Market Rent Determination in Property Management

Pricing a rental property is an important part in investing in real estate. Setting the price too high can mean your property will sits vacant and more vacancy losses in the spreadsheet. Or you could undercut your potential rental income, leaving money on the table.

Whether you currently own rental real estate or aspire to invest in rental properties, you need to have knowledge on how to determine the fair market rent for a rental property and how valuation helps.

In the Philippines, there is a Rental Act that serve as guide in the rental transactions, however it covers only the P10,000 monthly rental property and below. Thus, the rental transaction between parties are important.

Based on the definition of the Philippine Valuation Standard, market rent is the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lessee terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

In the nutshell, market rents are determined by the property’s size, type, and location. For example, a two-bedroom fair market rent in a Cebu City subdivision could be P60,000, while it could be P20,000 in a less expensive district area. Market rent differs from contract rent which is the stated amount in a contract between parties. Market rent always play higher than the contract rent, however it is not always be the case.

How is market rent determined? There are different factors such as property type, unit size, location of the property and the condition of the property. There are secondary data that can be used online to compare rental listings based on size and locations such as Carousel, Property24, Lamudi and other websites.

Using the lenses of a property manager, market rent determination can also be aligned with the goal of the property owner for profitability and be on top of the competition. Thus, the need for the regular valuation of the property is a must in decision making of the top management.

Fair Market rent can also be raised through renovation or total reconstruction of the property based on its highest and based use. Renovation of the building is the common method to achieve competitive and modern status. Determining the current status of different component of the building is the first step in conducting renovation and repair of a building. A rehabilitated and modernized structures is a passport to any proposal for price increases and profitability.

More so, renovation will bring additional value to the property. The life span will be extended and will result in a higher valuation due to introduction of additional improvements.

Appraisers should learn to master the numbers in providing assistance to the building owners, property managers and tenants. Anyway, numbers is the appraisers tool in reaching a credible and knowledgeable appraisal.

 

Gus Agosto Speaks at Real Estate International Conference

Philippine Association of Real Estate Board Vice President for the Visayas, Gus Agosto, served as one of the panelists in a forum during the recently concluded ASEAN Real Estate Networking Alliance Annual Convention and Exhibition 2019 held at Novotel Hotel, Yangon, Myanmar from 23-24 August, 2019.

Together with other resource speakers, Gus Agosto shared his thoughts on the topic entitled “What I want from ARENA?”

The Asian Development Consultant stresses on the aspect of organization that “ARENA could explore more in providing business opportunities to the members and by institutionalizing it through formation of committees and mechanisms. The said body will explore various opportunities in member association countries, provide privileges and incentives to ARENA members. This will foster cooperation and stronger ties among individuals in the alliance.”

The panel forum was headed by ARENA Co-founder Atty. Moby Arquiza 
and includes speakers from Malaysia, Singapore and Myanmar.

The theme of this year ARENA Annual Convention and Exhibition was “Embracing technology and networking”, and featured discussions on real estate, investment, digital technology and best practices in real estate. The participants of the convention include real estate practitioners from Cambodia, Thailand, Vietnam, Indonesia, Singapore, Malaysia, Philippines, Myanmar, Mongolia, and United States of America.

 

Attended by more than 800 delegates, the ARENA Annual Convention and Exhibition 2019 served as a platform where international and Myanmar’s real estate entrepreneurs, investors, policy makers, and stakeholders met, connected and discussed updates, issues and opportunities in the real estate sector. The exhibition was also expected to provide benefits in developing a strong real estate sector in the ASEAN economic zone through cooperation with government agencies, real estate practitioners, developers and construction contractors.

 

Video credit to Dr. Sopon Pornchochai

Valuing Our Story: The history of AA RealtyPro Solutions

AA RealtyPro Solutions was established on August 2, 2012.  Its founder Augusto B. Agosto, has led the organization from its humble beginning to the present.

AA RealtyPro Solutions started as full real estate service firm. It was an endeavor initiated by the founder as a testament for his many years of experience in real estate. Upon his passing the Professional Regulation Commission (PRC) Licensure Examination, Mr. Agosto served as the Managing Partner of a national appraisal company for its Cebu Branch and then attempted to form a branch of another Manila based appraisal company serving banks and private companies which did not last long.

On July 2014, it expanded its services to include real estate appraisal. The first corporate clients were General Milling Corporation and Classical Geometry Export Corporation. Its historical leap started when the biggest cooperative in the Visayas and Mindanao, Cebu CFI Community Cooperative, acquired its services.

On November 2014, it started in court litigation appraisal when Mr. Agosto was appointed by the Regional Trial Court of Lapu-Lapu City as Appraisal Commissioner. Then, it rendered appraisal services to different schools and universities in the Province of Cebu such as University of the Philippines-Cebu Campus, Southwestern University, Cleaverlearn Inc., University of Southern Philippines, and Bantayan Southern Institute.

On September 2017, AA RealtyPro Solutions has been hired to appraise an apartment building in Sampaloc, Manila by GSE Law Firm, a respected law firm in the country. Then on February 2018, AA RealtyPro Solutions was commissioned by Vivant Power Corporation to appraise a power plant in La Union. Since then it has appraised commercial, residential, and industrial properties in Luzon and the National Capital Region (NCR).

AA RealtyPro is recognized as one of the growing appraisal business firms in the country today. It has achieved this unrivaled growth and reputation for excellence due to its successful completion of a thousand or more valuation and other related services.

