mGa KuRo-KuRo Ni Ka UrO

Friday, July 14, 2006

Misconceptions that Hinder People from Buying a House

Kapag may mga nami-meet akong mga kababayan natin na matagal na sa NZ (5 years or more) pero til now nag-re-rent pa rin, hindi ko maiwasan na magtaka at tanungin sila kung bakit. Pano kasi ako ang naghihinayang sa opportunity na nasasayang. Considering that I know people who receive lesser salary than them were able to buy a house within just a year or two. I even know a couple, who owns not one, but three houses! The other two, pinare-rent niya. And both husband and wife, they don’t have high paying jobs.

Nakakapanghinayang, kasi every year, tumataas ang halaga ng mga properties sa NZ. Some keep waiting for the right time to buy a house, thinking that they’ll be in a better position to do so in the future. But that time never comes.

So when is the best time to buy a house? Tanong ko dun sa real-estate agent namin. Sagot niya, there is no best time, because the best time is NOW. Actually, second best time lang ang NOW. The best time was yesterday or years ago. But yesterday is past, tapos na, kaya tama rin siya.

Talking to our kababayans who told me that they actually wanted to buy a house for a long time but still haven’t, I’ve found out that the real problem is less to do with financial but more to do with their somewhat flawed way of thinking. May dalawang misconceptions silang pinaniniwalaan na aking napansin that hinders them from taking their first step towards buying a house.

Una, the belief that “You will live in the house that you buy for a loooooong time”. Pangmatagalan. In our country this is so true. Once you buy a house, expect to live there for as long as you live. If this is your thinking it's hard to be satisfied with buying a house that is less than your dream house. Gusto mo siempre perfect, kasi sa isip mo pangmatagalan eh. However, you should know that in NZ, it’s not uncommon for Kiwis to buy and sell their houses every 3 to 6 years. Therefore my advice is instead of thinking that the house you’re buying is for the rest of your life, think of it as just a temporary residence for the next 3-5 years. This way it doesn’t matter if the house you buy isn’t your dream house yet. For now, be content in buying a 2BR house. After 3 years, move into a 3BR house in a better suburb. After another 3 years, move into a 5BR house by the beach. That's how you get to own your dream house. One step at a time. (Tama ba fafa KD?)

Pangalawa, the belief that “You have to stay/live in the house that you buy”. Forget about this. Just because you bought a house doesn’t mean that you have to live in that house. Usually, if you are renting a flat and decide to buy a house, your first objective is to look for a house to live in. That's ideal, but may not always be feasible yet. The houses you want to buy in the areas you prefer may be priced beyond your reach.

If you can't afford the houses in the suburb you prefer, heto ang gawin mong diskarte. Buy a house or property that you can afford now, kahit sa malayong lugar. Tapos ipa-rent mo. Yourself, dun ka pa rin tumira sa flat na ni-rerent mo. Okay lang yon. Then after a few years, when house prices have appreciated, sell the property. If you keep doing this, you would have accumulated enough equity/cash to buy the house in the suburb that you want for yourself. I assure you that you will be in a better position if you do this than if you simply waited and put your savings in the bank. Ask yourself, are you able to save $20k in a year? I don't think so. But with buying and selling a property, there is a greater chance that you'll get that much money and even more.

Owning a house/property in NZ, one must not think of it as wishful thinking. It is very achievable, even on your first year in NZ. In fact, once you’ve done it once, masasabi mo, “ganun lang pala kadali”. Buying your second, third, fourth house? Mas lalo pang madali.

29 Comments:

  • i agree...pareho po kayo ng hubby ko...ganyan din ang sinasabi niya...

    malaking panghihinayang nga po yong binabayad sa rent ng bahay...

    By Blogger idealpinkrose, at 1:32 PM, July 14, 2006  

  • Mura lang ba tlga ang mga properties jan? parang gusto kong lumipat jan ha! tapos makakasalamuha ko pa ang isang sikat na blagista si fafa ku.. kung wala akong toyo manghihiram ako sayo pwede ba?? pero never mangyayari un kc maraming toyo ang utak ko!! ehhe!!

