Dave Ramsey, a personal finance personality and businessman, recently said that when you invest $100 a month from ages 25 to 65, you’ll earn around $1,176,000 by the end of it. It’s not as simple as it sounds though. You can’t just invest in anything. Investing requires strategy.
So, what should you invest in? Well, there are tons of options. For now, let’s focus on one. Properties – specifically those near airports. Why? Because if you’ve heard the news about the Department of Tourism aiming to improve airports to get tourism up, you’re probably wondering whether investing in properties near airports is now a good idea. If you are, we’ll talk about everything there is to know about investing in properties from why you should do it and how you do it to the pros and cons of buying properties near the airport.
Let’s get you through the millionaire mark via passive income.
What are some of the kinds of properties I can invest in?
Let’s start by introducing to you what the options are. What kind of properties can you invest in? There are several types of real estate or properties available for investment. To make it less confusing, let’s focus on these 3.
1. Commercial real estate
Some examples of commercial real estate are hotels and retail stores. These properties are non-residential and are considered ‘active’ because you will have responsibilities such as renting out space in your property to businesses. This is also how you will earn money.
Commercial real estate often creates more revenue than residential real estate although this depends on which area you’re in. This is because your property will be filled with businesses and if they’re successful, your property’s value will skyrocket faster.
2. Residential real estate
Residential real estate is, as the name suggests, property that will serve as homes for individuals and families. There are several different kinds of real estate investments. Some might be familiar to you. For instance, there are vacation rentals where the property’s owner will give you access to the said home for a specified number of days and a fee.
There are also fixer-upper homes or homes that need flipping. These properties are often cheap to buy because they will require lots of work (and money) to fix. It might be risky because you will be paying for the renovation of the home and you will be in charge of making sure the house looks appealing; however, like most things, high risk reaps the high reward. Flipping homes can turn out to make tons of profit if you do things right.
3. Land
Finally, another common type of real estate you can invest in is land/real property. This is the type of real estate where there aren’t any buildings, roads, etc. It’s just land. Because of its lack of infrastructure, land can typically be cheaper than other types of real estate investments.
You can lease the land to other interested parties such as farmers. Land, however, will not earn you much money fast. It will take time and much like the other real estate properties, there are no guarantees that you’ll get your money’s worth. Fortunately, land also appreciates which means they increase in value over time.
Why should I invest in properties?
Properties are one of the more common assets to invest in. Like most investments, investing in properties will have risks. So, why do people still do it? Why should you be investing in properties? Here are some of the reasons why investing in properties is a good idea.
1. The returns are great.
Let’s say you invest in a commercial property. A few years later, you decide you no longer want it so, you sell it. The question is, can you sell it for more than you bought it? If you’ve chosen the right property in the right location, that property’s value is bound to increase by a lot. If the value has increased, you can sell it for a higher price. You’ll see those big returns and earn yourself some profit.
2. It’s passive income.
The upside about investments is, most of the time, you don’t have to do anything. After all, investing is difficult because it requires you to choose what to invest in wisely but, once you’ve invested, most of the time, it’s minimal responsibilities from here on out.
While properties will require you to take care of their upkeep and make sure there are tenants and these tenants are happy, it won’t be a full-time job. It’s a great way to earn passive income in which you’re earning income without having to do anything.
3. Most of the time, you’ll have tax advantages.
Real estate investments often give you tax advantages you have to make use of. These advantages may include paying less than needed because you can deduct some expenses such as property tax, cost of repairs, and more.
If you also decide to sell a property and price it higher than you paid for it, what you get out of the sale will be taxed as capital gains rather than income which means that you’ll pay less.
How does the DOT fit into investing in properties?
In hopes of boosting the country’s tourism industry, the Department of Tourism otherwise known as DOT formulated a plan consisting of creating policies and improving current infrastructure. One of these infrastructures would be airports.
The current DOT secretary, Christina Garcia Frasco, has said that they aim to improve airports around the Philippines so that they are more accessible. The capacity of these airports will also be improved through “cohesive and comprehensive digitalization and connectivity, equalization of tourism product development and promotion, maximization of domestic tourism, and the enhancement of the overall tourist experience” among other things.
If these plans are followed through and airports are improved, tourists might start coming in waves. They will need a place to stay and some will prefer to stay near airports to avoid unnecessary traffic. Given these projected outcomes, would it not be a good idea to start investing in real estate near airports? Let’s discuss that further.
The Pros of Buying a Property Near an Airport
The recent plans the DOT aims to implement give you lots of things to consider. After all, the plans aim to boost tourism. Once tourists start coming in, they’ll be looking for places to stay. They might even be looking for commercial space to rent to open up businesses if they see the Philippines as a viable place to set up shop. As seen from examples abroad, residential properties on the outskirts began developing as soon as a new international airport was put up.
