed down from one generation to the next. I never once thought about resale value, as I know this is the last place I’ll ever live. Many friends who rented until they passed away have left their families now living in dire circumstances, as they (The family)could no longer afford the high rent that their husband could, and are forced to move to a much much lower standard of living.
    If one is just passing through the Philippines with no intention of staying, then by all means rent. We each have our reasons for the way we live, and no one’s reason is better or worst that the others persons reason, we do what is best for ourselves and our families. And if renting is the best than well and good, but for me it was not, and I speak from having rented for a long time and now having owned for a long time. To each his own and what is good for you, is the best way.

    • Miss August says

      Quote from Paul Thompson “…as it will never be for sale, and nothing was ever owed on it as it was built with my cash. This house will remain in the family, being passed down from one generation to the next.”

      This is the same philosophy I have, about wanting to own my own house. Also, if my my daughters decide to visit the Philippines, they have a place to stay without paying for a hotel room.

      • John Miele says

        Miss August: Certainly, that is a valid point. I think the biggest message I tried to convey was that you should rent here first, and get the “lay of the land” before spending tons of money. Houses here can quickly turn into gigantic money pits if you are not careful.

    • says

      Hi John _ I agree wholeheartedly with Paul’s reasoning behind buying and in my particular case had I rented a house here in CDO instead of building I would now be out of pocket. As it is by not renting I have recovered the cost of our house and minus building maintenance I’m a little ahead. Yes I agree, it’s horses for courses.
      Regards.
      Jim.

      • John Miele says

        Jim: Everyone has their own comfort level… I assume that before building, though, that you had spent significant time in the area before making the decision, correct?

        • says

          Hi John – Your correct we did not just jump at either the first place or house we saw, I had 20 years experiance of the area we chose to build our house in.
          Regards.
          Jim.

    • John Miele says

      Paul: Right you are… Those I know who were not hurt by the real estate crash were those who bought a house with the intent to stay there for a long time. Problem is that so many were using their equity as a piggy bank. Those are the folks who got burned. It is a deeply personal choice… I think that is why these articles generate so much emotion.

      • Benny says

        I do not know who it is that thinks buying a house in the Philippines is a good idea,BUT FOR ME?NO WAY,the prices per square foot/meter are just OUTRAGEOUS and the APR’s ,if mortgaging,are 14%….HYSTERICAL,as in,OUTRAGEOUSLY FUNNY.The construction of the places,in most cases,is HORRIBLE,as in CRACKED WALLS,FOUNDATIONS.
        I have rented on the beach here for 5 yrs. and saved enough $$$ to go back home and buy a place…CA$H.The opportuinities for making money to pay-off a mortgage in the Philippines do not exist so anyone who buys a place here and dies,loses the place as asawa can not pay the freight.RENTING,RENTING,RENTING IS THE ONLY WAY TO GO.

  3. says

    Hi John!
    Great article and likely a great service to those western expats who are choosing to relocate here. I reside in Butuan City, am 55yrs old and happily married to my bride 10yrs my junior. If nothing else is retained by your readers, your statement that newly relocated folk ought to experience life here prior to making large investments is prescient and cannot be emphasized enough.

    Based on my experience, I offer an entirely different viewpoint regarding your premise; here’s why.

    Firstly, different climes have different standards as we know. Here in Butuan, I always suggest visiting a prospective domicile during rainy season when sewers/septic systems tend to clog and result in stagnate water for weeks on end.

    That said, I disagree about your presentation of ‘ownership’. While you are correct about PI law ‘reads’ relative to foreign ownership, there are plentiful options for foreign investors to protect their investment. Many of these options require attorney assists, but they do exist. That many foreign corporations invest here with adequate ownership is testament to this fact. The real question is ‘transfer’ of ownership should one desire. While the concept of houseboats, container/modular homes and RV type dwellings is in its infancy in PI, nonetheless they are entirely valid, transferable and easily protected by law and practicality.

    Rents are not appreciable lower than house payments. In Butuan there are over 50 banks and the more aggressive institutions are beginning to offer mortgage products that are approaching international standards. Equity loans at BDO for example allow 80% loan to value loans at increasingly attractive rates relative to the Peso value. PagIbig offers numerous purchase options for its properties. Demonstrable foreign based income is a decided asset, not a detriment in the acquisition of financing.

