Once in a Lifetime Chance: Estate Tax Amnesty of 2019

Published March 5, 2019

Edit: July 9, 2019


In a move to alleviate the Bureau of Internal Revenue’s backlog of tax cases, increase revenue collection, and free up idle properties, the government finally approved the long-awaited Tax Amnesty Act (TAA). This is great news because it gives all taxpayers the once-in-a-lifetime chance to settle unpaid taxes and have a clean record. In this article, I’ll tackle one of three items covered by the TAA: the Estate Tax Amnesty (ETA).


Before the TAA was executed, the estate tax ranged from 0% to 20% of the net estate of the decedent (the person who passes away). Assuming heirs weren’t able to settle the estate taxes to transfer the inherited properties to their name, the BIR automatically slaps a 25% surcharge penalty of the tax payable. Moreover, each year of non-payment subjects the tax payable with a deficiency penalty of 20% annual interest. In short, the tax payable grows exponentially to exorbitant levels, which sometimes are even more than what the property is worth.


Let’s take a hypothetical case as example. In 2001, Jose Reyes (90 years old and widowed) passed away, leaving a 2,000 square meter lot in Forbes Park to his only son Joe. At the time of death, the zonal value of the lot was Php70 Mn. The estate tax payable at the time of death was Php12.7 Mn (after reducing the estate by some allowable deductions), which Joe didn’t have the cash to pay for. Years pass and by December 31, 2016, the tax payable had grown to Php82.5 Mn.


Sadly, Joe passed away on December 31, 2016, leaving behind his wife Josefina as the only heir.


On December 31, 2017, Josefina has to pay estate taxes of Php99 Mn to transfer the title from Jose’s name to Joe’s, and an additional Php88.4 Mn to transfer the title from Joe’s name to hers.


With this kind of tax burden, real properties often become idle. Sellers believe that buyers are willing to settle the estate tax payable as part of the acquisition price. More often than not, buyers shy away from these properties for the fear that undisclosed heirs may suddenly appear or for the possibility that sellers may disappear the moment they settle the tax burden.


This all changes with the TAA. The new law states that Josefina only has to pay Php4.1 Mn (Php67.3 Mn net estate as of Dec. 31, 2001 * 6% ETA rate) to transfer the title from Jose’s name to Joe’s and Php21.5 Mn (Php357.3 Mn Zonal Value as of Dec. 31, 2016 * 6% ETA rate) to transfer from Joe’s to her name.


What if Josefina doesn’t have the Php25.5 Mn needed to settle the estate? She could proceed with an “Extra Judicial Settlement of the Estate WITH ABSOLUTE SALE. This means that Josefina, the heir, will settle the estate as with the proceeds from the consequent sale of the property. This procedure transfers the title of the property straight from Jose’s name to the buyer’s name. Furthermore, the Buyer can acquire an “heir’s bond” from a reputable insurance company, to protect himself from unexpected claims of undeclared heirs.


If you would like to avail of the ETA with the goal of selling the property, you have to move quickly since the amnesty is only offered for a period of 2 years , or until June 14, 2021. If you miss this chance, the taxes to paid reverts back to the National Internal Revenue Code of 1997, which means the penalties revert back to what they were and the penalties will continue to continue grow at the old rate per year.


Send me an email; we can help provide a concrete plan and solution. It would be best if you’re first in line, especially with the sheer number of people who we believe will be claiming advantage of this development (as well as the General Tax Amnesty and Amnesty on Delinquencies).

Juan Alfredo S. Patag, REB
REB Lic.# 0023114; ID# 18-1612675 until 10/20/2022; PTR#7335646 until 12/31/2019

DISCLAIMER: This material, which is strictly for information purposes only. The views and opinions expressed in this article are those of Juan Patag’s and do not necessarily reflect the position of RE/MAX Capital, or of any other RE/MAX franchise. Any information is subject to change without prior notice. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. Information Each RE/MAX franchise is independently owned and operated.


