My first build an sell experience

In my earlier post I talked about how I made profit out of a housing loan I took from the state-run Pag-IBIG Fund. It was not planned. I bought the house with no intentions of selling it for profit in the future. But things worked to my advantage and I was inspired to duplicate the feat or even top it.

Venturing into a build-and-sell affair gave me mixed emotions. I was excited, enthusiastic, nervous, and uncertain at the same time. The one question that really bothered me was: what if I wouldn’t find takers or renters for the house, will I be able to afford the monthly amortization?

With only my monthly salary certain and that money I made from the sale of my first house, I singly proceeded with the plan in July 2000. I took a P500,000.00 house and lot package from a subdivision, paid the 20% down payment and signed a contract to sell that said I have to pay the remaining balance for five years at 16% per annum diminishing interest.

The house I got was a 45 sq. m. complete one-storey house in a 170 sq. m. corner lot. It had two bedrooms, tiled floors, a toilet, and a kitchen. During its construction, I would visit every other day after work to make sure that the workers use the right materials and to also infuse my inputs. It took four months for the house to finish and I participated in choosing the materials, height and design of the ceiling, what colors of paint to use, and tile texture and design.

When the house was finished and the keys were turned-over to me, I began with the improvements. It took another two months for the 15 sq.m. kitchen extension, perimeter fence, gate, and other ground improvements to finish. I have to admit, the house grew on me. The reason could be that I have spent a lot of time and effort overseeing its construction. There was a point that I wanted to move in there and forget about the build-and-sell thing.

Finally, I overcame myself and began to open it for rent. Fortunately and very quickly, I got a renter for my house. I had it rented for P4,000.00 a month, which covered almost 50% of my monthly amortization to the subdivision. After a year and six months, the renter wanted to buy the house from me at the price of P800,000.00 using his membership with Pag-IBIG. Of course, I readily agreed.

How I made money using my Pag-IBIG Fund Entitlement

In early 1998, I was 27, single and only a contractual employee then when I thought of buying a low cost house using my membership with Pag-IBIG Fund. It was my first time to acquire a property and I was totally inexperienced in that regard. As a contractual employee, I was not receiving a substantial salary but I still had room for a P1,700.00 monthly amortization. And so after weighing the pros and cons (the former by far outweighed the latter), I took the risk and proceeded to getting a loan. The house I got was a 30 sq. m. house on a 60 sq. m. lot priced at P180,000.00. It was a core house, which means no ceiling, no partitions and no painting. Many people refer to it as a 'matchbox' house. All it had were basic amenities like a kitchen and a toilet. 

As soon as the power and water supply were made available, I started introducing some improvements to the house using a portion of my savings. First, I extended one area of the house to accommodate a kitchen and a dining area. Then, I had the roof and the house painted. The house was ready for occupancy and I was ready to move in. But then I realized that there was really no need for me to move in. I was staying then with co-employees in a convenient staff house provided by the company. And so I decided to have the house rented for P1,500.00 a month in the months that followed.

In mid 1999, with my absorption as a regular employee of my company and with the rental income still coming in, I decided to buy the adjacent 60 sq. m. corner lot from the owner of the subdivision on an installment basis. The adjacent lot cost P72,000.00 payable in one year at 16% interest. The one year payment for the extra lot ate up a big chunk of my monthly salary and my bonuses and it meant a lot of sacrifices on my part.

In the summer of 2000, just as the payment for the adjacent lot was completed, the family that was renting my house decided to buy the property from me including the adjacent lot that I bought. Wow, I sold my very first house! I made a considerable profit from the sale and I felt really good reaping the fruit of my sacrifices! This was when the idea of build and sell or build then sell hit me big time. I wanted to do it again.