    We all know that everyone’s economic/personal situation is different. I have witnessed a plethora of expats who contend that renting is better than buying in part because they state that they want their wife to ‘get the cash’ if they die, rather than providing the security of ownership that ‘most’ filipinas have never experienced. What a crock;I have never seen this happen. The surviving spouse is usually left effectively destitute after years of comfort with her foreign spouse. A very unfortunate position to be thrust in. Few Filipinas have the requisite skill set to deal with medical, financial and insurance issues, let alone at a time of high emotion. Some would contend that part of the implicit marriage contract anywhere in the world is for the hubby to provide a home; perhaps this concept is more pronounced in view of the prevailing economic condition in PI and with most asawa families.

    Providing a home is a HUGE emotional and financial condition for those fortunate enough to be capable of doing so, and demonstrates commitment and solidity. A good case can be made that many gents that ‘qualify’ renting vs. buying are substituting their true implicit responsibilities because the economic disparity allows them to do so. Women are treated very poorly, (in the legal arena), in PI compared to western countries, and many expats perpetuate this concept.

    I certainly respect your position and as said, everyone’s situation is different. I contend that;
    -home ownership options are available for foreigners,
    -attractive financing packages are available,
    -home ownership is often the smartest choice,
    -the real estate market is vibrant in certain sectors,
    -many sellers are willing to act as mortgagor offering attractive terms,
    -home equity is ‘unremoveable’,
    -every improvement is for you, not the landlord,
    -the barangay process of protecting homeowners from harmful conduct from others is extremely effective,
    -home ownership is likely often the best ‘gift’ a husband can present to a wife.
    Thank you,
    Greg May

    • John Miele says

      Greg: I somewhat agree with you, but I will say the following: Those I know who have been burned have always either done one of two things:

      1. Rushed in before knowing what the real situation is

      2. Gotten involved in various schemes to circumvent the law.

      That said, there are ways to “own”, and some are riskier than others. I always refer to the costitution, the supreme law of the land, which specifically, and unambiguously, prohibits foreign ownership.

      That said, there are many different options… But most are not really very feasible until you are here for a while, and learn what you are doing.

      As to “gift”, I’m not so certain… Rebecca has her own land, built her own house in the province. She doesn’t particularly like Manila… We are here because of my job and school for my son. She is just about at the CARP limit for land holdings. Were we to buy in Manila, she would need to sell some other land… So this gift, in our case, could very well turn out to be a headache, rather than a gift.

      • says

        Hi John,
        Thank you for your reply.
        Perhaps ,’Why Renting Can Be the Best Way to Go’, might have been a better title for your well constructed article?
        T’was an enjoyable read; keep up the good work!

      • Benny says

        MR.MIELE,LET THESE GUYS BUY THEIR LOVING WIVES A HOUSE,IT IS THE LEAST THEY CAN DO,RIGHT? I HAVE SEEN SO MANY GUYS BUY HOUSES THEY NO LONGER LIVE IN IT MAKES ME LAUGH.IF THEY DO NOT CARE ABOUT BUYING A SUB-STANDARD STRUCTURE AT OUTRAGEOUS PER SQUARE FOOT PRICES,AND EVEN WORSE IF MORTGAGING,14% IS AN APR I WILL NEVER PAY….WHO ARE ME AND YOU TO STOP THEM? HAVE YOU EVER MET A MAN WHO THOUGHT HE HAD GOOD IDEA THAT LIKED BEING TOLD IT IS NOT A GOOD IDEA?….LET THEM BUY A PACE!
        SOMETIMES A WORD TO THE WISE IS NOT SUFFICIENT,AND OF COURSE THE GUYS THAT GOT DECENT DEALS 10 YRS. AGO WILL ALL BE ON HERE BASHING ME…THE TRAIN HAS LEFT THE STATION ON GOOD DEALS ON HOUSING IN THE PHILIPPINES.WHERE DID IT GO???? LAS VEGAS AND ALMOST EVERY OTHER PLACE IN THE U.S.A. OR EUROPE COMPARED TO THE PRICES PER SQ. FOOT/METER,APR RATES INTEREST RATES AND CONSTRUCTION STANDARDS.SERIOUSLY I COULD POST ADS FOR PLACES FOR SALE IN THE PHILIPPINES THAT ARE OUTRAGEOUS IN COMPARISON TO THE ABILITY TO PAY FOR THE PLACE IN RELATION TO THE LOCAL EMPLOYMENT OPPORTUNITIES,AS WELL AS IN COMPARISON TO THE PLACES I JUST MENTIONED.THE PRICES HERE ARE LAUGHABLE,PER SQUARE FOOT/METER.

  4. Gary Wigle says

    I think I will just keep on renting. I have been renting this apartment since 2009 and the rent has never gone up. I would NEVER live long enough to see house ownership become cheaper than rent.