    I wanna go der someday!

    By Blogger tutubing_karayom, at 1:44 PM, July 14, 2006  

  • idealpinkrose,
    your hubby is a very sensible man.

    tk,
    di naman talaga mura. mahal na rin ngayon pero affordable pa naman. sayo pala ako dapat manghiram ng toyo kung ganon. hahaha

    By Blogger Ka Uro, at 2:18 PM, July 14, 2006  

  • ku, you forgot to factor in the "risks" involved... tali ka sa mortgage, maintenance cost kung ipaparent mo, hindi laging me uupa ng bahay mo, di sya liquid kagaya ng ibang investments like mutual funds, pano kung mag-depreciate ang value... kung cash siguro ipangbibili eh di maganda... owning real estate is a blessing if you are not broke but if you are it would be a curse... foreclosure, bankruptcy... etc...

    By Anonymous jon, at 7:20 PM, July 14, 2006  

  • Good comment jon. But there's a way around this. We bought a house years ago but we had to go back to Manila and stay there for 4 years. We were still able to pay the mortgage of the house and maintain it. You can negotiate with your bank and a property manager on how to go about things. Please don't be put off in buying a house because you don't have the funds. It's unlikely that you will lose.

    By Blogger T2 onit, at 8:34 PM, July 14, 2006  

  • that's right. frenchguy regretted it that he did not buy a house when he arrived here in dijon. he saw the prices soar in that span of time. anyways, real estate is the only product i never saw depreciate..so go for it... french people change house 5 x in average during there lifespan, nasa pangalawa pa lang kami... we know that this house wont be our house for our retirement..3 more to go..

    By Blogger Analyse, at 9:22 PM, July 14, 2006  

  • Ang laki nga ng bayad sa rental, sayang. Siguro yung iba hindi ganun kalakas ang loob na sumubok mag invest sa ibang lugar dahil nga iniisip nila eh di naman sila permanent dun.

    By Blogger Ann, at 12:05 AM, July 15, 2006  

  • There's a time to buy and there's a time to rent. It's wise to know the difference.

    By Blogger T2 onit, at 1:58 AM, July 15, 2006  

  • We rented for 10 yrs. and had the same mentality that Ku and Jon mentioned."Negative mentality ang tawag doon". Then my husband and I realized na sayang nga ang binabayad sa rent. parang pareho rin naman kasi yung binabayad sa rent at nawawala lang pero yung binabayad mo sa mortgage ,sa iyo yon.Now we owned a new house at kahit na mataas na ang prices dito sa California pinilit pa rin namin makabili and we are happy with our house and I can say that we are not high paying jobs.
    Tama si Ku there's always a way to achieve a house, "ganoon lang kadali". Hindi financial ang problema , kung hindi sobra lang tayong mag-isip ng negative at nauuna ang takot kaya maraming excuses para bumili ng house.
    Kapag may pagkakataon "Go for it"
    Sabi ng bayaw ko, ang masarap daw sa may bahay, kung mga anak mo doon nakakabuilt ng memories.

    Tama ba Kuya Ku?

    By Blogger settejr, at 2:50 AM, July 15, 2006  

  • i totally agree with buying your own house when you're capable, but i disagree with buying one to rent out while you yourself are renting lang. kasi, parang nakakasayang yung opportunity loss. why? for example, if you had 250k, putting it in savings would yield you +/- 7% p.a.

    if you borrowed 250k from the bank, interest on housing loans is at least 8% p.a. so doon pa lang, mejo mahirap na. to breakeven at 250k, you'll have to be able to rent it out 52 wks/yr at the rate of not less than $385/wk. how hard it is to do depends on the location, pero sa mga nakita ko sa trademe, looks like it's hard to rent out a 250k house at this price.

    now if you had 250k on hand AND already have your own home, it's a different story. you have to weigh between (1) earning interest at 7% p.a. (you get even more if you put it in time deposit, and possibly even more if you invest in bonds/stocks/funds); or (2) buying a house and renting it for at least $337/wk, 52wks/yr.

    re price of properties, over time ive seen articles at nzherald about the property market "getting hot" and "cooling down", but i dont know if year-to-year average prices consistently increase. (PLS COMMENT ON THIS.) but if this is the case, it would be crappy to have bought at the peak of a bullish market diba... (crappy for investment purposes, but if it saves one from having to pay rent, as my idol KU said, anytime is a good time!)

