Living in the Philippines – Better "passive" Companies to start
For those OFWs and foreigners who wish to start a business, but do not wish to get involved with the stress of a business involving daily operations, employees, owners, inventory, etc., there are several opportunities available to foreigners living in the Philippines. Buy superior restorative properties, upgrade them, and then rent or sell them.
1. Buy superior properties from Fixer, upgrade them, and then rent or sell them. This is a great deal for those of you who have experience in your home country in buying, repairing, and renting or selling property. During the last 10 years, many people have been involved in this type of business in their home country.
With the general economic problems in the world in recent years, the Philippines has not been immune, and there are many properties in disrepair, as well as many distressed and foreclosed properties.
2. Build an Apartelle. An Apartelle is an apartment building where all but one of the units are rented long-term, and you must operate at night or weekly, like a hotel, hence the combined name of apartelle. These are common in the Philippines.
This business will require a higher capital investment, but with the right property and concentrating on more rural areas or smaller cities, you can build a small 4-unit apartment building for 3,000,000 pesos, not counting the cost of the land.
You’ll want to rent 3 units on a long-term rental basis and keep one for short-term rentals, for the many street vendors who frequent the countryside. They like to book short-term apartelle units rather than the much more expensive hotels in the area.
3. Condotels. I have not given my approval to this business in all cases. Condotels have been hyped and hyped a lot in recent years and many, many new condos have been built in Manila, and now even in Cebu and starting in Davao.
The problem is that although developers offer excellent down payment terms (usually around 30% with initial financing for 3 years) and in some cases carry over the mortgage and financing for perhaps 10 years, the interest rates are incredibly high and the division of rents with the management team runs around 50% / 50%. There is also always a nominal monthly maintenance fee.
What seems like a “cheap” entry point and cash flow out each month, in many cases simply turns into a gamble on long-term property appreciation: finding someone willing to pay you more for it than you would. that you paid for it.
This is because with all the inventory available, there is a surplus of condos that have been in hotel-type rental groups, but there are not enough visitors to rent them all.
Consequently, what an investor thought would be a good source of positive cash turns out to be continuous negative cash flow – not what a new retiree in the Philippines is looking for to supplement their pension or annuity! This type of investment only depletes your pension.
However, having written all of this down, I HAVE FOUND in the last few months two exceptional investments in condotel that DO meet my criteria for generating good ongoing rental income.
4. Agriculture. The probable cessation of the Land Agrarian Reform Program (CARP) will give the rural sector renewed confidence to invest in agricultural production capacity. CARP has slowed investment in both production capacity and farm acquisition. The end of CARP will mean higher land prices, as land will be valued for its higher income-producing potential.
However, the higher land prices are simply a “fluke”, an added value, for the type of agribusiness I am writing about. I have found an extremely unique business opportunity, which will generate a great ROI (return on investment) and is completely passive. It has been structured by the developers (all foreign) to be a turnkey investment price. The price includes the cost of the land, plus all
Clearing, planting, cultivation and harvesting during the first 5 years.
The business price is within the capital investment budget of the average foreign retiree, and all owners will be members of a cooperative that will share farm equipment (tractors, equipment shed, and others). The farm will be “cultivated” by the developer’s management team.
The hottest trend right now is organic farming and yet it is only in its infancy in the Philippines. There is one export product in particular that has caught my attention: the pili nut. The Philippines is the ONLY country with which it produces and processes this nut in commercial quantity.
The current state of pili is equivalent to that of macadamia about 30 years ago. It has enormous potential to become a major industry. They are in demand not only in Hong Kong and Taiwan, but also in Singapore, Korea, and Austria.