    One expat here in town built a 2,000 sq meter house. Yes, two thousand! I couldn’t afford the help to keep the place clean!!! If I wanted to live in my own home I would just move back to the States. All paid for but it is cheaper to live here than rent so I have caretakers living in the place. I am disabled so house upkeep is not easy.

    It is more fun in the Philippines. Why try to bring my western ideas here?

      • John Miele says

        Miss August: I would say that it is more western oriented, though. Many of my business colleagues in a number of countries have no intention of ever buying anything.

        • Benny says

          YOU ARE RIGHT MR. MIELE.I UNDERSTAND THAT YOU WERE TREPEDITIOUS ABOUT BASHING THE BANKS INTEREST RATES IN THE P.I.,THE CONSTRUCTION STANDARDS AS WELL AS PRICES PER SQ. FT/MTR. COMPARED TO THE WESTERN PLACES I MENTIONED ABOVE,BUT I AM IN STITCHES OVER WHAT PLACES ARE GOING FOR HERE.IF ANYONE MORTHAHES A HOME IN THE PHILIPPINES AND IS NOT A RICH GUY,THE JOKE IS ON THEM.YOU ARE JUST WARNING THEM.I SEE A GUY UP ABOVE SAYING ATTRACTIVE APR’S ARE OFFERED,REALY?WHERE? NOT IN THE PHILIPPINES PAGIBIG IS THE CHEAPEST AT 11%,IF YOU ARE ACCEPTED.ON A 20 YR. NOTE,THE MORTGAGE AMOUNT MORE THAN QUADRUPLES.I EVEN SAW A PACE BUILT ON A SIXTY YR. OLD LAND-FILL,WHAT A SCAM. I HAVE NEVER GOTTEN A GOOD DEAL ON ANYTHING IN S.E. ASIA,AND THE P.I. IS NO EXCEPTION.SINGAPORE AND THEIR 10% SALES TAX ON FOREIGNERS BUYING A PLACE IS OUTRAGEOUS DISCRIMINATION,AND SOON TO COME TO THE PHILIPPINES.

    • John Miele says

      Gary: I agree… If it works for you and your wife, why change it? There are other ways to provide security besides owning a house.

  5. RandyL says

    Hi John,

    Although you have raised many points on both sides of the ownership issue, I have to agree with Greg May. As a practicing real estate broker for many years, I am familiar with market differences here and there (RP) and vibrant market conditions exist there if you know where to look. When you rent and then have to upkeep the unit, you will find the cost of rent PLUS is not all that reasonable and can be a money pit. Sure you can move, then you can move again…and again, and you can’t take any of the leasehold improvements with you. I do agree that building or buying should be approached from the same perspective as a long term investor, and looked at as a long term permanent investment. Due diligence should be the order of the day when buying or building and a substantial homework investment should be made. We have planned carefully and are certain that the home we are building will be our last home together. When I am gone, I know my wife will never be destitute. In my opinion, it’s part of good estate planning. She will have a good roof over her head and a family willing to take care of her. I owe her at least that much.
    Like Paul says, “What is good for you is the best way.

    • RandyL says

      What I forgot to mention is that with good advance planning, you should have NO house payment and more disposable income to work with. Now that’s something to shoot for! :D

    • John Miele says

      Randy: Renting can be a nightmare, but you are short long term monetary committment. As I stated above, there are many ways to provide security: Not just land. Again, it really is a personal decision, but there are always options.

  6. peterjoy says

    good posting john

    but unlike the most off u here i am buying a home in the php and i am happy to say like most men here in tassie i did dream off having a home off my own and with the thinks are going up and up here i did know i can never own one here at home so as 1 one day i will have to live there in manila we did start to look about for a home to buy there and have rented for some years we did find the home just for us it is about 2 hours out side off manila dow south up in the hills and it is just lovely for my wife joy and i and i also can say it is no longer a dream to me mate ok……..peter martin tassie

    • John Miele says

      Peterjoy: Exactly my point: You were here first for a while, before buying. In my mind, that makes sense. You also stated you were buying a place to live… Not just as investment.

      • petejoy says

        jonh

        the home i am buying to live in not just investment ok it as been a dream for years too have a home mate so this is my deam and i am happy to tell u if i was to die in the next year or so this home then will go to my wife and the kids and at lst thay will always have a place to live ok as home here in tassie are now are over $200.000 and on the manland it is over $500.0000 and how in the hell am i meent to pay off a home like that mate when i do not work as about 4 years a got two scum got hold off me in a park and put a disk out and now i canot work at all so there would be no way a men would think about buying a place here but there i can ok keep up ur good work mate ok …peter martin tassie

  7. Ricardo Sumilang says

    Good points about owning a home versus renting. What is lost in all of this is that you are forgetting you are a foreigner and will always be in a country in which you are not a citizen. As such, there is always a possibility – however remote – that you may have to pull up roots someday and return to your country of origin because of political turmoil or a failed relationship.