    :) jazzyjayt

    By Anonymous Anonymous, at 6:10 AM, July 15, 2006  

  • jon,
    thanks for pointing out the risks. but there are ways to minimize risks. in the future i might write something about this. thanks you just gave me a good idea for a post.

    t2onit,
    i agree that people should not be put off in buying a house just cause they don't have the funds now. nasa diskarte lang di ba?

    analyse,
    oo nga kasi yung pagsisisi nasa huli. especially with properties. it's common to hear from people na sana noon pa sila bumili nung mababa pa. the thing is if they don't buy now, prices will continue rising and they'll be saying the same thing again later.

    ann,
    actually isa pa yang misconception ann. may friends kami na ayaw bumili dito sa nz dahil daw lilipat naman sila ng aussie. so after a few years lumipat nga sila sa aussie na dala lang nila ang kanilang savings. may isa pa kaming kaibigan na bumili ng bahay dito sa nz kahit may balak lumipat ng aussie. nung magdecide na silang pumunta ng aussie, binenta nila ang bahay nila dito sa nz. kaya ayun marami silang dalang pera papuntang aussie. madali naman kasing magbenta ng properties dito sa nz eh.

    t2onit,
    and there's a time na makitira muna sa mga kaibigan. heheheh

    settejr,
    i'm happy you realize now the advantages of buying your own house. kayo kasi pinatagal niyo pa kaya niyo naman. but anyway, 5 to 10 years from now kapag almost paid na ang bahay niyo mas lalo niyong ma-appreciate na tama ang decision ninyong bumili ng house.


    jazzyjayt,
    i'll give you an example.

    option 1: live in the house you bought.
    let's say you bought a house for 250k, sabi mo nga. tinirhan mo yung house and so are now paying $385/week for amortization.

    option 2: you continue to rent a flat and rent out the house you bought.
    let's say you're currently renting at $270/wk. you bought a house in a far off suburb for $250k. ayaw mong tumira don malayo eh. so you rent it out for say $270/wk. that rent balances out your current rent and still have to pay the amortization to the bank for $385/wk.

    if you examine option 1 and option 2, pareho lang ang perang kailangan mong ilabas weekly which is $385. so i can't see why one can't consider option 2.

    YES, average year to year prices in NZ have been increasing for the last 10 years that i've been here.

    By Blogger Ka Uro, at 10:36 AM, July 15, 2006  

  • hi ku,correct ka dyan kasi mas marami kang binibiling mga hindi naman kailangang bagay pag ala kang iniisip na amortization,pag isipin mo yong perang binili mo ng mga damit at kung ano pa ang laki pala pero pamimigay mo lang pag ayaw mo na.buy ka nalang house me value pa at nag aapreciate.ala sa laki ng kita yon nasa diskarte kung pano mamanage ang finances mo.ka uro thank you so much sa mga info na binibigay mo,kakayanin ko mag start sa nz laking tulong.malapit na ako punta dyan.hope to seeyou there.Godbless.

    By Anonymous Anonymous, at 2:15 PM, July 15, 2006  

  • Mga kabayan, mas-maganda kong sarili nyo na yong bahay kahit pa eto ay hulugan kasi at the end magiging sa inyo rin eto. Meron naman ayaw ng lumipat kasi malawak naman yong lupa nila kaya they keep on renovating and expansion at the end yon na yong dream house nila. Hindi rin naman wise na bibili ka ng house tapos di mo naman titirahan maintenance palang talo ka na..kaya kanya-kanyang diskarte yan meron naman puros lupa lang ang binibili nila yon pa saludo ako don maintenance free yon at di nabubulok at paniguro pa yon pag nag retire tayo kahit pano may naka-abang na sa maliit na farm or for future business.