The Need to Look Elsewhere

DISCLAIMER: This material, which is strictly for information purposes only. The views and opinions expressed in this article are those of Juan Patag’s and do not necessarily reflect the position of RE/MAX Capital, or of any other RE/MAX franchise. Any information is subject to change without prior notice. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. Information Each RE/MAX franchise is independently owned and operated.

Condominiums (condos) in the Philippines were among the best performing in the region, with prices increasing at a compounded annual growth rate of 9.38% in the past 10 years. Can condo prices in the Philippines’ central business districts continue to go up at the same pace? Logic tells you that prices would have to slowdown at some point. The question now becomes, how do you determine or at what level will it slowdown? This price level is what I’ll refer to as the “ceiling”. We can determine this by examining foreign and local demand.

Article - The Invisible Ceiling 2019.02.08 - Table 1

Can foreigners continue to push prices higher?

It has largely been believed that the influx of foreign condo buyers has driven condo prices up in the region. A quick comparison of condo prices in the region show that the values in the Philippines are still cheap and therefore can attract more investors to buy in. But can we assume that prices in the Philippines be as high as, say, Hong Kong? To what country can we peg the potential condo prices of the Philippines?

Table 2 shows that condo prices are inversely influenced by foreign ownership restrictions in the individual countries. The lower the level of ownership restriction, the higher the prices get. If this observation were true, then the Philippines’ ranking in the table is just where it is supposed to be.

Data suggests that condo prices in the Philippines may improve IF restrictions on foreign ownership were loosened––or eliminated altogether. If not, the best that could be hoped for is to match at least at Bangkok’s average prices, which is around PHP260,000 per sqm.

Article - The Invisible Ceiling 2019.02.08 - Table 2


What about rental yield, can’t that attract foreign investors as well? Table 3 shows that risk-adjusted rental yields in the Philippines are higher than its peers. However, the differences in rates between the Philippines and Singapore/Malaysia, for example, shows that the percentage difference is too small to make a significant difference, especially since there are no foreign ownership restrictions in these countries.

(The country risk premium is the additional return investors require for the extra risk they take when investing in less stable and riskier countries. The higher the risk premium, the riskier investing in that country is. It’s determined by NYU Stern by studying bond prices of various countries.)

Based on my calculations, investing in the Philippines would make sense to foreign investors up until average prices hit Php220,000 per sqm, the price at which the price-to-income ratio of the Philippines equates to Singapore’s. At Php220,000 per sqm, investors would be indifferent between investing in the Philippines and in Singapore; and Php240,000 per sqm if against Thailand.

Article - The Invisible Ceiling 2019.02.08 - Table 3

Up to what level can local buyers push prices?

The local investor today would have a hurdle rate of 5%, basing it on Time Deposit (Gross) Rates today (yes, 1 year Time Deposit is now at 5%) or Long Term Negotiable Certificate of Deposits (LTNCDs). If we were to assume a very conservative 2% capital appreciation, which is based on the Philippine long term population growth rate, investors would need to get at least 3% to be indifferent between investing in a deposit product and a rental property. Consequently, a safe rental price per square meter to assume, to be sure that vacancy is kept at a minimum, is Php800 to Php900 per square meter in Makati. This suggests that the ceiling for local investors would be at Php280,000.

Obviously, anyone can assume a higher rate of capital appreciation or a higher rental price per square meter, which in turn would increase the ceiling. But as the assumption for these rates become higher, the probability of actually achieving these, decreases. For projection purposes, I used the very conservative rates, assumptions that are highly probable, based on what we have experienced in the market.

Article - The Invisible Ceiling 2019.02.08 - Table 4

As for local buyers who intend to bank finance the purchase, condo prices in Makati have started to become unaffordable. A buyer of a Php300,000/sqm, 30 sqm, studio unit should have a salary of at least Php166,862 per month. The table below depicts various RFO condo prices they can afford with their salary, assuming they will get a bank loan for 80% of the cost of the property to be bought.

