Wednesday, July 14, 2010

New Tires on My Car

It has been awhile since I wrote a thing or two in my Blog. Well, today, I have some news.

A little more than a week ago, it has been decided we needed to change the front tires of the car. The rear tires are still very good but the front, the tires are a mess. My car has front-wheel drive ( a KIA Picanto) and the tires were really beaten up for the last 3.5 years, since it was new.

The dealer had new tires put on, since the original tires from the assembly factory in South Korea were smaller breeds and so, to look more attractive, the dealer put on a little better tire before they sell the car.

All good, nice looking tires, but after 3.5 years, we found out that the wheels were way off alignment, even though, I did not have problems driving on a straight line when highway or city driving.

The Toe alignment was way off when we went to have our old tires exhanged with the new tires.

But before we start talking about the set of tires we bought, there's a little story first on how we bought the tires. Since the plan was only to buy two tires for the front, with the same tread, we went to the tire store and asked if they first have the type of tires we had before, in stock. They only had one in stock that day, but had to order another one. Since we were there on a Saturday, the order could only be placed on Monday, the following week.

The following week came, and Monday they phoned us saying the tire in question was already in. We already bought the first tire from them that Saturday, so we put it in the storage at home. The tires that were supposed to be are Hankook K406 tires and we bought one, the one that was in stock. On Monday, when we went back to the tire store, it was a Hankook K715 tire, with a different tread. So, much for waiting (not that long, was very fast service). I thought, this is not so bad. So, they installed the Hankook K406 and K715 as front tires. They also aligned the tires. I wondered how much this would cost and they said P775 (C$18) for the car. In Canada, alignment work cost close to $100, so the labor here in the Philippines is still less than in those western countries.

Tires however are about the same price anywhere. One of these small tires (165/60 R14) cost per piece here C$80 (P3,500). We got 15% off somehow. By the way, when we bought the car, the same tires are made in Chine, while these we have now are made in South Korea. I don't know if the quality might be different, but it rings a bell that everything that is made in South Korea a bit better is than what is made in China.

Now we drove away with the car with the new front tires which had different treads. So, in all, I was driving a car with three different treads. The new left front tire, the new right front tire and the two rear old tires (which by now have worn-out treads), so it was fun driving the car in a straight line.

I thought, they screwed up the alignment work, but when I sat down and checked the Internet on alignments of your tires, I found out that the veering of the car to the right when driving could come from driving on tires with different treads.

Soooo, we went back to the tire store and we decided that it would be a "very" good idea to change all tires (4 pieces) with all the same treads. At the end, we bought 5 tires at the tire store. The Hankook K715 (4 pieces) and we end up with also a new K406, and this one we keep for a spare tire. We have a factory spare tire, but this tire is very small. You would not want to drive with this tire on the highway, we thought, the new spare could be very useful when we travel long distances, like going to the province where my wife's family lives. There, we must drive on the highways.
I still remember the TV ad from Michelin a long time ago: " There's so much riding on your tires." They showed a baby sitting inside the tire.

(Picture above: One of the new front tires of our car)

Wednesday, February 3, 2010

How to Estimate the Value of Real Estate Properties in the Philippines

Knowing how to appraise the value of real estate properties here in the Philippines is very important. Many foreigners are used to have known the value of a "house" by the average value that exists in a particular neighbourhood or subdivision. That is usually NOT so in the Philippines. So, foreign buyers, BE AWARE!

It's a whole other ball game here as to determine the value of a house. They break the "property" into two: "the Lot and House".

Most people in North America or Europe just buy the property as a whole and the real estate agent don't mention too much about the lot. We just buy it as a package.

Here in the Philippines, they are very precise on what they buy, so there goes the paperwork again.

There are three different approaches for determining the value:

1. The Cost approach
2. Sales Comparison approach
3. Income Capitalization approach

In Cost apprach, the value of a property can be estimated by summing the land (lot) value and the depreciated value of improvement (house) The land value is usually based on the prevailing market value in the area distinct from the zonal value set by the government.