    By Blogger gelo, at 5:04 PM, July 15, 2006  

  • hi anonymous,
    tama yon, minsan dahil maraming extra money lalong lumalaki ang gastos sa walang kabuluhang bagay. but if you have to pay a mortgage, parang force savings na yon. i agree nasa diskarte lang.

    gelo,
    nabanggit mo yung farm. isa pa yan na magandang investment. may kakilala ako bumili ng lupa lang. pero malaki. walang structure, so maintenance free. pinaupahan niya yung lupa sa isang may ari ng mga cattle para gawing pastulan at doon kumain ng damo. kumikita siya kahit lupa lang. good investment, di ba?

    By Blogger Ka Uro, at 6:03 PM, July 15, 2006  

  • The longest I've rented was 2 months in NZ and 6 months in Australia- i am a risk taker and I believe that investing in real property is the best bet. Tama ka Ka Uro kung merong mortgage, disciplined ang expenses to meet the payments. Tipid talaga sa kain sa labas, sa mga walang katuturang gastos- imbis na bibili ng books/mags doon nalang sa library hihiram, challenged ang creativity mo sa pag shopping sa 2nd hand shops for clothes and things.. Pero may bahay ka naman na tumataas everyday ang value ng land. Rent is a dead expense landlord ang yumayaman. Real property- yan daw ang business ng MacDonalds- hindi hamburger kundi sa real property dahil ari nila mostly ang mga land/building ng kanilang mga outlets. So kung gusto ninyong yumaman- pagsikaping makabili ng sariling bahay or property. Maraming opportunities dian sa NZ- kahit dito- kahit walang deposit nga pinapautang dito. Lakasan ang loob dahil positive ang outlook ng real state. Good luck to all.

    By Blogger VICKY, at 11:21 PM, July 15, 2006  

  • K U,

    on second thought, tama ka nga re home purchase as the better investment. sa rent situation, no-brainer ang purchase lalo na kung konti na lang ang difference sa weekly rental at ang amortization+interest. napaisip lang ako kasi mataas yung interest sa savings, such that kung may extra $$$ ka, it's tempting to just put it in the bank kesa buy a house to rent it out. but given the constant increase in property prices, mukhang panalo ito.

    thanks!

    -jazzyjayt

    By Anonymous Anonymous, at 5:24 AM, July 16, 2006  

  • vicky,
    that's so true. i know a few who are afraid to buy a house kasi mababago ang lifestyle nila. iniisip nila wala na silang pang-goodtime. di na makakabili ng beer everyweek, mababawasan ang paninigarilyo, pang-shopping etc. in other words mangangailangan ng disiplina sa gastos. well it's their choice, it's their life.

    jazzyjayt,
    eh di papano yan. bili na tayo ng rental property. bakas tayo. after 2 years ibenta natin at paghatian ang profits. hehehe. alam mo may mga kaibigan ako gumawa ng ganyan. apat sila bumili ng isang bahay. tas binenta nila later. ngayon lahat sila may sarili ng bahay.

    By Blogger Ka Uro, at 8:53 AM, July 16, 2006  

  • K U,

    magandang monkey bisnes yan, especially for pinoy migrants who finally sell their homes in RP and have enough funds to buy a home in NZ. kung may matirang funds, pwedeng i-invest sa partial ownership of a home.

    kung sakaling pinalad ka at kumita ka sa ganitong paraan (i.e., buy low then sell high), will you be required to pay income tax on the revenues from the sale of the house? is it advisable to engage in this kind of sideline as an individual or as a corporation? kung malaki kasi ang tax sa individual, at least sa corporation pwede mong i-declare ang mga ginastos mo sa improvements or maintenance para bumaba ang tax diba?

