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Pre-selling House and Lot vs. RFO vs. Lot Only

Philippine real estate industry - property investment

To build money, they say, is to invest. Investing is the act of putting your hard-earned money into a channel, asset, or thing that has the potential to provide income, financial growth, and future opportunities. Most people invest because of the advantages they can get from it such as it can be used to cover unexpected expenses or to fund new ventures such as businesses.

Investments are more difficult than they appear. It’s not for everyone. In addition, if the investment is poorly studied or the investor is unsuited to it, there is a risk of losing money. To select an investment that fits your goals wants, and income, you’ll need to do some research. Investments that pay off, in the long run, require time, money, and effort.

Stocks, bonds, insurance, collecting items, and properties like houses and lots are among the investments that Filipinos regard as a tool for financial security and progress today.

Buying a house and lot for sale in the Philippines is one of the safest and most profitable investments you can make. Real estate investments can yield significant returns, passive income, and high-profit margins.

Investing in houses and lots is heavily influenced by the location of the home. Owners of real estate can benefit from higher profits and convenience if they choose a better location.

What Is The Difference Between Pre-selling, Ready For Occupancy, and lot only?

Investors and homebuyers now have the choice of selecting real estate investments in the form of either ready for occupancy or RFO properties, lot-only and preselling properties.

What Is RFO Or Ready For Occupancy

Ready-for-Occupancy or commonly known as RFO refers to condominiums and houses that have been built and are simply waiting to be occupied. The value of these condominiums or homes has already increased due to the market’s movement over time. However, the main advantage of getting RFOs is that you may move in right away when the transaction is completed.

With RFO properties, before signing the contract and giving over your hard-earned money, developers will allow you to view the condo unit or home from top to bottom to determine if you need any upgrades or the property will suffice your needs before moving.

Normally, a one-time down payment of a percentage of the property’s worth is required for RFO property purchases. As a result, this is a better option for people who have already saved up enough to pay in full.

ADVANTAGES OF RFO

Ready for Inspection and Saves Time

RFO properties allow you to physically examine the condo unit or house before signing the contract and handing over your money. Tripping is another term for this. As a result of the visit, you will be able to see how large the apartment actually is and how well it has been constructed.

As a result, it saves you time by identifying if the property best matches your needs and budget or if you will require to either remodel, renovate or upgrade the property before moving in.

Move-in Quickly

With RFO units and houses, you have the benefit of being able to move in quickly as soon as all the paperwork and procedures are completed, signed, and paid. This is one of the reasons why RFO properties are being preferred by families and individuals who are relocating, as well as expatriates, foreigners, and immigrants.

Flexible Payment Terms and Discount

Most RFO apartments include flexible payment arrangements, such as rent-to-own, also known as lease-to-buy. That way, you may move in right away and pay it down month after month until the full sum is paid off.

If the RFO unit is sold in a hurry, some real estate companies provide discounts and move-in promotions to people who will take advantage of them.

Availability of Amenities and Utilities

With an RFO unit or home, you and your family may make use of amenities such as swimming pools and gyms as well as a clubhouse with a playground and 24/7 security or depending on the amenities being offered by the condominium or house and lot for sale developers.

Utilities such as water, electricity, telephone, and internet connection may already be in place if the unit or home was previously occupied, and the only thing needed is to change the name of the utility owner.

Fast return of investment

It’s smart to invest in real estate, especially if it’s residential property since you can make money in a variety of ways, including selling it or renting it out short- or long-term, such as through Airbnb. To make money quickly, you may rent it out on Airbnb for staycationers as well as visitors to the area to enjoy your hospitality or put it in for lease and rent.

DISADVANTAGES OF RFO

Expensive

When purchasing Ready for Occupancy units or houses, you’ll have to pay a premium. This is because the property’s value has already grown since its introduction. Before the public sale, the property is generally purchased for its lowest feasible cost during this period.

Limited Selection

When developers start selling Ready for Occupancy units, they are typically trying to get rid of the ones that no one wants. These might include lower-floor flats or homes with less-than-ideal vistas. This isn’t always the case, but don’t expect to receive first dibs since those units were already selected before the public sale.

What are Lot Only Properties

Purchasing vacant property or a lot is one type of investment and security that is why first-time house buyers and investors in the Philippines who wish to diversify their property portfolios consider purchasing lots. OFWs and some Filipinos who want to build a house after they retire also consider buying this type of property.

Having a piece of land offers you a sense of ownership while also giving you the freedom to build you to create your own home. Having this freedom can give you the authority to choose the style of your house such as contemporary or modern houses, the amenities that you can add like swimming pool, a treehouse for the kids or a garden.

ADVANTAGES OF LOT ONLY

Affordable

Empty lots can be a good purchase for first-time homeowners on a tight budget, as they are less expensive than lots that already have houses on them.

Appreciate Overtime

Buying land may provide revenue over time, whether you turn it into a home or rental property or keep it and sell it later as it can appreciate over time. Land appreciation may be influenced by a variety of variables such as accessibility, location, zoning regulations, and inflation policies.

Aside from that, its value rises quicker if it is located in or near high-growth zones, real estate hotspots, or places located in or near commercial areas, business districts, and tourist attractions.

Flexibility

Purchasing land allows you the freedom for future construction of your ideal real estates, such as a cottage, townhouse, apartment, open space, or commercial businesses such as markets, restaurants, or malls.

