"a million reasons
to buy a condo in the
Philippines."

CondoMillion.com ®
Newsletter - Q4, 2005
 

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1. President's Message
2. Condo of the Month
3. New Condo Towers
4. Article 1 - Condos at 25% of their value?
5. News
6. Contacts
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PRESIDENT'S MESSAGE

Welcome to our Quarter 4, 2005 Newsletter. Well it seems the Philippines presidential crisis may be running out of steam. Whatever the outcome, the economy is stable and foreign investment still on a rise. We have seen continual growth in the residential condominium market, particularly in Makati City, Fort Bonifacio and Ortigas City. When it comes time for you to purchase your condominium, we will be here waiting to assist you.

"There's a million reasons to buy a condo in the Philippines!" Sante Delle-Vergini President & CEO CondoMillion.com

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CONDO OF THE MONTH

2 bed/bath, fully renovated/furnished, 65sqm condo, Makati City - 3.9M Pesos (cash). Payment terms available.



LOCATED 50 METERS TO BURGOS STREET! Older unit, but fully renovated and furnished, so don't pay 6-7M Pesos or more for a new unit in the same location! 2 bedrooms, 2 bathrooms, 2 balconies, corner unit, only 4 units on this floor (level 21). 2 telephone connections, cable TV and internet already connected. Master bedroom balcony has views over Makati City, and living room balcony has views to Laguna Bay and Ortigas. Deluxe curtains and furnishings have been added since these pictures. Brand name refrigerator, flat screen TV, DVD, electric stove, buffet, queen size bed, sofa lounge, sofa and lamp tables, 3 air cons, master bedroom with own private bathroom which includes large bathtub, second bathroom with glass-enclosed shower, cabinets in all bedrooms. See "Billboards" and "Mascara" nightclubs, along with the rest of Burgos Street, all from your 21st storey balcony off the living room.

The only older unit available in Makati where you can elect to pay over 12 months, interest free, while you still live in it or rent it out. No one can match this offer.

Payment Options: 4.0M cash or 4.5M payment terms (30% downpayment and 70% over 12 months). Move in after the downpayment. Your choice! Hurry, this condo won't last!

For more details, CLICK HERE.

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NEW CONDO TOWERS

This section links to tower developments listed recently on our website:

N/A

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ARTICLES

Article 1 - Condos at 25% of their value?

Every wondered how some people can buy condominiums at 25% of the value price? If this just sparked your interest, then you're thinking along the same lines as a growing number of overseas investors, who are snapping up hot bargains all over the Philippines.

Before we tell you how they do it, we need to lay some ground work. It doesn't take a genius to know that in the Philippines, there are many asset-rich people, but with very little or no cash flow. And banks being the rigid institutions they often are, make it nearly impossible for people with decent assets to get a loan against their properties, and even when they do, the interest rate over here can be as high as 18-20%.

So many people who need to make a living, look at other options for assistance, even if it means risking their property, which is only an added financial strain (association fees, taxes etc.).

Ok so here's how it works. Overseas lenders, agree to borrow the property owner an amount of money, usually around 25% of the true value of that property, including any fees to the broker.

The broker handles the contracts, which basically include stipulations on the amount paid, the timeframe to pay back, the interest charged every month, any restrictions to the agreement, and penalties for breaking the agreement.

Most contracts go something like this:

1.  Property owner has condominium worth 10 Million Pesos for example.
2.  He/she wants to borrow 2.5M Pesos against the property (thus 25%).
3.  Broker creates contract, which stipulates that the principal must be paid in full,
     in three months for example.
4.  Interest on the principal is charged at 10% per month, so 250,000 pesos per
     month.
5.  If the principal is not paid within 3 months, or the interest during any month, the
     owner forfeits the property, and it is eventually titled to the lender.

It is worth noting than from our information sources, 90% of all owners do not pay the loan back, or the interest for that matter, and therefore surrender their properties.

At the contract signing, the owner surrenders their title, all paperwork, and signs a Deed of Sale based on the conditions in the loan contract. As added security, the owner signs a Special Power of Attorney giving the lender full rights to the property, again based on the conditions of the loan contract.

The broker does their homework, to make sure that all the paperwork is in order, that there are no mortgages over the property, that taxes have been paid (sometimes the owner can't afford some of the back real estate taxes, which are not usually that high), and that no other claims over the property exist. There is also a clause in the contract that any false or incorrect information supplied by the owner results in forfeiting the property, so the contract is very tight. Finally, the properties are usually furnished and no person living there, so some contracts allow the lender to use the condo in the meantime until the conclusion of the contract.

The broker handles the transaction, collection of interest/principal, and payments to the lender, minus their fees.

In the event that the property is forfeited, the lender then arranges for the broker to title the property in the lender's name. This involves paying the capital gains tax, as obviously the former owner cannot afford to pay. This must be performed before the title can be transferred.

We have see recent examples of 1 Million Pesos being borrowed against an 8 Million Pesos luxury condo in Rockwell, 850K Pesos borrowed against a 200sqm condo in Greenhills (Metro Manila), and 500K Pesos being borrowed against a 60sqm condo near Greenbelt. We even know of someone who borrowed 2 Million Pesos, and ended up forfeiting his 2000sqm piece of land in Baguio (exclusive South Drive location), worth an estimated 15 Million Pesos. All these owners did not pay the principal by the due date, and all the above properties have since had their titles transferred to the lender.

Foreign investors are now either investing in this scheme on a Transaction basis, or into a Fund account that sits in waiting for the right condo to come up, given their special conditions (condo type, location, contract conditions etc.). There are advantages and disadvantages to both systems.

The advantage of Transaction investing is that your money is invested at the time the right property comes up that matches your criteria. The disadvantage is that often that this type of investor is not the first to make a genuine offer for a loan, and often misses out.

The advantage of investing in a Fund setup, or basically money in advance, is that the broker has a lot more bargaining power and is first in line with an offer that matches your criteria, as the funds are already available. This disadvantage of course is that your funds are just sitting in waiting for the right condo, at the right time. However, this is no different than money sitting in a bank, except it won't earn interest until a condo/owner is found that matches your criteria.

And what better return on investment can you get than buying (if the property is transferred to you) something at 25% of the value, then renting it out at 10%? Basically, that means paying off your investment in 2 years, not including any interest you made during the contract phase, or the free use of the condo.

So if you're an aggressive investor, and want to get a bargain on condos in the Philippines, this is probably the best way to do it. The banks have been getting away with it for years, only in a different way.

For more information, please email sales@condomillion.com.

CondoMillion.com does not guarantee this service. An independent broker can advise you of the process and requirements to qualify. We can put you in touch with these lender brokers. CondoMillion.com can however act as your agent in dealing with any brokers of this service. Our fee for acting as your agent in this type of transaction is 250,000 Pesos, paid in advance.

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NEWS

No doubt for CondoMillion's future focus.

Today, President & CEO of CondoMillion.com, Mr. Sante Delle-Vergini, confirmed that the company would continue to focus 100% on the sale of condominiums in the Philippines, with heavy focus on international buyers.

"We have always been, and will continue to be, the only real estate company in the Philippines that deals only in condominium sales." said Mr. Delle-Vergini. "Further, we are a business owned and operated by foreigners and Filipinos. Our business model is simple. Eat, sleep and breathe condominiums."

For more news, please visit our News section.

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CONTACTS

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