Living in the Philippines – Best "Passive" Businesses to Sta…
For those OFW’s and foreigners wishing to start a business, but not wishing to include themselves with the stress of a business involving day-to-day operations, employees, landlords, inventory, and so forth, there are several obtainable opportunities for foreigners living in the Philippines. Buy fixer upper similarities, enhance them, then rent or sell them.
1. Buy Fixer Upper similarities, enhance Them, Then Rent or Sell Them. This is a great business for those of you who have experience in your home country in buying, fixing up and renting or selling similarities. Over the past 10 years, a lot of people got involved in this kind of business in their homeland.
With the overall economic problems in the world the past associate of years, the Philippines has not been immune, and there are a lot of similarities in a state of disrepair, in addition as lot of distressed and foreclosed similarities.
2. Build An Apartelle. An Apartelle is an apartment building where all but one of the units are rented out long term, and you are left to function on a nightly or weekly basis, like a hotel – hence the combined name of apartelle. These are shared in the Philippines.
This business will require a heavier capital investment, in addition with the right character and by focusing in the more rural areas or smaller cities, you can construct a small 4 unit apartment building for Peso 3,000,000 – not counting cost of the land.
You would want to rent out 3 units on a long term rental basis, and keep one for short term rentals – for the many traveling salesmen that frequent the countryside. They like booking into such short term apartelle units instead of the much more expensive hotels in the area.
3. Condotels. I have not given this business my “thumbs up” in all instances. Condotels have been heavily touted and promoted the past several years and there have been many, many new condominiums built in Manila, and now already in Cebu and starting in Davao.
The problem is that although the developers offer great down payment terms (usually around 30% down financed over 3 years) and in some situations carry back the mortgage and finance for perhaps 10 years, the interest rates are incredibly high, and the divided of rentals with the management team runs around 50%/50%. There is also always a moderate monthly maintenance fee.
What looks like “cheap” entry point and cash flow out each month, in many situations simply becomes a bet on long term character appreciation – finding someone willing to pay you more for it than you paid for it.
This is because with all the inventory on hand, there is a surplus of condos which have been into hotel kind rental pools, but not enough visitors to rent them all.
consequently, what an investor thought would be a good positive cash cow, turns out to be a continuous negative cash flow – not what a new retiree to the Philippines is looking for to supplement his pension or annuity! This kind investment will only drain you pension.
However, having written all this, I HAVE FOUND the past several month two exceptional condotel investments which DO meet my criteria of creating good current rental income.
4. Farming. The likely cessation of the Agrarian Land Reform Program (CARP) will give the rural sector renewed confidence to invest in agricultural production capacity. CARP has held back investment in both production capacity in addition as farm acquisition. An end to CARP will average higher land prices since land will be valued for its higher income producing possible.
However, higher land prices are simply a “serendipity”, an additional value, to the kind of farming business I am writing about. I have found an extremely rare business opportunity, which will generate a great ROI (return on investment) and is completely passive. It has been structured by the developers (all foreigners) to be a one turnkey investment price. The price includes cost of the land, plus all
Clearing, planting, cultivation and harvesting for the first 5 years.
The business has been priced to fit the capital investment budget of the average foreigner retiree, and all landowners will be members of a cooperative which will proportion the farming equipment (tractors, equipment discarded, and others). The farm will be “farmed” by the developer’s management team
The hottest trend now is in organic farming, and in addition it is only in its beginning stage in the Philippines. There is one export product in particular which has caught my attention – the pili nut. The Philippines is the ONLY country with which produces and processes this nut in commercial quantity.
The current position of the pili is equivalent to that of the macadamia some 30 years ago. It has huge possible to develop into a major industry. They are in need not only in Hong Kong and Taiwan but also in Singapore, Korea and Austria.