Article - The Invisible Ceiling 2019.02.08 - Table 5

The Invisible Ceiling = Php280,000

The invisible ceiling for condo prices in the Philippines is at Php280,000/sqm––on average––today. These are for condos that are ready-for-occupancy now. By average, I mean that prices of some condos (i.e. ultra high-end) can be higher than Php280,000/sqm. What about condos that are going to be delivered in the future? For these, we can inflate the ceiling using IMF’s projected world growth rate of 3.9% (compounded). For example, the ceiling will increase to Php340,000, five years from now.

Please don’t get me wrong and decide not to invest in real estate TODAY (especially if you can buy cheaper than Php280,000). This article points to the fact that prices in Makati, have started to become unattractive to both local and foreign buyers. As such, I expect condo prices in Makati (and possibly BGC) to move sideways until a new catalyst bolsters foreign demand or until the disposable income of local buyers catches up. If you find properties in these central business districts selling below these prices, you should consider buying them (we have some of these properties in RE/MAX Capital). It is also important to look outside these two main business districts to find lower prices and higher potential upside.

If you think prices will crash and there would be a more opportune time to purchase real estate in the CBD, waiting for that moment risks you losing a bigger profit opportunity than investing now. As pointed out economists and analysts, the Philippines’ growth story is true, and unless there’s another crisis, you’d be left behind if you were not to invest in it. You just have to know where to look (you can consult with RE/MAX Capital on which areas to consider).

Let me end by sharing what my old boss told me, “Juan, you should consider buying a property now. If you think you don’t have enough money, you will never have enough. The time will come when you will get married and you will have kids. You’ll want to give your family the best things you can afford–the best luxuries; the best education; and the best vacations. All this while, property prices keep on increasing. Don’t get left behind.”

Juan Alfredo S. Patag, REB
REB Lic.# 0023114; ID# 18-1612675 until 10/20/2022; PTR#7335646 until 12/31/2019
T: 505.3584 / M: +63 917 520.5826
RE/MAX Capital
7th Floor, 8 Rockwell, Hidalgo Drive, Rockwell Center, Makati City

Savya Financial Center (by Arthaland)

Dear valued clients,

We would like to offer to you Arthaland’s newest office building in Arca South (old FTI Complex in Bicutan)–Savya Financial Center (SFC).

Here’s why I think SFC is currently the best pre-selling office investment in the market today:

Optimism for Arca South (Old FTI Complex in Bicutan, Paranaque)

It’s like BGC but with better infrastructure to support growth: South ITX transport hub (2020), Direct Skyway Exit and Entrance ramps (2020), and Sub-way (2024). It’s only 5 km away from the airport and BGC, and only 7 km away from Makati.

Great Value

SFC is priced at Php240,000/sqm (as of January 25, 2019), the lowest in the market (even lower than Alveo’s Tryne Enterprise Plaza). It’s like getting Ayala Land Premier quality at Avida prices.

(Price/sqm will likely be increased to Php280,000 to match prices of Alveo’s Tryne Enterprise Plaza (TEP) after the official launch in January 31, 2019.)

Better Investment Return

Net Present Value analysis shows that SFC is the better investment due to lower price/sqm and light payment terms. I expect SFC prices to grow 6%-8% annually in the next five years, driven by office space demand particularly BPO companies (e.g. online gaming). Unlike SFC, Alveo office buildings don’t allow 24/7 operations. Moreover, rental rates in Arca South would likely match the rental rates in Makati once the infrastructure and residential projects are completed in 4Q2024.

Value Today / sqm NPV/sqm*
Savya, Arca South Php 240,000 91,722
Tryne, Arca South 280,000 72,306
HSS, BGC 300,000 14,941
AFC, Makati 308,000 41,934

*JASP Estimates


My forecasts show that SFC will have a better rental yield than its peers.