In addition to leading what is now one of the country’s respected real estate appraisal firms, Mr. Agosto was known for his training courses, which helped to establish him as one of the leading industry experts in appraisal business.  He also continues to learn and upgrade knowledge from various institution here in the country and abroad. Last August 2018, the Complex Properties Real Estate Valuation seminar in Bangkok, Thailand helped to widen his knowledge on the different approaches in valuation.

AA RealtyPro Solutions is proud of its rich history in providing excellent appraisal services and will continue to contribute its knowledge and skills to the industry and the general public in the years to come.

ADB hires Agosto as Consultant

ADB-logo-1543342036The Asian Development Bank has recruited AB Agosto as a Consultant Housing Market Specialist. The objective of the consultancy is to assist ADB in developing a framework to expand credit availability to the socialised and economic housing segments in the Philippines.

The Innovative Housing Project which is part of the support to the Association of Southeast Asian Nation Economic Community. It started last April 15, 2019 and will end in June 30, 2019.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.

Agosto speaks in Iloilo

“You should know the relation of selling and ethics. The former will provide you the livelihood that is well-rewarded, the latter will separate the chaff from the grain.”

Gus Agosto lectures in Iloilo to equip practitioners with the knowledge on the fundamentals of real estate and the role of ethics in the profession.  It was held in Regatta Hotel, Iloilo and hosted by the Iloilo City Real Estate Board.

Agosto has been teaching and lecturing real estate both in the academe and in the profession. With almost 100 participants in the seminar, the discussions were lively and based on actual experiences of the participants.

Besides Iloilo, the seminar participants came from different provinces in Panay Island. It includes participants from Aklan, Antique and Capiz.

 

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Industrial Warehouse Appraisal in Cavite

FCIEAA Appraisal recently just appraised an industrial warehouse building in First Cavite Industrial Estate, Dasmarinas, Cavite. The property was constructed in 1978 and is 100% owner-occupied. The property totals 13,240 square meters and is situated on a 18,206 square meters site. The property features 18′ clear heights, grade-level loading doors and 10% office finish. This commercial real estate appraisal was conducted for market value purposes and will help the on-going real estate transaction.

The FIRST CAVITE INDUSTRIAL ESTATE ASSOCIATION, INC. is 154.5 hectares. “Industrial Subdivision” built to service all basic needs of any manufacturing concern of the light-to-medium scale industry.

Situated in Langkaan, City of Dasmariñas, the estate currently has 148 companies operate in the zone.

tandng sora

 

In other related development, AA Appraisal was hired to appraised a 2-storey commercial arcade property in Tandang Sora, Quezon City. The property was built in 2010 and contains a total of 24 units. This commercial real estate appraisal was conducted for a law firm based in Ortigas, Mandaluyong City.

Professor Gus Agosto Speaks in Ateneo Grad School of Business

Image result for ateneo mba regisProf. Gus Agosto from AA Appraisal & Consultancy gave insight on the Investing Highlights in Cebu Real Estate Market at the Ateneo de Manila-Graduate School of Business, Cebu City Campus.

“Real Estate investing is not only vibrant in Cebu but also has a new tool to look on in the next two years. The different segments and geographical location of properties have been surging in the last ten years.” The opening of Mactan Cebu International Airport Terminal II, and the influx of tourist created a bigger demand for hotels and other hospitality enterprises. The retail sector have been unstoppable on building malls and community retail. The industrial sector expanded with the entry of more and more locator in the Export Processing Zones.”

“The next two years will be shaped by the current infrastructure programs unleashed by the present administration. The opening of Cebu-Cordova Bridge in 2021, New Container Port Terminal in Consolacion Cebu and the continuing renovation and expansion of routes of the Mactan Cebu International Airport,” Agosto explained.

AA Appraisal & Consultancy – as a comprehensive real estate services firm not only provides expertise in real estate investment and appraisal but also act as a specialised research firm for property projects.

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Professor Gus Agosto stressing the market situation and real estate investment in Cebu.

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Professor Gus Agosto receiving a certificate of appreciation and token from the MBA-Regis Students of the Ateneo de Manila Graduate School.

 

Big turnout at Complex property valuation seminar in Cebu

Appraiser Agosto, lectures on Complex Property Valuation-Valuation Masterclass II. The seminar workshop, held in Castlepeak Hotel in Cebu City,  was organized by PAREB Cebu Real Estate Board.

The seminar participants reached to more than 80 real estate practitioners, including real estate appraiser and brokers not only from Cebu but also from Negros, Cagayan de Oro and Leyte.”I was stunned by the turnout of participants”, Gus told the organizers of the seminar. “It just showed that practitioners values the seminar”.

In the 2-day lecture, participants learned from different case studies actual application of solving appraisal problems using discounted cash flow method, opportunity cost, replacement value and market studies on township development.

“Thank you for sharing your expertise on us”, one of the participant shared in the lecture room. “Very knowledgeable in the topics discussed”, another participant shared.

The valuation masterclass is a project of PAREB Academy for its members. Its objective is to raise the level of PAREB Appraiser-members professional practice through seminars, workshop and provide linkages through appraiser’s directory.

Appraiser Gus Agosto has conducted lectures already in different areas of the country. Hosted by different local board, he traveled Iloilo City, Dipolog City, Cagayan de Oro, Pasig, Caloocan, Lucena, Puerto Princesa, Baguio, and other areas.

 

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