While this news is exciting and you’re itching to get things going, you have to stop and consider the pros and cons to be sure that investing in property near airports, such as a condo near NAIA, is the right move for you. Let’s start this off with a list of pros.
1. The location is advantageous.
Most of the time, when you’re vacationing somewhere and need a place to stay on the last night or two – especially when your flight is early – you’re going to check out hotels near the airport. If your flight has been moved or canceled or you have a long layover, airport hotels are the way to go. If you’re looking for considerably cheap places to stay, places near airports will provide that. The possibilities of properties near airports are endless.
Properties near bustling and busy airports can be great commercial real estate investments. Once the airport gets busier, businesses will realize the opportunity this holds and will want in on the action. They’ll start looking for places to rent to open up stores. Who’ll they turn to? Investors like you have exactly what they need. The location is very advantageous especially when the airport is high-quality, attracts tourists, and is constantly busy. Your investment will become a good commercial destination.
2. You’ll see good returns.
If everything goes as planned, your properties near the airport will increase in value fast. This means you can earn more money and attract more tenants. Infrastructure projects lead to capital appreciation. Should you wish to sell the property, you can sell for a higher than average price because the value of your property is high. You’ll earn more than what you bought the property for.
3. Once airports are improved, other infrastructures will follow.
Good airports attract tons of business. Soon enough, it will become a popular commercial area. Let’s go over one scenario. Tourists arrive. They see the shops selling trinkets and souvenirs to remember the trip. They buy. Tourists are consumers and they bring in lots of business for these stores. Once the airports are improved, other infrastructure will follow which will turn this area from lifeless to booming.
The Cons of Buying a Property Near an Airport
The pros are making it seem worth it; however, it’s time to look at the other side of the coin. To properly weigh this decision, you have to consider the cons of buying a property near an airport. It’s not all going to be sunshine and rainbows. You have to prepare for that.
1. It poses health risks.
One of the main reasons why most people stay away from living near airports is because it poses health risks. Who would want to hear noisy planes 24/7? Airports create noise pollution and noise pollution can cause hypertension, heart problems, and sleep disturbance among other things.
These health risks are no fun for anyone involved so, it might be off-putting to your potential tenants and will directly affect the return on your investment.
2. All these plans the DOT has made haven’t been implemented yet.
Another thing to consider is how the DOT hasn’t implemented much yet in terms of its plans to improve airports. If you decide to invest now and these plans did not boost tourism, after all, you’ve taken a huge risk that ultimately failed.
If you’re willing to take the plunge and risk losing money, you can always invest; however, for now, we’re not sure whether these plans will be implemented and whether or not they’ll work. If they will be, it will take some time before these airports are improved which means that you’ll have to wait before you see business pick up.
3. The success will often depend on the location.
The success of your investments will largely depend on the city you’re in. If you plan to invest in property in cities that don’t often attract tourists, you might not gain enough to call your investments successful.
If you decide to invest, make sure to invest in areas that will be teeming with tourists as they will bring the business you need.
So, should I invest in or buy properties near the airport?
Given the list of pros and cons, what’s the final verdict? Should you or should you not invest in properties near the airport? We hate to say it but, as much as we’d like to tell you what to do, investing is a personal decision. It’s your money you’re willing to risk.
If you’re unsure, you can wait for further news from the DOT regarding their plans to improve airports. You can bide your time and wait to see if these plans turn into concrete actions. From there, create a strategic plan as to which areas you’ll want to invest in, what you’ll invest in, and how much you’ll invest. But keep this in mind, there are reasons why real estate developers fight for land near an airport.
Where can I find properties near airports?
Whether or not you’ve decided to invest, scouting for properties near airports is always a good idea – for personal use or otherwise. To find properties near airports, you can call real estate agents to inquire and ask for recommendations or talk to friends who may have properties they’re willing to sell.
If you’re still having trouble, you can talk to Crown Asia real estate agents as Crown Asia will have many properties for you to buy such as the Hermosa Condo in Las Pinas. Located near the Ninoy Aquino International Airport, Hermosa is an apartment building with beautifully designed condominiums and amenities you’d enjoy.
The Takeaway
Investing is a tricky business. Much like anything else, investing in properties near airports will have its risks so you have to consider them carefully. After all, you want to see your investments gain money rather than turn sour.
Whether you’ve decided to invest or not, we’re sure you’ve made the right decision for yourself. There will be other real estate investment opportunities waiting for you. If you need help finding these, feel free to contact one of our Crown Asia real estate agents.
Read more: The Benefits of Living Near an Airport