Location Price
Rental Rate
Cap Rate Turnover Payment
Savya (Arthaland) Arca South 240,000 800 4.00% 2021 10-30-60
Tryne (Alveo) Arca South 280,000 800 3.43% 2023 10-40-50
High Street South (Alveo) BGC 300,000 900 3.60% 2018 100
Alveo Fin. Center Makati CBD 308,000 1000 3.90% 2021 10-40-50

*JASP Estimates


Projected Price / Square Meter* for SFC

CAGR Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
5% 240,000 252,000 264,600 277,830 291,722 306,308
6% 240,000 254,400 269,664 285,844 302,994 321,174
7% 240,000 256,800 274,776 294,010 314,591 336,612
8% 240,000 259,200 279,936 302,331 326,517 352,639
9% 240,000 261,600 285,144 310,807 338,780 369,270

*JASP Estimates

If you are interested to invest in this project, send me a message. As of this writing, only 58 out of the 120 units of the North Tower remain available. The South Tower is sold out.

Thank you.

Juan Alfredo S. Patag, REB

REB Lic. # 0023114; ID#0023114 until 10/20/2022; PTR#7335646 until 12/31/2019

T: 505.3584 / M: +63 917 520.5826


President, RE/MAX Capital

7th Floor, 8 Rockwell, Hidalgo Drive, Rockwell Center, Makati City


Days of the Quick Flip (of condo units in CBDs) are coming to an End

Days of the Quick Flip (of condo units in CBDs) are coming to an End
Published: January 22, 2019
DISCLAIMER: This material, which is strictly for information purposes only. The views and opinions expressed in this article are those of Juan Patag’s and do not necessarily reflect the position of RE/MAX Capital, or of any other RE/MAX franchise. Any information is subject to change without prior notice. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. Information Each RE/MAX franchise is independently owned and operated.


Screen Shot 2019-01-23 at 9.44.53 PM.png

“Flipping…refers to a strategy of purchasing properties and selling them on a short time frame for a profit.” -Investopedia

Condo flipping has become a popular investment strategy in Makati and BGC given the double-digit capital appreciation condominiums have enjoyed in recent years. Investors are enticed because flipping is so simple: a. Buy pre-selling; b. Hold on to the property for 2 to 3 years (before turnover); and c. Sell at a profit. It’s stress-free since it bears the least risk relative to other financial assets.

We (brokers) have noticed recently that overpriced units have suddenly flooded the secondary market. The owners of these unsellable condo units likely bought between 2016 and 2018 (at prices above Php250,000/sqm), wanted to make the same quick profit, but seemed to be stuck with them. The owners of the unsellable argue that since the Developer is selling the same property at, say Php325,000 per sqm, buyers get a bargain if they sold at Php300,000 per sqm. Thing is, there doesn’t seem to be any takers. What’s the problem here?

Higher prices have caused local demand to drop because as the basic principle of economics dictates, “as the price goes up, demand goes down.” With higher prices per square meter, demand naturally has to go down.

Prices have outstripped financial capacity of domestic buyers

2019 reports show that the Philippine Real Estate Market is doing well, and will continue to do well. In my opinion, however, “Yes” and “No”.

In GENERAL, “yes”, capital appreciation is still on an upward trajectory, but “No” not like before. The appreciation of condo prices has slowed down, and is continuing to decelerate (especially in Makati and BGC) at an increasing rate. “Yes”, the need for condo units is real and remains healthy. People continue to purchase condo units for various reasons, for example as a halfway home to address the traffic, or to move out of their parents’ house before marriage.

But “No” the surge in prices have made condos unaffordable. For example, one needs to have an income of at least Php100,000 to be able to purchase a 30-sqm studio unit selling for Php300,000/sqm (downpayment and bank financing for the balance). Employed couples, on the other hand, need a combined basic monthly salary of Php300,000 to be able to afford a 90 sqm two-bedroom unit. This is the reason why people have started to consider buying units in the fringes of Central Business Districts (CBDs) or in neighboring cities.

Foreign demand likewise is slowing

During the earlier boom years of the property market, foreigners quickly noticed the double-digit returns of investments in the Philippine property market. Most would agree with me that foreigners were the major driving factor for condo prices to shoot up in Makati over the past two to four years. Today, however, the 40% foreign ownership limit has started to bite. Local sellers can no longer bank on selling to foreign buyers because even foreign buyers who can afford the elevated prices are prevented from doing so.

