Financial Adviser: 5 Real Estate Lessons Every Investor Can …

 

 

Exequiel Robles was only 17 years old when his father, Buenaventura Robles, died unexpectedly of a heart attack, leaving him and eight of his younger siblings in the family. 

 

During that time, the senior Robles had a small real estate trading firm which he put up with his sister, Marcella Robles-Santos, who unfortunately also died the following year.

 

Left with no other choice but to help his siblings and cousins at a young age, Robles, who was taking up accounting in college, decided to take up night classes to continue the family business.

 

The realty business, which involves buying and selling of raw land slowly grew as Robles learned the ropes of the trade. But one day, he discovered from one of his customers that they could make more if the land were developed.

 

Robles diligently inquired about the process and soon started developing his first subdivision in Pasig. The project was so successful that it encouraged him to develop more in Cainta and its nearby areas.

 

The family realty business that would eventually be known as Sta. Lucia Land when it became public in 2007 with his cousin and co-founder Vicente Santos has since developed about 300 subdivisions, 15 golf courses and 20 condominiums to date.

 

Today, Sta Lucia Land is one of the largest property developers in the country, with market capitalization of Php15 billion at the Philippine Stock Exchange.

 

How did Robles manage to transform his family business into a leading subdivision developer in the country? What success lessons can we learn from Robles, who was recently awarded the Property Man of the Year by the prestigious International Real Estate Federation?

 

Here are the five business lessons every entrepreneur can learn to succeed in real estate from the co-founder of Sta Lucia Land, Exequiel “Exy” Robles:

 

 

1. Know how to uncover market opportunities

Understanding the growth potential of a market can help you identify new business opportunities in the future.

 

With market research, you can develop strategy that can open new markets for developments and increase your revenue base. 

 

“We are now in the golden age of real estate because our market is growing,” says Robles. “The Philippines may be a small economy, but our market is huge because we have more than 100 million people.

 

“With a growing population, there are lots of opportunities for infrastructure development. For example, there is an (expressway) leading to Urdaneta but there is no diversion road going to Cabanatuan. But look at Batangas; because they have Star Tollway, they have become more progressive.

 

“There are many areas that the government needs to develop. New roads will not only help the agriculture sector but also provide new frontiers to developers. I hope someday we can also have our own bullet train like those in China that can transport people from Hong Kong to Beijing.”

 

 

2. Know how to find good location for development

You may have probably heard the age-old mantra: Location, location, location. The reason why this word needs to be repeated three times is to emphasize that the long-term profitability of a real estate investment depends on viability of location.

 

“A good location is somewhere near the town or city and it depends on the size of the property,” Robles says. “For example, here in Metro Manila, if you can find a lot size of 100 to 200 hectares, that would be great because Metro Manila has a big market.

 

“But if you will get this size of land in the province, it may be more challenging. You may need to develop some attractions such as a golf course, a lake or some commercial establishments. Maybe you need only 10 to 30 hectares to develop a plain subdivision if it’s in the provinces.”

 

 

3. Know how to invest for capital appreciation

History has consistently shown that real estate values appreciate over time. As population increases, demand for housing also increases, making the value of land more expensive. 

 

“If you invest in a property worth Php2 million, the value of that property after five years will not be Php2 million anymore,” says Robles. “It depends on the demand for the property in the future but for sure, it will be worth more.

 

“What are the chances that the property will appreciate in the future? We have over 100 million people and with the infrastructure developments, the chances for land appreciation are very high.

 

When you invest in property, it is important that you take time to study it, look at the different areas to find which locations are good and which ones have the best chance of appreciating. Of course, if the location is promising, the price is more expensive than those that are not so nice.”

 

 

4. Know how to manage your risk and profitability

Managing risk is about identifying what could go wrong in a business decision by evaluating the potential problems that you need to deal with risk mitigation strategies.

 

“There is always risk in everything,” Robels says. “Before you enter into any transaction, you need to compute your costs and projected sales. If you see that it is not feasible, why will you still do the transaction?

 

“There are times when you need to negotiate with land owners,” he adds. “Do not hesitate to bargain. You have the right to offer a price that you think is reasonable even if the seller may find it insulting. You must always watch out for your cost because that’s where you will base your mark-up to price your product. In our case, we try to avoid pricing our product too expensive because we want to be competitive. We are in the business for the long term. We have customers who buy from us regularly as investors.

 

 

5. Know how to measure real success in business

Every entrepreneur has different idea about success. Defining what success means to you can bring you a sense of accomplishment and contentment in life.

 

“Success should extend beyond your business,” he says. “You may have a successful company but if your relationship with your family is not good, then you may not be really successful.

 

“It is difficult when your business is growing but your family members are not financially stable. Financial success to me is making sure that my siblings and relatives who are stockholders of my company are financially secured and that we have a strong relationship.

 

“Sometimes it is better to be number 10 than number one if you will just have lots of headaches. It is better to have steady earnings with less problems than aggressive earnings that will make you lose sleep at night.”

 

 

*****

 

 

Henry Ong, RFP, is president of Business Sense Financial Advisors. Email Henry for business advice hong@businesssense.com.ph or follow him on Twitter @henryong888