    • RandyL says

      Ricardo, if a foreigners relationship is unstable, why would that foreigner even consider buying? That would not be the smart thing to do. I believe I equated building/buying to making making a smart long term investment, which I think would include a stable relationship. Relationship no good – no buy! It’s that simple. And political turmoil? …it can happen anywhere. But as a 13A visa holder, well….that’s all part of the equation. Everything you do in life is a calculated risk, is it not?

    • John Miele says

      Ricardo: I sort of thought that was somewhat implied… I also know a number of people who lost everything buying “freehold” in Mexico (The law changed) and the UAE (The sheikh decided one day to expropriate “freehold” property to build a mall… No compensation). As a foreigner, especially regarding land and real estate, you will always be at a disadvantage.

  8. Bob New York says

    Although I have no intention of moving there at the present time, I have kept in mind many of the things I have read here on ” LIP ” about housing in The Philippines. The words ” Apartment ” and ” House ” may take on an entirely different meaning in Philippines.

    An apartment that one of my Filipino friends was living in was not much more than an old hotel / motel that had been converted. If the place had ever had a fire it probably would burn down faster than the ” fire Dept ” could get there. In another instance, I looked at a new ” housing development ” . The so called houses looked very nice on the outside but nothing on the inside except 4 ” simulated ” concrete walls. If the same ” house ” were here in the USA it would never get a certificate of occupancy and it would probably be considered more like a fancy garden shed. Those houses lasted for about a year and then were washed away last December by tropical storm Sendong.

    Here in the USA, I prefer to own my own house which I have done for the past 40 years or so but I realize and have seen some of those differences in housing here and in The Philippines. My opinion on buying something, even if I could, in Philippines I would at this point say ” approach with caution ” . Staying in a decent hotel can cost $100 per week in some areas and thats a lot cheaper than many rents here in the USA For me, if I were to contemplate a move there that is the way I would go and then look for a rental over a period of time. From my own experience on my visits and what I have read here many times I think I would have to agree that a rental might be the most logical way to go at least for starters.

  9. Miss August says

    John, you made a lot of good points about renting. For me, when I build my house, it’s where I will spend my old age; so renting won’t work for me. Also, I don’t plan to get a mortgage, fortunately we will have to funds to do build. It won’t be huge house, a simple ranch style or bungalow would suffice as long as I have enough yard for a small vegetable garden.

  10. brianking says

    As a full time real estate investor for the last 26 years I generally agree with Johns opinion. If you are looking at a real estate purchase in the RP for investment IMHO avoid it at all costs…the return on investment (roi) is minimal, while talking to several pinoy investors last year they were giddy they were getting 4-5% return. Factor in the rate of inflation and its much less..I smiled and congratulated them but by my standards it was a dismal return unworthy of the investment.
    Yes there are places which do well and have a above agerage rate of return on investment but most people do not have the skill set to ferret that market out effectively.
    Now if you are not looking to capitalize on the market and could careless what it does as in Paul’s position who owns for the joy of owning then its the right decision to do.
    If you do decide to buy I’d spend time ample time researching your target market beforehand , if it were me I’d rent in the area for a year first (i.e rainy season)
    To expand a bit on a topic John touched on ..the way the title/deed is transferred
    sometimes many months AFTER you pay the seller is a major issue with me and one which should be scrutinized prior to buying. I know of several large building projects which were semi completed that ended in a title dispute that went unresolved for years and the buyer simply walked from the project after a sizable amount was spent on the uncompleted construction. If you have spent anytime in the RP you’ve seen them… you know what I am talking about.
    The emotions that run hot on this topic appears to be a clash between the investment mind and the passion to own mind, neither is wrong , you just have to understand the motivation behind their opinion.

    • RandyL says

      Brianking ~ I don’t plan on living in an investment…We plan on living in our ‘home’, which will be paid for. And I’d say a 3-4% annual ROI on investment properties in the RP are much better than what the USA has been doing of late. If anyone has any ideas of building or buying and flipping for profit in the RP, well you might as well stay put…it doesn’t very often have a happy ending, at least in the residential sector.

      • brianking says

        Sigle family homes have taken a beating on equity but all the ones I have are still doing well on return (well over 10% ) most fellow investors who did not over leverage themselves are still doing ok.