Rental yields are dropping

The higher prices of condos have pushed rental yields to lower levels of 3% to 4% on average. The table below depicts the rental yields in the market today.


600 700 800 900 1,000 1,100 1,200


180,000 3.33% 4.00% 4.67% 5.33% 6.00% 6.67% 7.33%
200,000 3.00% 3.60% 4.20% 4.80% 5.40% 6.00% 6.60%
220,000 2.73% 3.27% 3.82% 4.36% 4.91% 5.45% 6.00%
240,000 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50%
260,000 2.31% 2.77% 3.23% 3.69% 4.15% 4.62% 5.08%
280,000 2.14% 2.57% 3.00% 3.43% 3.86% 4.29% 4.71%
300,000 2.00% 2.40% 2.80% 3.20% 3.60% 4.00% 4.40%

*Association Dues of Php100/sqm deducted from rent income
Note: This still doesn’t consider other expenses incurred such as real property tax, depreciation of furnishings, etc.

The reason is that the growth of disposable income of Lessees has lagged behind the growth of condo prices. In other words, the budget for rent has more or less stayed the same while acquisition costs have increased significantly. It’s now common that monthly rent prices are kept the same for renewals since lessors risk suffering from bigger opportunity losses if units stay vacant for a few months. With lower returns, savvy property investors have shifted their focus to other countries or other types of real estate assets.

Developers reining in flipping

With prices hitting record highs, developer sales are actually slowing. In fact, some condo projects have turned over with the developer still holding on to unsold inventory–which was uncommon before. This inventory, which are priced 40% higher than secondary market units, stay unsold. To mitigate this problem, some developers have mandated that units sold before turnover will be subjected the usual property taxes despite titles not being transferred to the initial buyers. One developer even went as far as to ban reselling if projects have not yet been turned over.

With these reasons, why continue to prefer real estate to other investment options?

Best return relative to risk

A study of 16 developed countries for a period of 145 years showed that real estate was the best performing asset relative to equities, bonds, etc. Although the stock market provides comparable returns, it exhibits greater volatility than real estate, meaning returns vary to a greater degree year after year. Thus, the relative stability of real estate is a huge plus.

The main drawback of real estate is that it’s less liquid. Financial wizards (such as Warren Buffet) would advise, invest in stocks and forget about it for the next five years, practically to breeze through the fluctuations. But if we were to follow this advise, wouldn’t stocks be as illiquid as real estate?

Constant, stress-free cash flow

I believe the one investment that can beat both real estate and stock returns is investing in a business. By all means, entrepreneurial ventures can record exponential returns. The one drawback of this investment is the stress-involved. You’ll have to deal with a lot of headaches: irate clients, incompetent employees, rapidly changing consumer demands, etc. Real estate investing, on the flipside, practically provides stress-free monthly cash flow.


Last and best of all, real estate can make you earn on money that you don’t have! If say you had Php650K  today, and had the capability to invest an additional Php526,000 annually for the next 8 years, which do you think would have a higher internal rate of return: stocks that provided 8% consistent annual return OR a condo unit (turning over in 4 years) that appreciated 2% per year, to which you’ll get a loan for (at 7.5%) upon turnover? Real estate.

You would earn a greater rate of return from the condo unit. This is because the growth rate of equities, although high, is applied to a lower base–the total actual invested capital. In contrary, the growth rate of real estate is based on the full contract price, regardless if you’re fully paid or not. To prop up earnings, you’re even able to rent out the unit when it turns over.

Key take-aways

First, for the people who have bought real estate at high prices, don’t worry, it’s still the better investment. You’ll just have to wait longer.

Second, for the people who are just about to invest, consider real estate. It provides the best returns (in the long-term) as well as the best returns relative to risk. Just make sure you use free cash (money that you won’t need any time soon) to purchase properties.

