Top Benefits of Investing in RFO Properties for Your Financial Growth

Investing in real estate has always been a strategic move for individuals seeking to enhance their financial portfolio and achieve long-term financial security. Among the various real estate investment options, Ready-For-Occupancy (RFO) properties stand out as a promising choice.

This blog explores the top benefits of investing in RFO properties for your financial growth, highlighting how this investment can help you achieve your financial objectives through careful planning and strategic decision-making.

Understanding RFO Properties

RFO properties, or Ready-For-Occupancy properties, are real estate units that are fully constructed and ready for immediate use. These can include RFO condo units, houses, or even commercial spaces. Unlike pre selling units, which are sold before construction is completed, RFO units offer the advantage of being able to move in right away or start generating rental income immediately.

The economy at hand and the real estate market

The Philippine economy (or any economy) and the real estate market are inseparable. Often, the health of the economy and real estate are correlated. In fact, one of the crucial sectors that reflects the strength of an economy is the housing market.

For instance, people are more inclined to purchase new homes when the economy is booming. Conversely, a downturn in the economy can turn buyers away from buying new homes and opt for the secondary market. But how does each of the economic indicators actually influence a property buyer’s decision?

Inflation

More money in the market tells establishments that people have greater buying power. Along with the demand, prices of goods in the market also increase. And housing costs have also increased with the rise in prices of many commodities. In fact, in the Philippine Statistics Authorities’ latest report, Philippine inflation climbed to 7.7% last October.

During this time when commodities are at their all-time high, is it still worthwhile to invest in ready-for-occupancy properties? The short answer is a resounding YES. Remember that inflation is the measure of prices in the entire economy. This means that whatever you buy, expect it to be more expensive than usual.

However, real estate properties are some of the best places to put your money during inflation. Real estate, such as RFO properties, has intrinsic value. This means that investing in RFOs is like putting money in a sure bet investment vehicle.

Aside from being a strong hedge against inflation, RFOs can also be a good source of immediate passive income. This way, property owners get the double benefit of value appreciation and passive revenue from an RFO property.

High interests

The effect of interest rates on real estate properties is not limited to bank borrowing rates to finance a home. When only looking at mortgage rates, one may be discouraged from applying for home loans. However, high interests also change the dynamics at a macro level.

When interests are high, people are less likely to take out new loans in the short run. When this becomes a market-wide phenomenon, it translates to lower demand for housing properties. Eventually, real estate prices would adjust accordingly.

In other words, high interests make buying RFO properties more expensive in the short run. However, this also means less competition on the properties that one is targeting. Unlike pre-selling properties, RFOs may be limited, and finding the perfect property is more challenging. It is even more frustrating to compete with people for the same property.

But when interests are high, competition is not a problem. Since borrowing money to finance properties is more costly, there is less competition for RFOs. That said, it is the best time to buy that property you have been eyeing for so long, provided that you have the necessary funds on hand.

With the slowdown in demand, real estate prices may also see a drop when interests are high. As a result, this frees up more properties and offers homebuyers more RFO property selections.

Growing economy

Inflation is high, and so are interest rates. Everywhere one turns now feels like a challenging time for property buyers. In fact, Colliers Philippines predicts another increase in mortgage rates in its third-quarter report this 2022. This holds true, especially after the Bangko Sentral announced another 75 base points increase in its benchmark interest rates this November.

Despite this, the Philippine economy is still on a growth trajectory. This means that the economy is still relatively familiar territory for investors to make confident buying decisions. Furthermore, real properties remain one of the most robust hedges against inflation. And with much uncertainty ahead, real estate is one thing that always comes out winning.

What are the advantages of choosing RFO properties?

Given the benefits of buying RFO properties with the current economic conditions, here are more reasons why these properties work for everybody.

Immediate Occupancy and Utilization

One of the most significant advantages of investing in RFO properties is the immediate occupancy and utilization they offer. When you purchase a ready-for-occupancy unit or home, you can either move in right away or rent it out to generate rental income, providing you with a quick financial return on your investment. This is in stark contrast to pre-selling properties, where you often have to wait months or even years before the property is ready for use.

Achieving Financial Security

Investing in RFO properties is a viable pathway to achieving financial security. Real estate is a tangible asset that typically appreciates over time, offering a sense of stability and growth potential that is appealing to investors. By investing in RFO units, you are adding a solid financial asset to your portfolio, which can contribute to long-term financial stability and security.

Diversifying Your Financial Assets

Diversification is a key strategy in financial planning, and real estate properties offer an excellent way to diversify your financial assets. By investing in RFO properties, you are spreading your investment across different asset types, reducing risk, and potentially increasing your overall return on investment. This diversification can be especially beneficial during economic downturns, as real estate often remains a stable investment compared to more volatile financial markets.

Rental Income Potential

One of the most attractive aspects of RFO properties is their rental income potential. By buying RFO condos and renting them out, you can establish a steady stream of passive income.

This rental income can cover your living expenses, contribute to your retirement savings, or be reinvested to further grow your financial assets. Additionally, rental properties can provide tax advantages that can further enhance your financial growth.

Leveraging Real Estate Companies

When investing in RFO properties, partnering with reputable real estate companies can enhance your investment experience. These companies often have extensive knowledge of the market and can guide you in selecting the best properties that align with your financial objectives. They can also offer valuable services, such as property management, to help you maximize the rental income potential of your RFO units.

Advantages Over Pre Selling Properties

While pre selling properties can offer lower initial purchase prices, they come with the uncertainty of delayed completion and potential changes in market conditions. In contrast, RFO properties provide certainty and immediate utility. By investing in RFO properties, you eliminate the waiting period and the uncertainties associated with pre selling units, allowing you to start benefiting from your investment right away.

Enhancing Retirement Savings

Investing in RFO properties can play a crucial role in enhancing your retirement savings. As real estate appreciates over time, your investment’s value is likely to increase, providing you with a substantial asset to draw upon during retirement. Additionally, the rental income generated from RFO units can serve as a reliable source of income, supplementing other retirement savings and contributing to a comfortable retirement lifestyle.

Achieving Your Financial Objectives Through Careful Planning

To maximize the benefits of investing in RFO properties, careful planning is essential. Consider your financial objectives, such as achieving financial security, generating rental income, or enhancing your retirement savings. Evaluate the location, market conditions, and potential growth of the RFO properties you are interested in. By aligning your investment strategy with your financial goals, you can effectively use RFO properties to build a robust and diverse financial portfolio.

Mitigating Risks and Ensuring Financial Stability

While investing in RFO properties offers numerous benefits, it’s essential to be mindful of potential risks. Market conditions can fluctuate, and property values can be affected by economic changes. However, with careful planning and strategic investment choices, these risks can be mitigated. Diversifying your real estate investments and staying informed about market trends can help ensure financial stability and growth.

The Role of Human Services in Real Estate Investment

Human services play a vital role in the real estate investment process. Whether it’s working with real estate agents, property managers, or financial advisors, human services provide the necessary support and expertise to make informed investment decisions. These professionals can offer insights into market trends, assist with property management, and help you navigate the complexities of real estate investment, ensuring that your investment in RFO properties is successful and aligned with your financial objectives.

Investing in RFO properties provides benefits for those looking to grow their financial assets and achieve long-term financial security. From immediate occupancy and rental income potential to enhancing retirement savings and achieving financial objectives through careful planning, RFO properties offer a strategic and reliable investment opportunity. By leveraging the expertise of real estate companies and human services, you can make informed decisions and maximize the potential of your RFO property investments.

As you consider your investment options, remember that RFO properties can be a cornerstone of a diverse and successful financial portfolio.