Buying property from rural banks

An important element of the Philippines property market is 'acquired assets' or foreclosed properties. Many people will be familiar with the major banks in the Philippines which offer properties to investors. These banks have the advantage of a large number of clients and also far greater resources to promote the sale of their foreclosed properties. In contrast, there are some 751 small rural banks scattered across the country with maybe 1-5 branches. Most of these banks don't even have email or website capacities. So you might ask how these banks sell their properties. Well the answer is - with a great deal of difficulty. Some are more helpful than others. Some just don't want to sell. Some have useless lots, some have valuable properties. Some are prepared to offer deep discounts, others are waiting for the market to meet their prices. You might ask - how do you get in contact with so many rural banks? Well you don't need to. We have spoken to many of them. The attraction of these properties is that they are under-loved. These banks don't have the high-end customers that the major banks have. The discouragement by some banks suggests to me that they don't want to waste time with tire kickers, or they have some vested interest in retaining the properties. It's not all too clear. I've had rural bank managers trying to sell me other non-bank properties so they can make commission. When I was not interested, they were not interested in selling me bank assets. A lot of that type of thinking around.

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Andrew Sheldon www.sheldonthinks.com

Easier than ever to buy, live and retire abroad

I have long been thankful for this period in history in which we have been born into. Apart from the long period of economic prosperity, we have never been more free to travel, to work abroad and increasingly its becoming popular to live or retire abroad. Prosperity has not fallen upon everyone equally, but even still astute investors have more capacity than anyone to buy property abroad. But I don't have to tell most people that. When I go around the Philippines people tell me 'That property is owned by a Chinese man, that one by an English guy and his wife, that one by a German'. Its always a good sign that you are looking in a good area when foreigners think well enough of a place to buy. They have a global perspective, yet they chose to buy here.

Some people retire in the Philippines because they can't afford to retire comfortably in their own country. Some have no problem retiring comfortably in their own country, then just want to retire in the Philippines so they can retire early. The lifestyle is certainly a selling point. The people make it such a relaxing place to be. They are not uptight like aspirational Westerners. But for Westerners looking for a place to build a business I can think of no better place. Whether you goals are profit-seeking or altruistic, there are many opportunities to set up a business here. If you want to set up a business here I recommend doing a seminar or course here. Study real estate, doing business, etc. This is the best way to meet the local people. I would not advise going into business without a local partner. Try to avoid the bars and clubs, that's not where you meet real people.
If you are interested in learning more about living in the Philippines check out my blogs and by all means buy my report. The table of contents is available here. Its not all good news, but then life is managing your affairs to avoid such problems. I hope I have offered some insights in how to do that.
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Andrew Sheldon www.sheldonthinks.com

Cheapest houses in the Philippines

It would be no easy task finding the cheapest house in the Philippines, nor I dare say would you want to live there. So what would you want in a house? Well lets see if I can cover the basics:

1. Decent house
2. Remote from neighbours
3. Quiet
4. Cheap
5. Good proximity to places
How would you fancy this place? It is being sold by a bank for just P1 million, that's $US23,000. Its located in the Balete area of Batangas, near Lake Taal, however the place is occupied by the previous owner. The bank will evict them for you. The problem of course is that you will be making the current residents homeless. Well it might not be that bad. Maybe they have a job, but can't make their payments. But its not a strategy for solving proverty. Behind the house there are nice views of the mountains near Calamba. The Balete road will take you to the lake or the shopping malls of Lipa City. The problem with this property is the neighbours behind the property. Anyway not a bad property for <$US25,000. Low maintenance garden, so good for a rental.
It does not meet all my criteria for a house purchase, but not bad. The neighbours behind (down the hill) could be a little noisy.
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Andrew Sheldon www.sheldonthinks.com

Fears of property crisis overstated in Philippines

Suggestions by some that there is a risk of a property crisis in the Philippines are way off-ball. There has not been the crazy buying that we have seen in other markets, at least not with respect to domestic debt financing, and foreign banks don't readily lend to property purchases abroad. The Philippines has among the lowest mortgage debt to GDP ratios, so no great credit bust ahead. All that buying came from OFWs, balikbayan rich from offshore savings and investments. When the US looked peakish, they moved money to the Philippines, resulting in the strong currency last year. High oil prices, weaker outlook has taken the top of the market, but there will be another period of strong strong in the Philippines property market.