Lastly, if you do not have enough money to purchase real estate, don’t force it. Save more!

I would love to hear your thoughts. My contact details are listed below.

Juan Alfredo S. Patag, REB
REB Lic.# 0023114; ID#0023114 until 10/20/2022; PTR#7335646 until 12/31/2019
T: 505.3584 / M: +63 917 520.5826 / E: jpatag@remax.ph

Is there a real estate bubble?

Is there a real estate bubble?
Published: December 21, 2018
DISCLAIMER: This material, which is strictly for information purposes only. The views and opinions expressed in this article are those of Juan Patag’s and do not necessarily reflect the position of RE/MAX Capital, or of any other RE/MAX franchise. Any information is subject to change without prior notice. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. Information Each RE/MAX franchise is independently owned and operated.
In recent years, we have seen real estate prices in Metro Manila soar to unprecedented heights. In fact, ultra high end condos are being sold at Php650,000 per square meter.
And one of the most common asked question we would get is, is there a bubble? I’ll go straight to the point and say yes–in certain segments I think. The reason people fear these “property/asset bubbles” is because the rapid increase in property prices is historically followed by a sudden crash. So the better questions to ask are:
• Which segment in the property market is the bubble, and
• What are the risks of the bubble bursting?
To answer these, let me first talk about why I think the prices are stable in certain segments (and this is all based on what we see in the market).
Ultra-high end condos
Examples: Discovery Primea, Park Central Towers, One Roxas, West Block of Rockwell
Buyers of these properties are mostly old rich families, as well as owners or top management of the country’s top 1000 corporations. The old rich families use the interest income or rental income of their various properties to purchase more. Some use the unallocated cash of their businesses, knowing that real estate investments have better risk-return ratios than any equity or fixed income assets. They buy properties in cash.
Some buy these properties as a status symbol of their wealth, knowing that people in the same social circle also have units in the same building. Some buy it for their kids, given the scarcity of available lots in high end villages such as Forbes, Dasmarinas, Urdaneta, etc. For these reasons, these properties are price inelastic (not sensitive to change). Simply put, these are the people who keep their Ferraris despite economic downturns.
High-end condos
Examples: Rockwell East Block, Park Terraces, Two Serendra
The buyers of high-end properties are a mix of end-users and investors. End-users are those people who are doing well in life and enjoy some of the luxuries life can offer. Some buy these properties from the windfall from their parents. Investors are also prominent in this space. They want to reinvest the hefty profits booked from the recent run up in real estate prices, looking to repeat the same success. They have healthy generating businesses and they park their money in real estate. Only a few get bank loans to finance the purchase.
Mid-end to Low-end Condos
Examples: DMCI, SMDC, Robinsons Land properties, properties that are in the outskirts of the CBDs
Buyers of these properties are mostly middle-class end-users. They have 8-5 jobs and have recently moved out of their parents’ house. They take a bank loan to buy these properties. I’m quite sure that they have steady jobs and work for top corporations; otherwise banks wouldn’t lend them the money. Thanks to the Asian Financial Crisis back in the 90s, our financial institutions have the stringiest qualifications in the world for personal loans. This is not where the risk is.
The risk lies in the sudden influx of Chinese buyers. Have you heard of stories where a Chinese buyer walks in a showroom and purchases several floors in one go? As I found out, these “buyers” aren’t really buyers. They are brokers. They pay the reservation money (which ranges from Php25,000 to Php100,000 per unit) to the developer and re-sell the properties in Chinese Mainlanders. Mainlanders have all the reason to buy in the Philippines: 1) invest in better air quality in the Philippines, 2) protect their hard earned money by bringing it offshore, 3) better opportunities in the Philippines (US$10,000 wouldn’t go far in China).
Here’s the problem: we don’t know how well the Chinese brokers explained the payment terms to these buyers. As we’ve heard, these buyers don’t pay spot cash; they take terms when purchasing (e.g. Php10,000 a month schemes). The question lies when the balance comes due—the time when local buyers get bank financing. I don’t think local banks or Chinese banks will lend to them. They don’t have anybody else to borrow from but the developer. Aside from the interest rate risk (especially since it’s on an upward trajectory) and the more volatile foreign exchange risk, there’s serious political risk. What if, the Chinese government decides to restrict capital flows to certain foreign countries–which they’ve done so many times in the past. What happens if they miss payments for a month? For two months? A quarter? What if a chunk of these foreign buyers default? Will projects still be completed? This is highly probable as proven by the fact that a certain publicly traded real estate company’s past due ratio became more than 25% of total receivables some years back (The company was privatized in the same year).
I know, a lot of these claims are unfounded. However, you can’t displace the fact that these are legit questions. I don’t think even regulators have means to check (i.e. BSP can only monitor banks; SEC does not have the manpower to effectively monitor all private companies.)
The good thing is, if the bubble does burst, I don’t think the pandemonium would reach the other segments; simply because leverage isn’t a big component in the other segments. Yes, there might be a slow down but it shouldn’t be as serious.
The points I’m trying to drive at are: First, I hope developers control the amount they sell to each nationality. Second, buyers/Investors should carefully choose which broker to listen to. No, not all real estate investments are “good” investments. At least in RE/MAX Capital, we carefully study which projects to push and we’ll offer the best ones.

