Dream House.
source: http://serbagunamarine.com
Yes it is the ultimate dream of every Pinoy to one day own a house or one day fully pay the house they live in and call it their own. Technically speaking your house is your asset but let me clarify something about it.
Lots of us have this mentality of what we call “na-ipundar”. OFWs working hard and wanting to have their own house call it their investment. Employees who has been working for long time to pay their PAG-IBIG housing loan call the house that “na-pundar” as an investment. A house maybe be an asset but it could or could not be an investment.
We should have a clear understanding what is an investment.
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
source: http://www.investopedia.com/
With that definition your house does not fall under investment. The very important factor that turns something into an investment is that it will generate income or appreciate in the future. Yes your land on which your house stands will surely appreciate in value but in order to realize income from it you have to sell your house. But for us our house is something we won’t part away because it is our shelter from the elements. If we do sell them where will you stay now.
I brought this idea to debunk the wrong concept that actually in away stop Pinoys from investing. Most Pinoy think that once they are able to own their own house they have already made an investment and thereby stop setting aside money for the real investment, that is the one’s that actually generate income.
Now to even make things clearer, if you’re fan of Robert Kiyosaki and his books you might have read that he even calls a house a liability.
Let’s face the fact that a house is like any other structure that will go through wear and tear. Thus in order to keep it standing and to make it last up to your great-grandchild you must spend a considerable sum of money to upkeep it. Thus in a way a house becomes a liability.
From time to time you need to buy new materials to keep rain water from leaking on rainy season. Or at times burglars tried to break in thus breaking a window or a door and you need to again fix and fortify your house to be safe.
So there you go. Again your house is not actually an investment unless it generates income(if you sell it in the future or if you rent it out). Also your house might be a liability for the expenses you need to incur to upkeep it or repairs needed due to damage may it be cause by nature or by humans. But definitely your house is an asset that you could call your own so once achieve owning it don’t stop setting aside money for the real investments.
good day sir may I ask one thing….we own a house and lot somewhere in pasig my husband and i decided to sell it out for us to have capital, we want to start a build and sell business… we will buy a small land and we will build a house that are only suitable for an OFW or ordinary employees who are capable to have it loan from Pag-ibig or banks…Is it advisable for us to push trough our plans….your advice is very important to us thank you very much in advance.
Good day Steph,
Again the article I posted is to point out and to take away the notion of common Pinoys that a house is an investment. The house you live in could not be considered as an investment if it does not generate an income unless part of your house is rented out which is income. But the question is why do you own a house in the first place? We own a house to protect us from the weather and to have a safe haven. So moving in house enough to serve your need for a safe place to rest and to safeguard your family is okay.
Now if the house you currently own in Pasig is a huge house and you feel that it does not really serve the purpose then your decision to move into a new one which will satisfy your basic need for a shelter and sell the big house to invest in a business that will generate income is a good idea. The thing now is you mentioned that you will loaned the money to purchase the new house and borrowing it to Pag-ibig would be a good leverage.
I hope this advice helps and also seek the advice of those you know who have dealt with Pag-ibig you might get good advice where to get a better house with cheaper payments spread over the maximum years Pag-ibig grants. Good luck to you and your husband and to the business you are planning to put up. You can share it and who knows you can help more people with this endeavor.
good day sir! thank you so much for your wonderful advice…we are pushing it through, and hopefully we can start our build and sell business before the end of this year..
Well keep you posted thank you very much and more power!