For house and lot properties, it is best to separate the land from the building/improvement and add them together after knowing its individual values.

For example, you want to know the value of a house and lot in a subdivision in Las Pinas, a 3 bedroom house, 5 years old, with a floor area of 80 sq/m and a lot area of 120 sq/m. First, you will have to estimate the prevailing selling price of the middle end subdivision in the area. Assuming the average is P6,000 sq/m, the value of the land would be 120 x 6,000 = P720,000. Then, estimate the value of the house. The acceptable prices ranges are as follows:

Low Cost housing: P16,000 to P25,000 sq/m
Middle End housing: P26,000 to P35,000 sq/m
High End housing: P36,000 to P45,000 sq/m

So, for the house area of 80 sq/m x P30,500 average price per sq/m = P2,440,000
Then add the value of the lot = P720,000
Selling price = 3,160,000 (excluding VAT which is 12%).

Since the example above states that the property is already 5 years old, depreciation value shall then deducted as follows:

Depreciation = P3,160,000 (house & lot) / 50 years = P63,200 cost of depreciation per year.
Depreciation cost for 5 years = P63,200 x 5 = P316,000

Therefore the appraised value of the property in this example shall be P3,160,000 less P316,000 depreciation = PP2,884,000.

The Sales Comparison approach recognizes that a typical buyer will always compare by asking prices and seek to purchase the property that meets his or her wants and needs for the lowest cost possible. The actual selling prices happening in the same local area can be obtained from public records, buyers, sellers, real estate brokers and/or agents, appraisers, and others. Important details of each comparable sale are described in the appraised report by licenced real estate appraisers.

Since comparable sales are not always identical to the subject property, adjustments are sometimes made for date of sale, location, style, bathrooms, square foot, site size, etc... The main idea is to simulate the price that would have been paid if each comparable sale were identical to the subject property. If adjustment to the comparable is superior to the subject, a downward adjustment is necessary. Likewise, if the adjustment to the comparable is inferior to the subject, an upward adjustment is necessary.

For example, the subject property in comparison has a bigger lot area, then compute the difference and deduct from the price to make an upward adjustment. If the subject property has a smaller floor area, then compute the difference from the price to make a downward adjustment. You will also have to compare the basic facilities, amenties, and other features of the property that make it more valuable than the other properties. A careful balancing of all the variables is important in arriving at the good appraisal value based on sales comparison approach.

The Income Capitalization approach is used to value commercial and investment properties. Because it is intended to directly reflect or model the expectations and behaviors of typical market participants, this approach is generally considered the most applicable valuation technique for income-producing properties, where sufficient market data exists to supply the necessary inputs and parameters for this approach.

In a commercial income-producing property this approach capitalizes an income stream into a value indication. This can be done using revenue mulitpliers or capitalization rates applied to the first-year Net Operating Income. The Net Operation Income is gross potential income, less vacancy and collection loss (=Effective Gross Income) less operating expenses (but excluding debt service, income taxes, and/or depreciation charges applied by accountants).

Monday, December 21, 2009

Very nice shopping malls in Metro Manila

In Metro Manila, you'll find many fine and large shopping centres. In fact, the 3rd. and 4th. largest shopping mall in the world are located right here in Metro-Manila. The 3rd. largest is in the City of Manila (SM Mall of Asia) and the 4th. largest is located in Quezon City (SM City North EDSA). They are really large. One can ride a small shuttle bus that comes along periodically from one wing to the other wing, so you don't have to walk long ends to your favoured store. There's also a very large mall called, SM Mega Mall, and this mall is located in Mandaluyong City, along EDSA boulevard.

A few weeks ago, my wife and I went to Makati City, which is a city located in Metro Manila, and which is actually the downtown core where many businesses, five-star hotels and banks alike are located, including most embassies.

That is where you really can see very trendy shopping centres. Many are buildings connected to eachother and have different names. They are Glorietta and Greenbelt. Glorietta has 4 malls and Greenbelt has 5 malls. Greenbelt 5 has just been opened and this is the classiest of them all, with many high-end stores, only for the rich and famous in the Philippines.