    • John Miele says

      Brian: I cannot disagree… Real estate game in the RP is very risky. Nearly every foreigner I know who has lost money here, it was two major things: Real estate or small business. That is why I keep stressing not to invest uless you are here for a while.

  11. PalawanBob says

    A nice house as per North American standards will cost here on Palawan about $30k.
    That is roughly 3 years rent in a big city.
    I am talking 2 bedrooms 2 bathrooms concrete house.
    Here are 3 photos for you to judge about the quality.
    Cheers!
    That is our guest bathroom and the porch for afternoon Gin & Tonic.
    http://i1237.photobucket.com/albums/ff474/PhilippinoBob/IMG_0288.jpg
    http://i1237.photobucket.com/albums/ff474/PhilippinoBob/IMG_0289.jpg
    http://i1237.photobucket.com/albums/ff474/PhilippinoBob/IMG_1047.jpg

    • Dan says

      Bob I believe you, another contributor of this site said it cost $40,000 to build his house. What I don’t get is why some area here in Manila cost half a million US dollar for 120 square. And the electricity rate is like 4 times of L.A., is it like this in other parts of the Philippines? Is the utility price subject to regulation here?

  12. says

    I have read all comments, but i give my opinion anyway:

    I prefere to “own” a house (my wife own) of some simple reasons:

    I like to give my wife some securety and the feeling of having her own house, no matter what happens to me.

    It is a clear sign that i trust my wife and trust our relationship will last, since i can’t own on my own and have no rights in case of divorce.

    Over a period og some years it is cheaper to own.

    I can make the changes i want without loosing the investment if i move.

    No owner can tell me what i can do or what i can’t do, no owner can raise the rent.

    When this is said i can see it is a good idea to rent, untill you are sure you have found the right place to live here.

    That’s how simple and easy i feel about own/rent.

    Have a great day

    Axel

    • John Miele says

      Axel: There are many ways to provide security… If you want to be in the same place for 20 years, owning may make more financial sense. Again, personal comfort level. If you buy, knowing the law and risks, and are comfortable with that risk, who am I to tell you that you are wrong?

  13. Tom says

    Real estate investment in the Philippines?

    When I moved here 12 years ago my wife bought a residential lot 3000 square meters in Roxas City for 500 square meter last week I was offered 2500 square meter the average price in town is around 3000-6000 sq meter for residential now

    In the province we purchased 18 hectares of sugar land for 50 Piso per square meter average current price to purchase same land now after 12 years is 800-1000 square meter if you can find it for sale

    This land was purchased when the Piso was 56 to $1 USD today its 41.72 – $1 USD

    For some reason land seems to be a good investment here maybe I missing something?

    Tom / Roxas City

    • brianking says

      Hi Tom, good return but it gets back to who really owns it? I understand you .. dont get me wrong , but for the expat/investor its kinda based on how sound your relationship is.

      • says

        Hi Brian – After 30 years with my Asawa I think I’m pretty stable. But what some people are trying to say here its not only about investment its about giving your partner something should you go first. It appears there is a mine and hers syndrome and as pointed out by others if that mentality exists don’t buy ever, that way no one can take anything from you only the landlord.
        Regards.
        Jim.

        • peterjoy says

          it looks like to me at hearing and reading all ur post here that u dont trust filipina wife if there is no trust there is no love so start looking at ur self and why do u all wont to be marred if u dont trust ur wife and think she will run and take the home with her it looks too me it was better for u to stay home then go and live in the php or put a little bloody trust in ur wife after all that is why u meet and married her right and as for my self i have been married for 7 years+1 and as it is a long story and i will not go in to it today but my dear one still lives in the php and i live here in tassie it is very hard but we are buying a place there why as i trust and love my wife and she loves me so how about it boys love ur wife or for get it and go home………..peter martin

      • Miss August says

        It’s ll come down to this: If you don’t’ trust your wife and you think the relationship will go bust, they don’t buy.

    • chasdv says

      Land with clean title is a good investment anywhere, they ain’t making anymore and it requires very little maintanance.

    • John Miele says

      Tom: That assumes that someone is willing to pay that for something you have built. The profit does not exist until you are paid. I know many houses in the Philippines that have been on the market for 5 years or more… This often happens with large houses in the province.

    • Dan says

      Hi Tom

      That is great, I am looking in the condo market, but it seems the return is extremely low. I am thinking about land too or fish pond since I am renting it anyway.

  14. says

    Fantastic article, let me share my view on why I will be buying a house in the Philippines when the wife and I move there in 2013.

