How to Make Money Out of Your 2nd House in Cavite

a couple with their new home

Cavite is a great place to buy not only your primary residence but also a second property. If you have extra cash to spare, investing it in real estate is better than idly keeping it in a bank. There are many ways to grow your money out a sought-after property, like the Lancaster Catherine model house, but only some methods may work for you.

Here are the best ideas you should consider:

Be a Landlord

Renting your second house out offers a stable source of income. Considering that Cavite’s population is growing through migration, it’s easy to find a tenant and avoid long-term vacancies. If you need to apply for financing to buy the property, you can use the rent to cover your mortgage payment. In the end, you may earn extra cash per month and still own the house.

Being a landlord, however, comes with many responsibilities. You’ll have to take care of repairs except when the problem is caused by the tenant. You’ll need to pay for tax and any fee the subdivision charges with general maintenance.

Also, you need excellent property management skills to spot a potentially problematic tenant when you talk to one. After all, it’s only good business if your tenant doesn’t cause you any headache.

Resell via the Rent-to-Own Means

front door of a house

A rent-to-own property reselling method is attractive to cash-strapped buyers who can’t qualify for traditional housing loans. As the owner, you can agree with a renter to buy the house over a specified period. You’ll collect a higher rental payment to cover the buyer’s down payment until the latter can secure a mortgage. Normally, a lender in the Philippines is only willing to loan anywhere 10% and 20% of the property’s price.

If the buyer backs out of the agreement, you won’t be obligated to refund anything. The extra payment is yours as an incentive for not accommodating any other buyer while your property is being rented.

This scheme benefits you in many ways. You can turn a profit from the sale, earning rental return, and keeping the deposit whether the deal completes or not.

The only risk you’ll have to take is that the price of your property is fixed once the contract is signed. That means you won’t benefit from future land value increases. On the contrary, the buyer will absorb the losses should the land value depreciate upon the actual sale.

Bank on Land Appreciation

Compared to a condominium, a house is the better real estate investment because it includes greater land area. Remember that only the land appreciates while the building depreciates. That is why the price of a property is chiefly based on its land value. Property equity only becomes liquid upon resale, but it’s a source of passive wealth if you don’t need extra income monthly.

Although modern schools of thought go against the “land content ratio” philosophy since condos have become money-making assets in other ways, there’s no denying that houses remain a safer bet. In the event of a housing crisis, a house generally retains its value better than a condo unit.

Buying a second property in Cavite isn’t without caveats, but its worth consideration. Assess your personal situation and calculate the risk of each method to make an informed decision.