Although, you can really see many ordinary people enjoying lunch in the weekend in many expensive restaurants. My wife and I would hesitate going there because of the prices, but it seems that many Filipinos have money to burn to go there.

We really enjoy walking through the malls in downtown and have lunch at our favoured restaurant, The French Baker, where they serve the best Beef Lasagna and Chicken a la King for a mere P150 for the lasagna and P135 for the Chicken a la King. No wonder, we have to fight for a table every time we go there, because, it's always packed with people who know where to go for a cheap and good lunch that is rather classy, too.

You see more and more people going to the malls now as Christmas approaches. The stores usually decorate very early their Christmas decorations, sometimes as early as the beginning of November and you can sometimes hear Christmas carols already that early to attract customers. It's very nice to be in this atmosphere that early.
Picture 1) Newest addition inside Greenbelt 5
Picture 2) Facing Greenbelt 3
Picture 3) Inside Greenbelt Park facing some of the Makati City skyscrapers
Picture 4) Inside Greenbelt Park
Picture 5) Inside Greenbelt Park
Picture 6) Inside Greenbelt Park
Picture 7) Makati Avenue
Picture 8) Classy stores
Picture 9) Entrance of Greenbelt 5

Thursday, November 5, 2009

Nurses, nurses and more nurses.

When you ever come to the Philippines, you will notice that young people take great pride in their education. You will see a great number of private colleges and universities, run by Catholics or private entities basing their education on Christian values.

Since the 1980's, there has been a perception that taking a certain educational course can get you further ahead in life than others, and this namely is so because in the Philippines, wages are very low compared to the wages in western countries, or even in some of the other Asian neighbours of the Philippines.

A field that is particularly very popular these days is Nursing. It's for many students a passport to get a job overseas, especially in the United States of America. Also, in other countries, like Ireland, England or Austrialia.

In a given moment of a year, there are about 100,000 nursing students graduating but only about half pass their final exam. In the 70's, only a handful of nursing students were enrolling nursing courses but since many people like to leave the Philippines, many students now see a light at the end of the tunnel for a better future, so they think, enrolling in nursing will get them a ticket for a better life abroad.

I think, there're already too many students who follow up nursing these days and there's already too much competition going on for the few local hospitals who will hire them here, and in the case of looking for a nursing job abroad, one must complete and pass another exam so he or she will be accustomed to the standards of nursing in other countries, like the US.

Parents spend lots of money on their children for them to finish up nursing in the Philippines, in the hundreds of thousands of pesos if not close to a million pesos for their education.

Although, when a nurse has passed all exams, local and foreign, she or he must be hired and most of the foreign hospitals will hire an experienced nurse first before they will hire a nurse that does not have any practical experience, so it's very difficult for a just out-of-school nurse to get a job abroad.

Picture: This is a graduation of a February 2007 class of nurses. Only 49% passed their final exam and what you see, the amount of nurses are only half of the 49%, the other half will come in the afternoon for their graduation to accept their degree. The 51% are not there, as they did not pass the final exam, but can retry another time. Can you imagine, if 100% passes, how many nurses will you see in the Philippines. There're just not enough local hospitals for them to find a job, much less going abroad. So, you can see, much unemployment in the Philippines.

Tuesday, October 13, 2009

Volunteering in the Philippines

Well, it came that far. I am doing something out of the house. In the subdivision where we live, we have a gate with a guardhouse with guards guarding on a 24-hour basis. This is to provide extra security for the residents. Many subdivisions in Manila have this set-up as this is very normal in the Philippines. There's also a main gate from the main road into the area where the streets lead to other subdivisions, including ours, and this main gate is also guarded on a 24-hour basis. So, we actually have to pass two gates before we reach our house. Quite a feat.

I am currently painting the area where our gate leads into our subdivision, as this gate was getting rusted. Also, one could see postlights hanging upside down and I wondered if I could do something about beautifying this area. Mind you, when you drive through this gate, usually you don't notice what is wrong with the gate area because, when you would live there, it's becoming second nature to just go through it and not notice anything around you anymore.