Security and sense of ownership

The desire for the pride of ownership is at the top of the list of reasons why Filipinos purchase land or lots. Having your lot in the Philippines provides us with the satisfaction or sense of personal progress that comes from accomplishing a goal or desire.

Purchasing a lot also protects your loved ones because it might be developed into a home or commercial property in the future. You can also keep the lot and then rent, lease, or sell it if you need money for your child’s education or a family company.

Land Partnership

Landowners can benefit from the land partnership in addition to developing and selling the parcel. A land partnership is a collaboration formed between landowners and real estate developers to launch a new land venture.

A land partnership differs from the typical sale of a property in that the landowner’s earnings cease when the lot is sold. With a land partnership, both the landowner and the real estate developer benefit from the land’s upgrades and development on an ongoing basis.

DISADVANTAGES OF LOT ONLY

More Work in Building a House

While purchasing a lot has several advantages, it also has several disadvantages that must be addressed. Building a house, for example, necessitates greater effort. When it comes to RFOs, the developers are in charge of everything, but when you only buy a lot and would like to build a new house, you’ll need a team of architects, engineers, builders, and workers who can visualize your concept within your financial constraints, which can be challenging.

Beyond finding the right team or contractor for your ideal home, you’ll also need to spend some effort and time obtaining the necessary permits. Some of these will be issued by the developer, homeowners’ association, and local government.

Lastly, it will be necessary for you to connect your home’s electrical, water, and sewage systems after the house is complete. As an added bonus, you’ll have to deal with all of your utilities’ needs and applications as well.

What Is Pre Selling In Real Estate

A pre-sold property is one that is still under development but is already offered for purchase or literally under pre selling stage. Construction of houses and pre selling condo are the most common type of pre-selling properties. Pre selling condos and house and lot inventories are available in the Philippines.

Pre selling property buyers have the advantage of picking the house or unit that they prefer the most from the options of a subdivision or building before anybody else.

For individuals on a restricted budget, pre-selling should be the first item on your mind. These properties often sell for a fraction of the cost of a Ready for Occupancy (RFO) home. Additionally, purchasers have access to more flexible and fair payment schedules in addition to savings. For those who are really fortunate, the bank will sometimes waive or keep to a minimum even the interest charges.

ADVANTAGES OF PRE SELLING PROPERTIES

Lower than Market Value

The lack of a physical unit is responsible for the low initial price. When compared to the cost of a completed unit, the developer reduces the real price by 30 to 50%. Other times they waive reservation costs if the buyer signs the contract and pays in-house. In addition to discounts, they provide various payment alternatives such as in-house financing if the customer is unable to obtain a bank loan. For their pre selling unit rates, they provide incentives to ensure that their property has a high occupancy rate by the turnover date.

Ability to customize

Due to the fact that the other units are no longer vacant, ready-for-occupancy properties do not allow purchasers to choose a unit or house, unlike pre-selling properties. A property under pre selling period allows buyers to pick their own size and location, as well as outside view and distance to amenities. It also reduces traffic from the very beginning of construction. Prior to purchase, clients can also pick floor plans and unit layouts depending on their personal preferences. Buyers may check on the progress and propose adjustments because they are involved in the construction process.

Ideal Investment

Pre selling real estate is a great way to make money as it is less expensive. Over time, the value of the real estate will rise along with the market’s worth. Investing in a pre selling home, whether you decide to rent it out or sell it on the secondary market, will pay off in the long run.

DISADVANTAGES OF PRE SELLING

Unexpected Changes

In worst cases, you may not receive a refund if the developer fails to complete the project due to resource shortages. To avoid delays in handover, buyers should choose a developer who is known for delivering on schedule. Mismanagement on the other hand results in slow development and unwanted delays that might take years to fix. When a buyer signs a contract, alterations such as unit sizes and floor layouts that differ from what was intended are made without prior notification. If you’re paying for the property, this may seem like a waste of money to you.

Possibility of Illegal Conduct

President Decree 957, commonly known as “Subdivision and Condominium Buyer’s Protective Decree” in the Philippines, regulates pre selling property developers. HLURB, a national government body that governs the Philippines’ real estate market, requires developers, owners, and dealers to get a license before pre-selling any property. All of this is done in an effort to guarantee that they adhere to all regulatory regulations and avoid pre-sale frauds. Prior to being provided to a buyer, all papers released by a developer or seller must be notarized by an attorney.

RFO, LOT ONLY, OR PRE SELLING PROPERTIES

Choosing what type of class to invest in depends mainly on the budget, needs, and requirements of the buyer.

Family and individual moving, as well as expats, foreigners, and immigrants can take advantage of ready-to-occupy houses while lots are for OFWs or those who want to build a home in the future, perhaps after retirement or when they have the ability to build one. Likewise, pre-selling is great for investors who wish to acquire properties that are either not yet build or constructed that they can get at a cheap cost and subsequently either sell them at a better price or make them available for rent or lease.

Since preselling homes have an initial price that’s 30 to 50 percent cheaper than their original listing cost, they’re a good option for purchasers on a tight budget. Down payment can be paid directly or through monthly amortization over a period of time with preselling. In the meanwhile, individuals with a bit of extra cash may get ready to move in. However, the conditions of payment for RFOs might be either rent to own or full payment at the time of purchase or staggered over a shorter period.

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