150,000 Dollars

[Sherman]

Hi Inspector,Yes, I think buying a 2nd rental property is a wise choice. I would look to buy another property in the US as opposed to the PI though. If you're not here, the property management side could get a little tricky on a local property. Collecting rent and reporting to you that the property is vacant...stuff like that. Also, you'll have to consider what to do if you want to sell years from now. There are no MLS or standard appraisal systems in place and property just sits here for years on the market. Also, everyone involved in the deal will be thinking a mile a minute, trying to figure out how they can skim something from the deal. The US housing market is in the toilet and there are good deals everywhere. You can find a trustworthy property manager and you can liquidate your investment with very few headaches. Do I have any experience with PI rentals? No I don't. However, I've been living here for 3 years and I do own 3 businesses. Business is business; retail, wholesale, real estate. From what I see around me, he'll be better served by keeping that investment in the US. I understand that your friend is looking to invest while avoiding taxes. On a commercial property here, the tenant is required to pay 5% to the BIR based on his rent. So, there's no hiding that. On a single condo, you might be able to get away with it under the table, but you'll probably lose more on the side just dealing with knuckleheads. I'm 39 and “semi” retired, but I have 15 years of financial experience (Bank manager, mortgage underwriter, special asset manager “foreclosure and REO”, mortgage broker, etc.). I've seen market ups and downs, you can't time the market but you can see the signs. If everyone around you feels like the sky is falling and the bleeding will never stop, it's time to buy. If your market feel like that right now, the time is right. It might go down some more, but at least you'll be in at “about” the right time. If taxes are the primary concern, I'd cut the cash flow a little close and mortgage the property (ie. Lower down payment). You'll be able offset the rent with the interest, depreciation, maintenance, etc. Your friend will likely qualify for an owner occupied interest rate. If he can fully document the rental and only owns one property, even the most conservative underwriter wouldn't have any issues with it. I'd get a 30 year amortization for some breathing room, but pay it back on a 10 or 15 year ammo so you're good to go at retirement.. Finally, I'd tell that fool that we're going to Sizzler and he's paying. “We're going to Sizzzzzzzler...we're going to Sizzzzzzzler” Be sure to do the Cabbage Patch while you're singing it.

[Inspector]

Thanks Sherman, and another aspect of renting here in the Philippines versus back in say a place like Phoenix....in Davao City a house in a nice area will sell for around 150,000 dollars, but rent for around 6-700 dollars, while you can pick up a house around 100-120 thousand dollars in a NICE phoenix area (the PC term is low turnover area...lol), and rent it for 1300-1400 dollars. Association fees a bit higher, taxes and insurance...as well as property manager fees...all deductible though. And of course, when the market does go back up...5 years or 15, it will eventually, you can double your outlay. :)

[Dave Hounddriver]

So what did this friend of yours actually do with his money? Its been quite a few months so it would be nice to know what his decision was.

[Inspector]

So what did this friend of yours actually do with his money? Its been quite a few months so it would be nice to know what his decision was.

I forgot to talk to him, as my memory is going fast (I was looking for my sunglasses for an hour and they were on my head)...last I heard he was going to buy a few rental homes/apartments in the Phoenix area and collect the rents, as I myself am now in the process of doing as well. I received this advice from some real estate attorneys, a good CPA and much research...and a close real estate friend, poker partner... who acts as my property manager. I believe my agent will be helping him as well....I will ask my agent next time I talk to him, and see if he's doing this, or his original idea...put it all on "black" in vegas . Edited August 5, 2011 by Inspector

[Art2ro]

Well, I surely didn’t get $150,000 to play with, but I did inherit $50,000 from my mother when she passed away about 14 yrs ago. I put all that money towards the house we had built in Sta. Rosa, Laguna as our permanent residence when we grow old and die! We plan to pass along all our assets to my wife’s sister and her children, so in that way we won’t have to worry about our home going into the Philippine probate court system upon our passing away at our old age when the time comes!So, we are all set with not much to worry about our future, we will just be enjoying the remaining years of our retirement here the Philippines! Our home is paid for and we don’t owe anything to anyone and we only spend 40% of my pension towards our daily or monthly living expenses and the rest of my pension is extra cash for emergencies or whatever that may come up unexpectedly! Upon my demise, my wife has survivors benefits from all of my U.S. Government pensions and a life insurance on myself! So, my wife will be in good shape financially after I'm long gone! All will be well, that ends well!

[bows00]

I would buy three(3 each) 2 bed room condos in Nevada Las Vegas... Net rental income would be around $1800/month with tax right offs... The market so surpressed, I cant imagine it getting worse...no where to go but up and the investment will be a buffer to inflation.