But, I did observe things that could get better there, so I offered my help and started painting the gate and posts. I started painting before the storm hit Manila, you know Ondoy first and then Pepeng, so I had to wait it out for a few days before I could continue my work (voulunteering) there. Could not ask for any money, as a foreigner can NOT work and receive payment in the Philippines. Although, in terms of how much a painter makes here "per day", it would for me be almost volunteering anyways. About 4.50 Euro a day in salary.

Anyways, much has been done already, and there's still the guardhouse that needs to be painted and the yellow/black lineage on the road, indicating that you are entering a sidestreet into a subdivision.

Today, however, I did some work and the guard was asking me something. I couldn't understand him first but after he showed me with some sign language, I understood that he wanted to have some sandpaper for "his revolver". His revolver was getting rusted, so he could sand the rust away on his revolver. Yes, they do run around with revolvers here. If they ever use it, I don't think so, otherwise his would not have been rusted. Right?
Picture 1) Postlight hanging upside down before the President of the subdivision called someone to straighten it up.
Picture 2) The guardhouse with one of the four guards that are present at any moment of the 24-hour day.

Friday, September 11, 2009

Our Third Anniversary in the Philippines

Well, it's so far again that we are here in the Philippines for three years as of today. Yes, we had to fly on the fifth anniversary of 9/11, and that was on September 11, 2006 for us to move to the Philippines. We flew with Philippine Airlines, a nice flight I must say. We luckily were able to sit on the first row in the middle, so we had lots of legroom. There was a little old Filipina lady who sat next to us and she told us that she does this trip every year to see her children and grand-children in Vancouver, Canada, and we were complaining of long flights. She had to endure these flights two times a year, a 15 hour or so flight from Vancouver to Manila.

We also had our little dog with us and it was smooth sailing for this little monkey. They put her in the cargohold and we paid about C$300 (188 Euro) for her ticket that was actually luggage cost.

We stayed first in a two bedroom apartment close to downtown for a year, but after battling with 24 hour noise from trucks and a passenger train that runs behind the apartment building where it stops at 6:30 a.m. every morning with its horns blowing everyone awake, we decided to look for a place in the suburbs of Metro Manila, and now we live all the way south of Metro-Manila, namely in Las Pinas City.

For some reason, it feels like it that it has been 10 years that we live here instead of 3, because the enormous adjustment one has to make, as the Philippines is a very difficult country to live in for foreigners regarding settlement and adjustments due to a very different culture we have here.

There's much disorganization, unregulation, corruption and lawlessness, you name it, in every aspect of life, but one can only adjust to these things and understand its culture.

We enjoy very much the warm, sunny weather and cheaper life here and both our health prospered. But we surely needed to jump a lot of hurdels to get where we are today.

Sunday, August 16, 2009

Walang Tubig

After enjoying months of having tap water flowing on their faucets, BF Paranaque homeowners staged a rally to protest and air their grievance over a decision of the village developer to stop Maynilad Water Services, Inc. from laying down water pipelines inside the subdivision.

BF Homes, where we also live, is the largest private subdivision in Asia with some 12,000 residential homes that encompass three Southern Metro Manila cities - Paranaque, Las Pinas and Muntinlupa.

When the subdivision opened sometime in the '50s, the residents were provided with a continious supply of potable water operated by a subsidiary, Philippine Waterworks and Construction Corp. (PWCC).

The regular supply continued till the late '70s when its underground water source (deep wells) began to dry up one after the other. By the '80s, water supply was rationed until only a few households were getting water from their taps.

Just hope, after the rally, people from both ends will come together and work together for a good outcome, so that they eventually continue laying the underground waterpipes, so everyone can get centralized water to their homes.

First picture:
Rally stopping on a corner and then marching further to the United BF Homeowners Association Park.
Second pictures:
Marching to the UBHAI Park.
Third picture:
In the Park listening to members who are defending to get waterpipes for each homeowner.