Tuesday, July 18, 2006

Investing in Empty Lots in the Business Area

When a person talks about real estate investment, the immediate thing that comes into mind is that of buildings, townhouses, condominiums and large scale offices that will house the bigger corporate names of today. Business sectors will always have the space to offer for a new building to be put up, an investment that will certainly cost millions.

In the Philippines, wiser people buy land and do not really put up anything. It remains an empty lot without any improvements standing on it. So the question is, how does such an investment reap dividends?

The answer is think as an employee in a congested area. One business that may seem funny is that of converting the lot into a parking lot. It is not secret that parking spaces in this country has been slowly diminishing, and the main culprit is the continuous development of structures to house businesses. But hey, one after another, businesses are disintegrating due to losses and inability to continue. The result, a lot with a structure yes, but no occupants. What makes it worse, real estate taxes will eat up most of the profits, and unless a person would sell the property, he ends up paying for taxes for a useless asset every year.

Parking spaces require minimal effort. Cement it, paint some parking guides and put up a fence and have a person or two man the lot and walah, instant business. Imagine a parking lot that can house a total of 100 cars which pay a steady rate of Php40.00 a day for 20 days in a month, you have P80,000.00 or roughly in dollars, $1,500.00 a month. Not bad considering this is an assumption that all cars will just stay there for a couple of hours.

Basing it on experience, the need for parking is slowly deteriorating and if there is any good investment that will return a favorable return, this is one investment that needs consideration. The best way is to find lots that are in the business area. Trust it from someone who has a hard time looking for a good parking slot since 1996!