    My reasons are very simple and clean cut. I want to have a place that my wife can call her’s / our’s. It all boils down to security, I want HER to feel secure with a piece of mind knowing that she will always have that roof over her head, as life is way to short to play the guessing game, as you never know when your time is up… I want to know that my wife will be ok. To me that’s worth it’s weight in gold. Now I am not trying to sound morbid as I am a young guy with a young wife (near the same age) but life does not have any guarantees. However I can make sure that my loved ones are secure, that’s a guarantee I can and will make.

    My outlook might be very very different from some of you here, but at the end of the day, I love my wife with every ounce of my being, I love my family clan (yes I call them mine because they are the best.) So it is really a piece of mind for me.

    Regards;

    Bilko

    • Miss August says

      Well said, Biko! I think I can speak for the Filipina wives out there. We want to feel secure in our marriage… emotional security, physical security and financial security.

    • Paul Thompson says

      Bilko;
      You’ve made my point, my friend passed last year; his young wife had never been to the US so she can receive nothing of his pensions. The money in the bank was gone because of his hospital stay. His rented palace had to be let go do to the high cost of rent. His car was sold to pay for his burial, but he did lease a very small bar in the Barrio and that and the furniture was what she was left with. He subsidized the bar with his retirement and you would never get rich living off it, so she runs it now, and lives in a small back room of the bar.. Because his friends know his wife is a good woman and cared for him, we all stop into the bar and stay awile to insure she is making money. He never felt the need to buy a house.

      • John Miele says

        Paul: Rebecca always has the option to go back… Not even taking into account insurance and other security. Security does not necessarily need to be land (I’m pretty much worth more dead than alive… I croak, she can buy what she wishes)

    • John Miele says

      Bilko: That works in your case. In my case, my wife is:

      1. Dealing with a squatter for nearly 4 years in court.
      2. At her CARP limit for land holdings.
      3. Already owns a house in the province.
      4. Does not like Manila, but we are somewhat restricted here by our situation.

      Finally, I just found out that I am 80% likely to be leaving the Philippines for work. Had we bought or built in Manila, we would have a very real hassle.

      Not owning a home here does not mean that I love my wife any less, or am not concerned for her welfare. There are many ways to provide security.

  15. Ricardo Sumilang says

    There is no right or wrong decision on this issue, as many others have pointed out. The decision to buy or rent is entirely dependent on individual circumstances and point of view. What I find admirable, though, is the foreigner’s unselfish motivation to buy above all other considerations in order to have a lasting legacy for his wife. As for me, I have both feet firmly planted on both sides of the Pacific Ocean as I have no plans to live in the Philippines full-time.

    • John Miele says

      Ricardo: Unselfishness is one thing… jumping in without knowing the true risks is something else. Again, everyone’s comfort level is different. It does not always relate to trust.

  16. says

    John M,

    Thank you for the very informative article. It explains a lot about the concept of “To buy or not to buy” and all the different elements that one should consider before buying – very sound advice. Thank you again; I’m learning so much.

    • John Miele says

      David: Glad you found it useful… I’m not totally against buying, but I do believe that knowing the risks is important.

  17. louie says

    Reading this article by John and the one previously written by Paul(along with replies and posts), you could see clash of ideas and reasoning over the hot topic of buying/building or renting a house. They’re both good depends on one’s preference or need. There would be no clear-cut winner if we’re going to debate which is better. Both choices have advantages and disadvantages. They’re both right depending on the situation he/she’s in. That said, I admire those who choose to build a house to give their love ones a permanent home whatever may happen in the future. For them they see it not as investment for profit, but rather an everlasting evidence of their love. Their loving-kindness attitude is admirable.

    • John Miele says

      Louie: There is a case to be made for both options, but there are many ways to provide security. In our situation, buying makes no sense (and my wife agrees, perhaps more strongly than me).

  18. Jonno says

    If you wanna build a house, then make sure it’s far far away from the rotten Filipina’s family. How many stories have i heard about the kano living with a family of 12 palamunins that just sponge off him and yet don’t do anything to contribute. You even get randoms turning up asking for handouts. That’s why my does not go back christmas time anymore and most payments from what i know have been cut off with the mother in law maybe recieving 5000 a month.

    Having said that i have mo money but mo problems either LoL. I have a free house to stay at for aslong as i feel like and requests for money are denied on sight. The last thing i want is to foot the bill for some random kid’s hospital bills or have to deal with a squatter over land transfer titles like a writer on this website did

    • John Miele says

      Jonno: That is a very real risk, particularly for those in new marriages / relationships. You are correct that many people have become stuck or lost everything by building before they know the true situation.