    -jazzyjayt

    By Anonymous Anonymous, at 2:44 AM, July 17, 2006  

  • jazzyjayt,
    ok na ok na bisnes. dami nang yumaman ng pagbili ng mga lumang bahay, tapos inaayos, konting pintura, palit ng carpets, palit ng kitchen at ibebenta ulit. wala kasing capital gains tax dito. although kung ang main bisnes mo is buy, renovate and sell house dapat mo pa rin i-declare as income ang profits. kaya ang teknik diyan, ipa-rent mo muna ang property for at least 6 months to a year bago mo ibenta para lumitaw na ang bisnes mo is renting properties, hindi buy and sell. this way hindi ka mata-tax sa kita.

    mas advisable pa rin na mag-setup ng company para ma-declare ang mga gastos for tax purposes. kahit husband and wife lang kayo, pwede naman mag-setup ng company.

    By Blogger Ka Uro, at 8:42 AM, July 17, 2006  

  • IMHO, i think there are shitloads of hidden expenses when buying a house. Like syempre bago house gusto mo some other stuff bago din. Small stuff accumulate din... like duvet covers, thermal curtains kasi dehins na bagay sa bagong color ng wall.

    depende sa tao depende sa lifestyle... My apprehension before is paano kung mawalan ako ng work paano ko babayaran ang annuity ? But a friend of mine in welly told me eh kahit naman nag rent ka tapos mawalan ka ng work eh kelangan mo rin magbayad ng rent diba ?

    For me i'm still saving up for downpayment.

    By Blogger Senorito<- Ako, at 9:44 AM, July 17, 2006  

  • senorito,
    things you buy to improve the house for example curtains, or repainting, etc, are recoverable. because any improvement you make affects the market value of the house. when it's time for you to sell, you can demand a higher price because of the improvements.

    may point yung friend mo. if you're renting for say $280/wk. add $120 more would probably already buy you a house. lalo na diyan sa welly mas mura ang properties. although you pay $400 weekly, you're actually only paying $120 for the house because if you don't have the house, you still have to pay $280 for rent anyway.

    tama yon, try to save for DP, but give it a time limit. i've known a few ganyan ang sinasabi nila, magipon daw for DP. more than 10 years past, di parin nakakabili ng bahay. the danger kasi kapag nakikita mong malaki ang savings mo sa bangko, mas napapagastos ka sa non-essentials. eg. new car, new electronic items, overseas travel, etc. ang isa pa, house prices continue to rise, so yung DP na iniipon nila hindi makahabol sa house prices. like today you might be looking for DP for $300k house. by the time na maipon mo ang pang DP, baka $400k na ang median ng house prices. i saw that happen in less than 12 months.

    if i were you, think seriously of buying a property there in welly. malaki ang potential na tataas pa ang prices diyan. higher rise than here in AKL. after 2 years at di ka pa nakabili ng house, look back at this comment. sabihin mo kung tama o mali ako.

    By Blogger Ka Uro, at 11:53 AM, July 17, 2006  

  • sampalataya ako sa diskarte mo KU. ang agam-agam ko lang bakit ba napakamahal ng bahay dito sa New Zealand. May matatagpuan ka mang mura nasa ilang ng lugal. Mas mura ang bahay at lupa sa Canada, pati upahan ng bahay. Kaya nga mas abdantahe dito na may sarili kang bahay kaysa mangupahan problema nga lang sobrang mahal bumili.
    Sa Australia naman may binibigay silang 7,000 dollars yata para sa first time home buyers. Wala ba noon dito sa New Zealand.

    By Blogger atoy, at 4:09 PM, July 17, 2006  

  • nasa mamahalin ka kasing siudad, fafa atoy. queenstown ba naman kasi pinili mo, eh mahal talaga diyan.
    adbantahe nga dito kung may bayad mo na ang bahay mo, kaya dapat talaga yan ang una mong gawing goal dito. mahirap naman na 65 years old tayo, nagbabayad pa rin tayo ng mortgage o umuupa.

    yun naman $7k sa aussie, totoo yon. iniisip din gawin dito yon, pero ang tendency kapag ginawa yon, lalo lang magtataasan ang mga presyo ng bahay dahil dadami ang buyers. at least dito sa atin walang capital gains tax. sa aussie, meron.

