1

CHOOSING THE BEST!

BUYING MODERN HOUSE, CONDOMINIUM and TOWN HOUSE as an
INCOME GENERATING PROPERTY

Submitted by:
Tajanlangit, Maria Abigail N.
4 IE A

Submitted to:
Mr. Jeffrey Espineli

CONTENTS

Title Page

Contents

Introduction
3-5
Table 1
6

: Modern House

Table 2: Condominium
7
Table 3: Town House
8
Computation: Modern house
9-10
Computation: Condominium
11-12
Computation: Town house
13-14
Conclusion

15

References

16

INTRODUCTION
Life requires everyone to make decisions. The choices we make is
never easy for this will result to consequences. Some decisions can be simple
but others can be complicated. An example would be choosing the best
alternative which will greatly affect your life, in which you will be putting
several money in order to obtain it.
In the future, when you have enough savings, plenty of choices comes
to mind on which to buy or invest your savings. These might include buying a
condominium unit, buying your own house and lot, buying a car, starting a
business and many more. Wise and proper decision is needed in order to buy
the right thing you need or interested in without regretting the decision
youve made.
Below are the alternatives on houses and their corresponding
information to choose from by using the methods: Present Worth, Future
Worth, Annual Worth, and ERR/IRR.
A. Modern House

A luxurious modern type of architecture home in Paranaque, located in an

attractive and highly-secured community. 200sqm Lot Area: 241 sqm
MONTHLY RENT: 70,000

Property Details:

4 Bedrooms
4 Toilet and bath

Powder Room
Den
4 Car Garage
Maids Room
Service Area
Lanai

Living and Dining Area

Swimming Pool with deck
Gated Community with 24
hours Security
With Roving Guards
Flood Free

B. Condominium

Location

Mango Tree Residences The newest High End

Residential Development of
Empire East Land Holdings,
Inc.
Located in
along Peterno
A fully

a clean/green and very accessible area

Street corner Ledesma Street San Juan City.
furnished 2 bedroom

MONTHLY RENT- Php 32,000

C. Townhouse

A 3 Storey Townhouse in Tandang Sora Quezon City. Near

Congressional Extension and Visayas Avenue
Property Details:
Floor Area: 164sqm
Lot Area: 107sqm
Bedrooms: 4 + maids room
Toilet and Bath: 3 + Powder Room
Garage: 2
MONTHLY RENT: Php 40,000

MODERN HOUSE
Table 1
ITEMS
Home Price
(INITIAL
INVESTMENT COST)
Minimum down
payment
Down payment
amount
Closing Cost
(Total Non
Recurring Cost)

DETAIL
SOURCE
S
8.8
According to BF Homes Paranaque
Million
20%
Php
1,760,0
00
Php
726,00
0

According to the sales agent and an

accountant as well

Transfer Tax= 0.75% of

selling price= 66,000
Documentary Stamp tax= 1.5% of
selling price= 132,000
Title Registration fee= 6% of
market value= 528,000

Length
(N)

10
years

Closing Cost= Php 726,000

Bank of the Philippine Islands which is also
connected with the loan interest rate

Property taxes
(Annual Expense)

Php
35,200

Property tax= Home Price* minimum down

Market Value

Php
7,920,0
00

Average Expected Life= 100 years

8,800,000/100= 88,000
88,000*10= 880,000
8,800,000-880,000=7,920,000

payment* Property tax rate

MARR
YEARLY RENT
(Revenue)

10%
840,00
0

70,000*12= 840,000: According to the

going rate of rent in Paranaque

CONDOMINIUM
Table 2
ITEMS
Home Price
(INITIAL
INVESTMENT COST)
Minimum down
payment required
by the loan provider
Down payment
amount
Loan Amount

Closing Cost
(Total Non-Recurring
Cost)

DETAIL
S
5.4
Million
20%

SOURCE
Empire East brochure

According to the sales agent and an

accountant as well

Php
1,080,00
0
Php
Php 4,320,000.00 was the results of 80%
4,320,00 of Php 5.4 Million
0
Php
372,600

Transfer Tax= 0.75% of

selling price= 40,500
Documentary Stamp tax= 1.5% of
selling price= 8,100
Title Registration fee= 6% of
market value= 324,000

Loan Interest Rate

Length of Loan Term
(N)

8%
10 years

Closing Cost= Php 372,600

Bank of the Philippine Islands
Bank of the Philippine Islands which is
also connected with the loan interest rate

Property taxes
(Annual Expense)
Market Value

Monthly Association
Dues

Php
21,600

Property tax= Home Price* minimum

down payment* Property tax rate

Php
Average Expected Life= 50 years
4,320,00 5,400,000/50= 108,000
0
108,000*10= 1,080,000
5,400,000-1,080,000= 4,320,000
Php
According to Empire East Condominium
2,400

YEARLY RENT

384,000

32,000*12= 384,000: According to the

going rate of rent in Condominiums

TOWNHOUSE
Table 3
ITEMS
Home Price
(INITIAL
INVESTMEN
T COST)
Minimum
down
payment
Down
payment
amount

DETAILS
7.7
Million

Closing
Cost
(Total NonRecurring
Cost)

Php
635,250

20%

SOURCE
http://www.quezoncityhouseandlot.com/tandangsora-quezon-city/7-5m-large-townhouse-saletandang-sora-quezon-city/
According to the sales agent and an accountant
as well

Php
1,5400,0
00
Transfer Tax= 0.75% of
selling price= 57,750
Documentary Stamp tax= 1.5% of
selling price= 115,500
Title Registration fee= 6% of
market value= 462,000

Length
(N)
Property
taxes

10 years
Php
30,800

Closing Cost= Php 635,250

Bank of the Philippine Islands which is also
connected with the loan interest rate
Property tax= Home Price* minimum down