      In my case, we are very stable. Those concerns don’t bother me… Personal comfort level.

  19. says

    Good article, John.
    I always recommend to rent first and then take your time deciding what is the best place/land to buy.
    Having bought a big house on a big land in Cebu and now living in NZ as an absentee landlord puts me in the position to really appreciate the burdens of ownership.
    Between tenants, there is no income. Some tenants will trash the place or stick you with a large power bill. As a foreigner, I am practically forced to rent only to foreigners. (in case of a legal conflict, the foreigner is at a disadvantage and may have difficulty to get a Filipino to vacate)
    Because I am pretty picky in who I accept, the property can be vacant for a while. But where can you rent something for 70K pesos/mo that would cost you a million bucks to buy? In the Philippines, that’s where. Have a look at the web site to see what I mean.

  20. james watt says

    As I see it, the decision to rent or buy, is very much down to personal circumstances.
    My wife and I decided to buy our home.
    We spent some time deciding where we wanted to be based.
    We travelled around the area, looking at Barangays and estates that we could feel safe and contented.
    We eventually decided on an area, and (New Build) home (with Clean Title) that ‘ticked the boxes’.

    The BIG difference between us, and most (if not all) couples who live in Mindanao, is that we are both foreign.
    Therefore our personal circumstances differ.
    Our neighbours were somewhat surprised, when we turned up to move in.
    But we soon established ourselves, and are well accepted, not only in the neighbourhood, but over a wide area.
    We made a good/fortunate choice on our home and area.
    Renting gives flexibility for those looking for ‘the place’, but we did our homework, and are still happy with our choice.
    Regards James ee it, the

  21. james watt says

    As I see it, the decision to rent or buy, is very much down to personal circumstances.
    My wife and I decided to buy our home.
    We spent some time deciding where we wanted to be based.
    We travelled around the area, looking at Barangays and estates that we could feel safe and contented.
    We eventually decided on an area, and (New Build) home (with Clean Title) that ‘ticked the boxes’.

    The BIG difference between us, and most (if not all) couples who live in Mindanao, is that we are both foreign.
    Therefore our personal circumstances differ.
    Our neighbours were somewhat surprised, when we turned up to move in.
    But we soon established ourselves, and are well accepted, not only in the neighbourhood, but over a wide area.
    We made a good/fortunate choice on our home and area.
    Renting gives flexibility for those looking for ‘the place’, but we did our homework, and are still happy with our choice.
    Regards James ee it, the

  22. Papa Duck says

    John,
    I think i am in the best position. Will be living in a house that is fully paid for and furnished by my G/F. So financially i won’t be out of anything if things don’t happen to work and she will have security of house ownership. Good article. Have a nice day.

  23. says

    This is a great read that helped spark such a debate and enabled the reader to draw some sentiment on the topic with had. In my opinion, I will prefer to purchase a house opposed to renting a house for these reasons:
    1- When you buy, you’ll have the sense of ownership and security that will influence how you live your life on-words.
    2- After doing your homework, you can’t go wrong with the site and type of house you want to live in for permanent or long term stay that exceeds at least 10 years.
    3- As far as I know, and maybe I’m wrong, the property value of the land goes up by time due to many economical factors: most prominent – housing demand, economic and demographic growth, industry and development, and some other important indicators that you should study in order to foresee the near economic outcome.
    4- One thing to keep in mind – there is nothing for certain, but you can do your homework to minimize risks through your assessment based on your personal preference and the right fit to take the decision up on it.
    5- If anything, based on love and affection, love will determine your fate to answer the million dollar question: to buy or not to buy!

    • John Miele says

      Ramy: So because I don’t own a house here, then I don’t love my wife?

      That works in your case. In my case, my wife is:

      1. Dealing with a squatter for nearly 4 years in court.
      2. At her CARP limit for land holdings.
      3. Already owns a house in the province.
      4. Does not like Manila, but we are somewhat restricted here by our situation.

      Finally, I just found out that I am 80% likely to be leaving the Philippines for work. Had we bought or built in Manila, we would have a very real hassle.

      Not owning a home here does not mean that I love my wife any less, or am not concerned for her welfare. There are many ways to provide security.