There will come a time when the Philippines does have a property crisis, but we have yet to really see the boom yet. It has started, but it has a long way to go. In another 15-20 years I dare say, after $10-15 bil of investment in resorts and condos by Chinese and Korean developers, you will see the top of the Philippines property market. I might be overstating the intensity of the investment. Labour productivity and the strong yuan are likely to make China very attractive for Chinese, but there are other considerations. Pollution in China, a desire for exotic locations, diversification, not to mention that the Philippine currency will be no slouch either. We are a long way yet from that. We are seeing an inflationary phase resulting from higher commodity prices and a slight shortage of skilled labour. This is a rest period, not a sustained slump. I must say that other Asian countries will perform well as well, but the Philippines I think will lead the ASEAN countries, though I think Indonesia will offer some interesting opportunities in a few years after it relaxes its regulations regarding foreign investment and visa restrictions. Malaysia and East Timor too should have some appeal.
It must be remembered that this economic cycle is a 'super-cycle', as was witnessed in the 1880s and the prior booms when the world made great headway. As long as there is cheap labour capacity I dont see it running out of steam. There will be cost impositions on the global economy like higher oil prices, environmental compliance, but these will create just temporary setbacks since these costs are absorbed.
As far as the current property weakness is concerned, it will not sink far because of the low debt exposure, but prices are set at the margin, and any surplus property sales will hurt the market, as well as creating an over-supply of property. There is also strong inflation which is pushing prices up. Unlike Western markets (excluding Japan) high debt is not pushing up interest repayments as bad.
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Andrew Sheldon www.sheldonthinks.com

How English-only speakers can find properties

I don't wish to convey that it would be easy to find Japanese foreclosed properties without speaking Japanese, but there are ways around the language barrier, apart from relying on others support. The use of the internet being a case in point.
The files you download are PDF so sometimes they can't be translated from the PDF file, but you can still translate from the 'green' reference file online.
You can cut & paste a piece of name and place it into Google, and search it. Its very easy to pick up the pattern because the format is all standardised right across Japan.
You take the English name for the station and place that into Hyperdia.com. Use your home town as the other reference point. You will know exactly where the station is, how long it will take you to get there, and how long it is from the closest regional centre. Great tools!

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Andrew Sheldon www.sheldonthinks.com

How to look for foreclosed property

I cover this in more detail in my ebook, but just to give people an idea of the steps I take to find foreclosed property.
1. Identify the values you want to achieve in your life
2. Concretise you values in the context of property values, eg. Quiet neighbourhood, close to station
2. Perform a strategy study of your area of interest, eg. Anywhere within say 1.5hrs of your place of work using all the values you have identified.
3. Buy a street directory (map) - there are think provincial map books which I use
4. Get on to the Bit Sikkou website and look for properties - a guide is in previous posts
5. Download the property specific details - focus on the price, layout and photos, as you can read more later. Even if its not what you want, the info can be useful, particularly for using the future bidding results.
6. Read up on the properties. At this point you need Japanese reading skills, or know someone with that skill.
6. Go and have a look at the specific properties you are interested in, as you will learn a lot more by going there. I personally would not approach the occupants of the place, but do take a discrete look, unless it looks empty (a lot of weeds in summer, or no snow prints in winter, etc), then take liberty.
7. Take care if you talk to neighbours. Its pretty embarrassing for Japanese people to concede that they are lost their home, so don't be surprised if the neighbours don't know. I personally prefer not to talk to them because they are prospective bidders. eg. They might have children looking for a home in the neighbourhood, and few people consider foreclosed property. Many neighbours will want to know what you are doing.

The approach in the Philippines is very different. But that's another story.
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Andrew Sheldon www.sheldonthinks.com

Can non-English speakers buy Japanese foreclosed property

My Japanese level is very basic, so I would have to say it would be very difficult to buy foreclosed property without Japanese assistance unless:
1. You use a local broker who specialise in such matters
2. You find a Japanese agent who speaks English. This could be expensive unless you filter out the properties you want him to analyse in detail. The instructions I provided for people to people to use the Bit Sikkou website are intended to help you get to this point.
3. You call upon the help of a Japanese friend with business-level English.

It might seem like a drag for them to do this for you, but I would suggest several novel approaches:
1. Turn it into an English lesson field trip - i.e.. Today we are going to go to the Japanese District court to investigate property. I can imagine them saying 'Really, sounds exciting'!
2. Turn it into a lesson in financial literacy. I am always talking about investments, and I really find the Japanese curious to learn, particularly the girls. The guys can be too proud to take advice from foreigners, particularly the older guys, whilst the younger guys tend to lack a strong sense of purpose. Older girls & boys (>30yo are better). I would often talk to Japanese young people about buying property in izakayas. For many of them its really an interesting way to learn English.
3. Appeal to what they value. If you say to a guy he can buy a foreclosed 18m2 studio to bang his girlfriend for P1mil, he will probably say:
(a) But I already spent that I jewellery and holidays for her, or
(b) I'm too shy
(c) But whose going to wash my sheets.
I think the girls are so much more fun to take on field trips, but be sure to stop at many coffee shops because they quickly lose interest.
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Andrew Sheldon www.sheldonthinks.com