Investing in the Philippines? Don’t Forget Your Due Diligence
Investing overseas can be tricky business full of unknowns. You suddenly feel the need, and the social pressure, to start thinking about your future. There are too many options out there, you have no idea on what kind of things you should be looking for and everyone wants to give an opinion. Don´t panic. Investment, as well as relationships, takes some time and you need to be very cautious.
Real estate is usually the kind of investment in which people feel safer and is also one of the top investments of 2014. Many who have planned on retiring in paradise choose the Philippines as a destination, because natural beauty here is absolutely stunning and just about what anyone would like to wake up and see every day for the rest of their lives. And, there are some bargains.
If you have been researching about real estate in the Philippines, you have probably also seen some warnings regarding due diligence. Don´t worry. Due diligence in the Philippines is a safety measure that every investor in the world should consider, regardless of the type of investment.
Purchasing real estate always carries risk, but fortunately it can be avoided with proper and accurate information and evidence. Due diligence should be part of any real estate business —whether it’s a single family home that you want for yourself or a big apartment building that you are intending to purchase for future income. Get the facts, verify them, and invest smart.
Local private investigators in Manila and Cebu always recommend to make sure you do your due diligence when buying property, but what does that actually mean? What is due diligence?
The due diligence period in a real estate contract is defined as a buyer´s obligation to thoroughly investigate a property within a specified time to determine whether the buyer remains satisfied with the property before finalizing the purchase. If the buyer´s investigation uncovers defects with the property, the buyer may either propose a solution to the seller with an addendum to the real estate contract or cancel the purchase, according to the terms of the real estate contract.
A property may have liens, pending court cases, problems with the title, or pending property tax payments that the buyer would have to pay for. There could be illegal occupants in this land or you might even find out that the real owner is not the person who´s trying to sell you the property, or that the property is not for sale at all. If you’re investing overseas, you better be sure the property has a clean title and there are no political or other problems you could face. A professional inspection would also be necessary to discard any physical defects that could be too costly to fix.
So basically due diligence on real estate means reviewing property documents, doing public searches, checking the country´s laws and regulations to verify everything is legal and you have permission to develop whatever you´re planning to, walking the property, etc. Professional investigators can even visit and inspect the property, provide you with detailed photos, neighbor testimony and more. Essentially doing your homework for the property before you actually make the purchase.
Doing this homework in the Philippines can get complicated. Property scams are very well covered. Philippines investigators can use their skills and knowledge of the local laws, authorities, etc to minimize fraud risk, do some local background check in the Philippines if necessary and uncover fraud.
Having proper information will save an investor a lot of money, and a lot of time and potential problems. Learning the hard way can be a costly mistake, so verify before paying someone in a foreign country. Building codes, environmental and zoning are different. Get the facts. Purchasing buildings is farther more complicated and should be investigated with particular thoroughness.
Informed decisions are key to a good planning of your future. Do not trust a document if you do not really know where it comes from. Before putting your money in the Philippines, do your homework and hire a professional to help you obtain and verify the facts, and invest wisely!
© 2014 Philippine PI
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