(Annual
Expense)

payment* Property tax rate

Market
Value

2,566,66
6

MARR

10%

YEARLY
RENT

480,000

Since townhouse has 15 years of average life

expectancy, using straight line method:
7,700,000/ 15= 513,333
513,333*10year= 5,133,333
7,700,000-5,133,333= 2,566,666
40,000*12= 480,000: According to the going rate
of rent in Quezon City

CASH FLOW DIAGRAM and COMPUTATION

A. Modern House
840,000

0 1

7,920,000

2 3 4 5 6 7 8 9 10

N=10

726,000
8.8 M

35,200

GIVEN: MARR= 10%

Present Worth:
PW= -8,800000 726,000- 35,200 (P/A, 10%,10) + 840,000 (P/A,
10%,10)
+7,920,000(P/F, 10%, 10)
PW= -8,800,000 726,000 35,200 (6.1446) + 840,000 (6.1446) +
7,920,000(0.3855)
PW= Php -1,527,665.92

Future Worth:

FW= -8,800000 (F/P, 10%, 10) 726,000(F/P, 10%, 10) - 35,200 (F/A,
10%,10) + 840,000
(F/A,10%,10) + 7,920,000
FW= -8,800,000 (2.5937) -727,000 (2.5937)- 35,200 (15.9374) +
840,000 (15.9374)+
7,920,000
FW= Php 3,963,760.38

Annual Worth:
CR= 8,800,000 (A/P, 10%, 10) 7,920,000 (A/F, 10%, 10)
CR= 8,800,000 (0.1627) 7,920,000 (0.0627)
CR= 935,176
AW= 840,000 -726,000 -35,200 -935,176
AW= -856,376
IRR:
PW=0
PW(10%)= -1,527,665.92
PW (5%)= 1,550,512.16

Using Interpolation
Percent
5%
X
10%
X= 0.0751
X= 7.51 %

Value
1,550,512.16
0
-1,527,665.92

B. Condominium

384,000

0 1

4,320,000

2 3 4 5 6 7 8 9 10

N=10

372,600
5.4 M

21,600

GIVEN: MARR= 10%

Present Worth:
PW= -5,400,000- 372,600- 21,600 (P/A, 10%, 10)+ 384,000 (P/A, 10%,
10) + 4,320,000
(P/F, 10%, 10)
PW= - 5,400,000- 372,600 -21, 600 (6.14460) +384,000 (6.14460) +
4,320,000 (0.3855)
PW= -1,880,436.96
Future Worth:

FW= -5,400,000 (F/P, 10%, 10) 372,600 (F/P, 10%, 10) - 21, 600 (F/A,
10%,10) +
384,000(F/A, 10%,10) + 4,320,000
FW= -5,400,000 (2.5937) -372,600 (2.5937)- 21,600 (15.9374)
+384,000 (15.9374) +
4,320,000
FW= Php -4,876,678.86
Annual Worth:
CR= 5,400,000 (A/P, 10%, 10) 4,320,000 (A/F, 10%, 10)
CR= 5,400,000 (0.1627) 4,320,000 (0.0627)
CR= 607716
AW= 384,000-372,600-28,800-607,716
AW= -18,007.716

IRR:
PW=0
PW(10%)= -1,880,436.96
PW(3%)= 533,256.48
Using Interpolation
Percent
3%
X
10%
X= 0.0455
X= 4.55 %

Value
533,256.48
0
-1,880,436.96

C. Town House

480,000

0 1

2,566,666

2 3 4 5 6 7 8 9 10

N=10

635,250
7.7 M

30,800

GIVEN: MARR= 10%

Present Worth:
PW= -7,700,000- 635,250- 30,800 (P/A, 10%, 10) + 480,000(P/A, 10%,
10) + (2,566,666
(P/F, 10%, 10)
PW= - 7,700,000- 635,250- 30,800 (6.14460) + 480,000 (6.14460)+
2,566,666 (0.3855)
PW= -4,585,645
Future Worth:

FW= - 7,700,000 (F/P, 10%, 10) 635,250 (F/P, 10%, 10) 30,800(F/A,
10%,10) +
480,000(F/A, 10%,10)+ 2,566,666
FW= -7,700,000 (2.5937) -635,250 (2.5937)- 30,800(15.9374) +
480,000(15.9374) +
2,566,666
FW= Php -11,893,391.85
Annual Worth:
CR= 7,700,000 (A/P, 10%, 10) 2,566,666 (A/F, 10%, 10)
CR= 7,700,000 (0.1627) 2,566,666 (0.0627)
CR= 1,005,697.042
AW= 480,000-635,250-30800-1,005,697.042
AW= -1,191,747.042

IRR:
PW=0
PW(10%)= -4,585,645
PW(20%)= -6,455,721.472
Using Interpolation
Percent
10%
X
20%
X= 0.1452
X= 15.52%

Value
-4,585,645
0
6,455,721.472

CONCLUSION
It is difficult to choose from many alternative. But because of various of
methods, a person can choose the best alternative without a waste of
money.
As seen on the computation and results, it can be noticed that
townhouse is worth the chance to buy since its values from computation are
the largest among the rest of alternatives.
Also, using the IRR Method the results are as follows:
Modern house- 7.51%, Condominium- 4.55%, and Townhouse14.52%
Therefore, I should choose townhouse for greater rate of return on my
money

REFERENCES

Bf Homes Paranaque. http://www.homesearch.ph/index.php/bf-homesparanaque-philippines/1118-4-bedroom-bungalow-house-for-sale-in-bfhomes-paranaque.html. Retrieved on 11/05/16

Property Condomominium. http://www.property24.com.ph/2-bedroomcondominium-for-sale-in-san-juan-110764802. Retrieved on 11/05/16