    By Blogger Ka Uro, at 4:24 PM, July 17, 2006  

  • K U,

    during our bangkok interview, may napanood ako sa plane na show about remodeling homes. isang 8th generation italian family sa US, yan ang family biz nila. they buy homes, redesign and redecorate, then flip it within 3 months. ang ganda ng returns nila. sila mismo ang gumagawa ng trabaho & designing, they just hire extra workers. 4 lang silang magkamag-anak, pero with 1 project's profits, pwede na silang di magtrabaho the rest of the year.

    your blog post really got me thinking about this... :)

    jay

    By Anonymous Anonymous, at 2:20 PM, July 18, 2006  

  • jay,
    madaming gumagawa ng ganon dito. kung ako nga lang marunong magkarpintero at may oras gagawin ko yon. imagine, makabenta ka lang ng 2 to 3 houses pwede nang di mag-work the rest of the year.

    tulad namin, may binili kaming 4 BR house na do-up last year. kaming dalawa ni esmi lang ang nagpintura at naglinis nung kalahati nung house. nung napagod na kami kumuha na kami ng mga painters. tapos pinapalit namin ang carpets para magmukhang bago. then pina-rentahan namin ng 6 months tapos binenta namin. kumita kami ng around $35k bawas na don lahat ng gastos. yung kita namin binayad namin sa remaining mortgage namin sa bahay. kaya ngayon, maliit na lang utang namin sa bahay. imagine kumita kami ng $35k in 6 months na wala man kaming inilabas na pera (dahil utang din lahat sa bank)!

    By Blogger Ka Uro, at 3:54 PM, July 18, 2006  

  • Hi Kau Uro, regarding sa last post mo, halimbawa, nakabili na ang isang family ng bahay, paano sya ulit makakautang para makabili ng isa pang bahay after 3 years. assuming ganon pa rin kita nung magasawa.

    By Anonymous Anonymous, at 6:34 PM, July 20, 2006  

  • hi anonymous,
    once nabayaran mo na ang at least 20% ng original na utang (tinatawag na equity), madali nang makabili uli ng another house, provided yung next house gagawin mong rental. dahil rental siya may income na papasok. kaya ang bank pauutangin ka kahit the same pa rin ang mga salary niyo.

    habang tumatagal kasi lumiliit ang utang mo sa original house kaya tumataas din equity mo. you can use your equity on your original house to borrow more money to buy other properties at hindi na kailangan ng down payment sa mga new properties. kaya nga nasabi ko na mas madali ang pagbili ng 2nd, 3rd, etc. laway na lang puhunan mo. then you have the properties rented and soon they'll pay for themselves and you end up with multiple properties.

    By Blogger Ka Uro, at 9:44 PM, July 20, 2006  

  • thanks ka uro, kakabili lang kasi namin ng bahay, using excel function cumprinc and cumipmt, e after 3 years, lumalabas, e 3% lang mababawas ang mababawas sa principal, karamihan sa interest pa lang, puede siguro kung madagdagan namin ang monthly amortisation, pero mahirap yata, i guess depende na rin sa income ng isang family. thanks anyway.

    By Anonymous Anonymous, at 4:35 PM, July 21, 2006  

  • K U,

    grabe napabilib mo ulit ako, idol! :) earning 35k just like that! of course may hard work and risks involved, but you were able to flip it at a good profit!

    parang masarap subukan, pero bukod sa pagpintura, ang alam ko lang is magpalit ng doorknob, bumbilya, starter and other mundane things.

    kung sakaling meron kang plans for "Ka Uro Home Restorers, Ltd.", sali ako jan ha! hehe

    jay

    By Anonymous Anonymous, at 3:04 AM, July 22, 2006  

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