IN THE seventh installment of our article, we discussed some tips to guide first-time homeowners planning to build their houses and guides to look for in buying your second home. Continuing where we left of:

2. Buy First and then Sell Later. This is an ideal strategy when the buyer has available cash or financing in acquiring the second home. Buying a new home first and then selling the old home later seems a logical choice but the drawback is that it would put a lot of strain on your finances.

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In our experience in real estate, there are a lot of good properties for sale but it would be difficult to get the best price when selling your own property.

The thing to consider in this situation, is that the money used to purchase the second home should not be borrowed money, or if it is, the interest rate for such credit availed of is reasonable enough and the paying period is long enough to be able to dispose of the old property. If the time between the buying and selling is more than one year, then the changing economic conditions might affect the real estate prices.

If you plan to buy on installment, then you have to program the sale of the old house so that the proceeds of such sale shall be used for the payment of the installments on the purchase of the new home.

Remember that in most installment sale, a down payment is a requirement. This means that you have to prepare the amount for the initial investment and be able to come up with the payment of the monthly amortization while the old house is not yet sold.

3. Buy a New House but Retaining the Old One. If possible, you may not even have to sell your old home and be able to buy the upgraded home that you need. This is the situation wherein most prudent real estate investors would want to find themselves in.

The new home purchased will serve as the new residence of the family, which in real estate investment, is considered as a "dead investment." However, the old house will be the asset that will serve as an investment vehicle primarily because you can convert the old house into a rental property and use the rent to pay for the monthly amortization of the loan availed of, or if the new house was paid in cash, then the rental proceeds can be used as savings to be used for future investments.

4. Exchanging (or Swapping) the Old House with a New One. Although this is a rare and most difficult strategy, nonetheless, this is still an option to consider. Most likely the services of a reliable and long-time broker will have to be availed of in this situation.

The idea is for you or your broker to look for a property owner who is willing to exchange or swap properties.

Any differences in property values or agreed prices and settlement for the exchange will have to be agreed upon by the contracting parties.

Buying your second home can be more complicated than being a first-time home buyer. If the strategy is to sell the old home to finance the new purchase, you have various options to choose from. Each of the above-mentioned strategies have their advantages and disadvantages. Weigh each of them, and then come up with the most advantageous option based on your real estate needs, desires and what you can realty afford. There is no substitute for being careful in your choices and your ultimate decision.

Situations that make real estate buying difficult

Who said buying or investing in real estate is an easy task? Finding the right home for you and your family requires meticulous planning, searching, executing and implementing. In finding the ideal purchase, you will be in a precarious situation where you still cannot find the right one, despite weeks (or even months) of searching for the right home.

Searching for the right property and getting the right one often times does not come easy.

To get over with, you tend to make abrupt and immediate decision at the expense of not being able to get the ideal buy that you are looking for. This is one of the most common pitfalls when buying real estate property.

There are a thousand and one situations to avoid in real estate investment ventures. The important thing to keep in mind is to be able to identify clearly and explicitly these specific situations:

1. You Do Not Have a Full Grasp of the Situation. A real estate transaction no matter how we look at it, is a complex process.. Real estate property is a technical product, as such we have to find out its physical features as well as legal dimensions among many others.

Although you are not expected to be an expert, you have to understand all of these things to fully comprehend and grasp the nuances of the real estate transaction.

For example, if you do not understand the various parts of a house, then you should research, read literature or ask a house planner or architect. If you do not understand the legal jargon that goes with the transaction, then get explanation or advise from a legal counsel or a knowledgeable broker.

The important thing to remember is to understand the situation that you are getting into.

Avoid the situation however of being so obsessed in learning all the details and in the process mess up the whole scenario or end up missing all of the important aspects of the transaction. Moderation is the word, which means that you have to be technically and legally versed so when the opportunity comes along, you are well prepared and fully equipped to nail the real estate deal of your life, (to be continued)


(The writer is a Certified Public Accountant and the president of the Baguio Realtors Board, Inc. Apart from being a Real Estate Practitioner as a Real Estate Broker and Educator, Lecturer and Resource Person; he is likewise a Business Management/NGO/Cooperative Consultant, Project Development Consultant and Financial Advisor/Loan Broker. For comments and more information on Real Estate Updates and Studies, you may get in touch with him at Unit 303, 3/F, Otek Square, Otek Street, Baguio City, Tel. Nos. 304-3371 or 442-1176, cellular 0909-404-8863 or email: or