Real estate investments provide income in times of crisis

“My dad retired from government service at the age of 60 then studied law. He was able to finish it at 66 years old. Two doctorate degrees, two masteral degrees, and—at the age of 60-plus, he still managed to get his law degree.”

Listening to JR Papel talk about his father, one feels pride in his voice. You can also tell that JR has had very strong role models in his life. He has gone through ups and downs himself, taken risks, and emerged victorious.

JR has been a shopper and customer marketing manager for Unilever Arabia in the last 10 years. Prior to moving to the Middle East, he worked at Procter and Gamble. He is also regarded as a leader in the Filipino community in the UAE.

JR Papel, a customer marketing manager at Unilever Arabia

Entrepreneurial mindset
JR began his career balancing a day job as a young marketing executive with a night and weekend job as a rice seller. The entrepreneurial mindset was there; he knew how to sow the business seeds and let them grow.

He knew the importance of financial responsibility. True to his admiration for his dad, JR read the book “Rich Dad, Poor Dad” by Robert Kiyosaki and Sharon Lechter. He lived out the principles he learned from the book.

JR's family

“I started subscribing to stock market investing materials,” JR said. “I bought my first house at the age of 20, while I invested in the stock market at the age of 21.”

JR was in Dubai when the 2008 recession happened. When the stock market bounced back in 2009, so did JR. When 2010 rolled in, he was ready to accumulate real estate investment.

Pre-selling as peak value
JR is a proud owner of three SMDC properties, all acquired at the pre-selling phase. The first was Berkeley Residences. That was followed by Grace Residences, and—his most recent—Charm Residences. His intent from the get-go was to rent out the properties.

If one plans on making a real estate investment for passive income opportunities, he suggests doing the same.

“At pre-selling, you only need to pay a small amount of money—this can be your savings—continuously pay it for the next couple of years until turnover,” JR said. “Properties usually increase in value by at least 30 to 40 percent, which instantly gets you net equity.”

Then, he advised entrepreneurial individuals to get a loan. “Have it leased, and the rental income of that property pays off the loan. It’s cost-neutral. If you’re just starting out, you can take a government loan or a bank loan to pay off the mortgage.”

JR’s best example of this is his unit at Grace Residences in Taguig. While settling a bank loan for the property at P14,000 per month, his monthly rental income is at P15,000 a month. “That paid the loan, and I now have an asset that accumulates (value) over a period of time,” he said. “If you’re young and spend around P200 for coffee every day, that’s P6,000 in a month that you can use to invest in a condo.”

“(Property investment) is a sure-shot formula to become a millionaire in just a couple of years’ time,” said JR, speaking from experience.

Prime locations
“In purchasing condos, I primarily consider location,” JR said. “I knew that there was a big demand for living spaces in the Katipunan area, particularly from students. There was an opportunity because Berkeley Residences was pre-selling then. So I took it. I wasn’t wrong, until now I am still able to rent it out.”

JR kept his focus on more SMDC properties. He secured a unit at Grace Residences in 2014, targeting office employees in Taguig. In 2017, he acquired a unit at Charm Residences in Cainta.

JR researched on other real estate companies in the Philippines. When it comes to the bottom line, nothing compares with SMDC, he said. He attributed the property giant’s market strength to its competitive pricing, strategic locations, world-class amenities, and integrated lifestyle. Essential establishments, such as malls, schools, groceries, and hospitals, are all within reach.

“I position myself into investing in mass-market condos that I can sell to the middle class,” JR said. “Compared to properties of other developers, SMDC properties are easier to market and do not require as much capital.”

Landlord with compassion
On top of SMDC’s appeal, real estate in general as a hard asset has a couple of unique, intrinsic qualities. One is the minimal intervention requirement, which works perfectly with JR’s overseas management arrangement. He only has to look after cheque deposits from tenants; other businesses demand daily, hands-on supervision.

Another benefit of property investment is its resilience to economic crunches. JR has seen the values of his investments in other asset classes plummet amid the global recession brought by the pandemic.

“My only income-generating investment that generates income at this time of crisis is real estate,” he said.

His rental profits have taken a hit but the loss hasn’t been as big. Out of compassion for his student-tenants at Berkeley Residences, he waived one month of rent. He also gave his tenants a 30-day extension for payment.

“One month’s rent out of 12 months is about eight percent of the annual income. That’s better than nothing, as in other investments,” JR said.

World of possibilities
Today, JR continues to make financial moves while guiding aspiring entrepreneurs to do business the right and responsible way.

He has initiated programs and activations that engage his company’s shoppers on environmental awareness. This has earned him the reputation as one of the company’s “ambassadors of sustainability.”

“Filipinos love houses and living in houses,” JR concluded. “They see it as the only asset they need in their life. A house is not an asset; it’s where you live. But you should find other assets that can generate real income. And when it comes to assets that generate income, it has been SMDC all along."