The Big Jump

It was 9:48pm and I’m in front of a Bloomberg Terminal in my office…alone…on a Sunday. A few years back, I was a financial analyst of a local bank. During that time, I’d normally spend 13 hours a day in the office—not including the weekends.


Despite being rewarded well (in local bank terms), I came to the point where I wanted more. See, I dreamt big; and I mean BIG. Problem is, I didn’t know what I wanted exactly (though the usual dreams such as living in a mansion, driving a sports car, affording ivy league education for my kids did sound really enticing.) I was willing to sacrifice time, if it meant getting what I want. So there I was, thinking of what route to take. Eventually, I was convinced that boxing it out with ex-pats and playing politics was a dead end. So what’s next?


Whenever things bothered me, I think out loud in front of friends, hoping I’d get suggestions on how to solve problems. A few months later, I bumped into an old friend of mine who, after a long conversation, invited me to join his venture of putting up a real estate brokerage firm.


Initially I thought, I didn’t know much about real estate only that land prices were soaring in Manila and that developers were making a killing. Moreover, I never thought of myself as a salesperson. Actually, I hated talking to strangers (except when there’s liquid confidence, AKA alcohol). What attracted me though is the financial success brokers achieved. I heard (and verified) stories of how some of my broker friends were earning millions (north of Php5 Mn–net) a year! Consistently! That’s a full blown salary of local firm’s CEO! Some of them were even younger than me; people who even barely passed school! I thought if they could do it, so could a person who worked long hours and had a corporate background such as myself. Should be a walk in the park. Or so I thought.


And boy was I wrong.


Six months down from the time I became a real estate broker, I haven’t closed a single deal. I was living on my credit card, paying the minimum amount possible. I didn’t want to run to my dad for money (though I did a few times; thanks dad!) especially since I was in my 30s. I started to feel desperate. I worked on  Php11,000-a-month leases just to get by. There were times when I thought about going back to the corporate world where things may not be as exciting but provided a regular paycheck. The company we put up wasn’t going well either. We were running on fumes and we were scrambling to find ways to pay for rent.


Apparently, being a real estate broker or putting up a business wasn’t as simple as I thought. No, real estate brokerage was never rocket science (not anywhere as complex as financial derivatives). Real estate, however, requires a whole different skill set: patience, perseverance, humility. As my partner puts it, “this ain’t a job for the weak.” I never understood what he meant up until I was down.


Just to give you an idea of what I had to deal with:


Imagine dealing with government officials who claim, “o expired na yung SPA mo dahil two years ago pa yan!”  To which you reply in a VERY nice manner, “Ma’am, saan po naka lagay sa batas na nag e-ex-pire yung SPA?” And to which she answers in a very condescending tone, “Saan nakalagay sa batas na hindi nag-e-expire?”