      • Paul Thompson says

        John;
        After reading your comments I must agree with you on your points for renting. there in Manila.
        Having no desire to retire here in the Philippines-RENT
        Being closer to the airport as your job requires you to fly for work-RENT
        The incredible high cost of owning in Manila-RENT
        Planning on leaving the Philippines within a year-Rent
        Good schools for your son in Manila-RENT
        The problems you and your wife have had with squatters on her property-AGAIN RENT
        I understand that you love your wife, and you have other plans to take care of her and your son’s security someplace other than the Philippines-RENT

        None of your very valid reasons for renting apply to me or many others and we choose to own a house here where we will live out the remainder of our life.
        I rented for 5 years before I built a house. I know all about renting.
        I had preformed my due-diligence prior to buying the land.
        We then waited another two years before breaking ground and building.
        We have lived here in our house for 14 years and are pleased with our decision.
        And all this proves is; that we are both right!
        But it was a fun discussion.

  24. says

    Hi John.
    I posted a reply but it got lost.

    I bought a house and it is on a 150 sq metr plot of land.
    We could have 500 sq metres in our own nama.
    our attorney helped us on that.
    Regards James

    • MindanaoBob says

      Hi James – I am curious… given that neither you nor your wife are Philippine citizens, how did you purchase land here? Something does not smell right…

  25. Robert J. says

    Hi John,
    Another interesting article. We are looking forward to retiring to the Philippines from our home in Minnesota in a few years. My wife purchased a lot for a $1,000 in the province near her family about 15 years ago, which I had reservations about at the time. Since then, we’ve decided it would be better to live away from the family and just rent. We’ve been told the value of our property is at least $6K now, although I’ll have my doubts until the money is in hand. I’m really just hoping we can at least break even. You’re talking about the difficulty of selling homes there. Do you think it would be different just selling an empty lot? It is a nice piece of property in a beautiful neighborhood and we’ve had an offer. Thanks John. I’ve enjoyed your straight talk writing.

  26. Boss says

    I guess it’s horses for courses. If it feels right for you and your circumstances then do it. As to James Watt, what? Sure buddy.
    After 5 years I looked into the option of buying twice and only fate and gut feeling intervened to prevent heartache. Nearly ended up buying land (in my wife’s name) from someone who never owned the land in the first place. I am still renting after 7 years.
    What John is saying, have a long look first. Rent a while. Get a feel of the place. I moved 3 times, the neighbours drove me nuts. Live with the in laws for a few weeks, NOW that will be an eye opener.
    Then take a look at how many of your foreign mates actually stay in the Philippines or the area that you live in, then you will realize its not that many. Most do end up moving elsewhere and that’s a fact.

  27. Benny says

    I have read all the comments here and it is not a question of loving anyone for me.IF I were to leave my wife here in the fils.,she could have the damm house.If I am not going to be happy living in it I could not put it on my back and take it with me anyway.It is quite simply the OUTRAGEOUS PRICES per sq.foot/meter in the Philippines coupled with the shoddy construction materials used by builders and last but not least the APR on mortgages is 4X’s that of the West right now. I had hoped to come to one of the countries in S.E.ASIA AND get a reasonable deal on a house for say,$75,000.00 and for what I can get here and what I can get in the WEST AS WELL AS THE TANGIBLES MENTIONED ABOVE,it is quite simply NO CONTEST.THE WEST WINS…HANDS DOWN.I am quite disappointed, but IT S OK,I HAD FUN AND WAS ABLE TO DO WHAT I NEEDED TO DO HERE,AND THEN SOME.GOOD LUCK TO THOSE OF YOU WHO CHOOSE TO BUY.

    • John Power says

      I don’t know what planet you’r living on Benny. My house here cost 6 million pesos to build, plus 2m for the lot. In quiet an exclusive subdivision in Laguna. Thats approx £107,000. The same house anywhere near London in the UK, would cost £500,000-700,000. I was there every day while it was being constructed,. and it’s rock solid.

  28. Dan says

    Hi John

    I have a resident card here called ACR, can I buy a house here? I know no problem with condo which I prefer because I want to rent it out when I am back to the States. I checked out a building in Green Hills and was told the rent would be 1200 peso per square meter, 3 bed room 130 sq meter price is 21 million peso with 64 peso per square meter association fee, even using 5 percent interest 30 year like in US the rent is so low just barely break even. I dont know the reason of high interest rate here maybe here the expectation of return on investment is much higher.

    How is your fish pond? Since you live in Manila ever thought of renting one nearby so it is easy for you or your wife to manage? As I said in your fish pond post I paid down payment today and ready to buy fingerlings soon. I need to do some research on tiger shrimps and put it in one of 2 ponds I rent because I was told now is the season for salt water.

    On of the poster in your fish pond post said she owns fish pond in NH, I wonder if that is a province here or New Hampshire in the east coast? I will update you on my fish pond business so other expats get some ideas what kind of venture is viable in this country.

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