Real estate investment is often seen as a venture requiring significant capital, but there are several ways to start with minimal funds in the Philippines. Whether you’re aiming to become a property investor or looking for ways to grow your wealth, there are smart strategies to begin investing without breaking the bank. Below are effective methods to invest in real estate with a limited budget.
1. Real Estate Investment Trusts (REITs)
A Real Estate Investment Trust (REIT) allows individuals to invest in a diversified portfolio of income-generating real estate without owning physical properties. Since its introduction to the Philippine Stock Exchange (PSE) in 2020, REITs have become an accessible way for small investors to participate in the property market.
REITs are publicly traded, so you can buy shares through stockbrokers. The key benefit of REITs is that they provide regular dividend payouts, derived from rental income of the properties they manage, including malls, office spaces, and commercial buildings.
Some popular REITs in the Philippines include:
- AREIT, Inc. (Ayala Land’s REIT)
- DDMP REIT (DoubleDragon’s REIT)
- Filinvest REIT Corp. (FILRT)
Tip: You can start investing in REITs with as little as ₱1,000 by opening a brokerage account and buying shares.
2. Renting Out a Room or Part of Your Home
If you already own a home, you can start earning from it by renting out a room or part of the property. Platforms like Airbnb make it easy to list your space and find short-term renters, especially in tourist areas. This allows you to start generating passive income with minimal investment.
Alternatively, if you live in a prime location or a city center, you can rent out parking spaces or extra storage areas to others who need them.
Tip: Before listing on platforms like Airbnb, ensure you comply with local zoning laws and homeowner association rules.
3. House Hacking
House hacking is a real estate investment strategy where you buy a multi-unit property, live in one unit, and rent out the others. The rental income from your tenants can help cover your mortgage, allowing you to essentially live rent-free while building equity.
In the Philippines, duplexes, triplexes, or townhouses can be excellent options for house hacking. You can also consider buying a larger house and converting it into multiple rental units.
Tip: Pag-IBIG housing loans can be used to finance house-hacking purchases, with favorable terms for properties under socialized housing programs.
4. In-House Financing from Developers
Many developers in the Philippines offer in-house financing for buyers. This method allows you to purchase pre-selling condos or houses with low down payments (as low as 10%) and spread payments over several years without going through a bank or Pag-IBIG Fund.
While in-house financing typically has higher interest rates than banks, it requires less upfront cash and may have easier approval processes, especially for those with no established credit history.
Tip: Research reputable developers with flexible in-house financing terms. Some developers also offer rent-to-own schemes, which reduce upfront costs and allow for gradual property ownership.
5. Co-Investing with Family or Friends
Another way to invest in real estate with minimal capital is through co-investing with trusted family members or friends. This allows you to pool resources, split the costs of property acquisition, and share the rental income or profits. Co-investing is often used to purchase foreclosed properties or rental properties in prime areas.
Before entering into a co-investment agreement, it’s crucial to have clear terms in writing regarding ownership shares, responsibilities, and profit distribution to avoid disputes later on.
Tip: Legal advice and proper documentation are essential when co-investing to ensure all parties are protected and fully understand their roles.
6. Buy Foreclosed Properties
Foreclosed properties are often sold below market value, providing an opportunity to purchase real estate at a bargain price. Many banks and government institutions, such as Pag-IBIG Fund and GSIS, auction foreclosed properties to recover their losses. These properties can then be renovated and resold for profit or rented out.
Although purchasing foreclosed properties typically requires a down payment, the price is often significantly lower than that of newly built homes or condos.
Tip: Attend bank auctions and visit Pag-IBIG’s website to check for upcoming auctions. Some auctions even offer payment terms that allow you to acquire property with less initial capital.
7. Real Estate Crowdfunding
Real estate crowdfunding platforms allow small investors to pool funds and invest in large real estate projects such as commercial buildings, residential towers, and resorts. While still a growing trend in the Philippines, some platforms offer low minimum investments, allowing you to participate in real estate deals with as little as ₱5,000.
In return, investors receive a share of the rental income or profits when the property is sold. Although not as widespread as traditional investments, crowdfunding is gaining traction among Filipinos interested in real estate.
Tip: Research local crowdfunding platforms or international ones that offer investments in the Philippine real estate market.
Investing in real estate doesn’t require large amounts of capital if you know where to look. Whether through REITs, house hacking, co-investing, or foreclosed properties, there are many ways to get started with minimal funds in the Philippines. The key is to choose a strategy that aligns with your financial goals and risk tolerance while taking advantage of the opportunities available.