Or the time when you thought you have a done deal since the seller accepted an offer but changed his mind, come signing day. Or your buyer backs out from a deal (which is very normal). The industry and the income was UNPREDICTABLE!


When you’re broke, have bills to pay, and not getting any younger, you’ll start to question everything. You’d be so lost you start to lose confidence.
How can I provide for a family when I can’t even afford to pay for myself?
How can I afford to go on a date or should I even try to “settle down”??
What happened to the MBA I took???


I felt lost; a failure. I reached the point where liquor no longer helps. I’d down a sleeping pill just to help me forget about my problems and fight another day. Sometimes, I  wished unfortunate things to happen just to make everything stop.


At the peak of my depression, a small deal closed (the ice-breaker). Two weeks later, another closed. Then another. And then a fat one.


Just like that, I was able to zero my credit card bill, pay back my dad and gain the self-confidence I lost.


Our real estate firm was somewhat a different story. While I recovered financially, our small company kept bleeding money. I seriously couldn’t get it. I applied everything I learned from graduate studies from Switzerland! Sales Force Management, Human Resource Management, Strategy, etc. We had to infuse additional capital to keep the company afloat.


During the dark hours, you can’t help but blame other people for things not working out. Heck, I even thought about leaving and just practice brokerage by myself, otherwise I’m going to end up broke infusing capital and continue to burn relationships!


I don’t want this article to sound dramatic, but honest to goodness—the one thing that kept me from leaving were the people behind me. If you take time to get to know the people around you, you’d be saddened by the stark realities of life. But here we were, providing livelihood to our employees, helping aspiring brokers get out of the same situations we were in! We were building something! Something positive!


And just as with the success of my new endeavor, the company began to shape up a few months later. Our associates went through the same ordeal until they landed deals; and then some big ones. Later on, we got more people to join the bandwagon. The business model was finally working. Three years from when we started the business, we achieved a LOT. At this time, we knew we were doing something right. I realized that business plans took time to work.


Just like in any business, the ebbs and flows are natural. The entrepreneurial path is a roller coaster ride: you think everything’s all well and dandy and then (BOOM!) another sink-or-swim problem comes by. The pictures that come out in social media or newspapers is never a testimony to life achievements. They are for the small successes.


On the financial aspect of things, I’m definitely earning more than my corporate job (even with the bonuses). I’m happy that, despite the problems I encounter, the sleepless nights, the drama, I know we’re on to something great. This is when I realized that it was never the fancy things that were going to make me happy. It was the “building-something” part—the feeling of building something and seeing it work; the joy that comes with having happy employees and associates; the shared success that is being celebrated with people who are happy for the group’s success; and the assurance that the success resonated even to the lowest people in the company.


After everything’s been said and done, I’m happier where I am now.


My dream is for our firm, RE/MAX Capital, to grow to more than a hundred agent strong; to unite a fragmented industry; to professionalize an industry coined to be the “Wild-Wild West”. We have a long way ahead of us, and we’ll need all the help we can get.


To those who want to earn more but can’t afford to leave their corporate jobs, RE/MAX Capital, offers a program that can earn you as much as 20% referral fee. That’s 10% more than the industry average. This is especially beneficial to those who have relatives buying properties left and right. Or those who are well connected with people who invests in real estate.


To those who are willing to take the big leap and jump to a promising industry, let’s talk and explore options.


To those planning to do real estate brokerage alone, ask yourself an honest question: which do you think people would trust more: a broker backed up by a successful global brand or a broker with none?


If any of these criteria fit you or if you were simply inspired and sparked by my curious mind, let’s sit down and talk about options.


Juan Patag
PRC Reg. No. 23114
RE/MAX Capital
7th Floor, 8 Rockwell, Hidalgo Drive, Rockwell Center, Makati
M: 0917 520-5826
E: jpatag@remax.ph


Ntoe: Special thanks to my friend, Katrina Calderon, for proof reading this article. 🙂