My Retirement Stategy For The Philippines, Insights Please.

[newyorkmind]

Hey guys!

 

My father is a  Filipino who  immigrated to the states in the 60's and became a US citizen, My Dad came back for my mom in Manila and  I was actually born in the Philippines in the 70s but grew up in America. The NY consulate has a dual immigration process, where if your parent is a Filipino, you can take an oath and have dual citizenship, which I  did a couple of years ago. I have 2 passposrts but have never used my Philippine passport when traveling.

 

I use it for ID purposes when I visit the Philippines. With your question on ownership, I mostly purchased condos but it is interesting to note, my first purchase when I bought a townhouse in Q.C. in 2008 I was not a Filipino citizen and was not dual back then. I just realized no one questioned it as long as I gave the downpayment.  I guess it helped on my end that I look like a local and don't look like a kano for this matter. 

[Thomas]

This is pretty much my basic template and I would love to get your insight, input suggestions. It will certainly be appreciated. Thank you so much!

I think you have solved it good.

 

I don't give you any advice concerning where to settle, because we have very different taste   :)

(I dislike Metro Manila and plan to settle rural somewhere where I can get mobile and - slow  :boohoo:  :) - internet connection.)

 

Concerning different retirement age, EARLIER I thought retire as late as possible, because I plan to become elder than 81  :)   (=Get more total)

BUT I have changed my mind to get the money earlier and invest them instead.  

I would like to semi-retire at 53 I can still work part time for fun, but as a business man and in another field I'm passionate about, This is the reason why the consulting work in the Philippines, mostly online based, It is appealing as I can start setting it up and seeing what I can do there as a business--- I'll be paid about $7,000-$8,000 gross a month and can do extra hours with them for more income another thousand bucks or 2.

With the customers in Phils or abroad?

If in Phils, you will need an EXTRA approval to be allowed to do consulting. 

 

Strange, I thought as a foreigner you are not allowed to own property or do you have right's as the son of a Filipino?

And if that's the case are you allowed to own more than one, as a non resident?

This a genuine question on my part. JB

I haven't heared of any limit IF they are all condos (and max 40% foreigner owned in each condo project.)

(But he told in a later post he has dual citizenship anyway.)

[bows00]

With all your rental investments, have you considered applying for the SRRV? It might be a good option for you if you plan on living in the philippines. I think the minimum age for that is 50, which you would be eligible in about 8 years.

Other than that, your plan is pretty solid. Regardless if the condo bubble bursts, you are in it for rental income, so it shouldn't matter.

But then again, you plan is still 10 years ahead, and that is a long time. There is a good chance your plans may change.

[chris49]

With all your rental investments, have you considered applying for the SRRV? It might be a good option for you if you plan on living in the philippines. I think the minimum age for that is 50, which you would be eligible in about 8 years.

Other than that, your plan is pretty solid. Regardless if the condo bubble bursts, you are in it for rental income, so it shouldn't matter.

But then again, you plan is still 10 years ahead, and that is a long time. There is a good chance your plans may change.

 

He has or is getting back citizenship so wouldn't need it.

 

My friends have 2 deluxe level condos in Eastwood, and find it more convenient to live in one of them.

 

All that glitters ain't gold though those condos need some quite high maintainence between tenants. And will need to be gutted and renovated as early as 25 years. I have been inside and although Eastwood is nice, some of the building and electrical work is atrocious,

Edited May 25, 2015 by chris49

[Larry45]

Everyone has different tolerances for risk, but have you thought about just packing up and coming to the Philippines now?  If you have $50K in cash, a credit card for emergencies, and a monthly consulting income of $7-8K, that's more than enough to support yourself here.  Even if you have no renters for your properties, your income is double what you would need to live here and pay the mortgages.  Plus, if you're looking to get married and start a family, it might be better to do that in your 40's than in your 50's.  JMHO.

[newyorkmind]

 

This is pretty much my basic template and I would love to get your insight, input suggestions. It will certainly be appreciated. Thank you so much!

I think you have solved it good.

 

I don't give you any advice concerning where to settle, because we have very different taste   :)

(I dislike Metro Manila and plan to settle rural somewhere where I can get mobile and - slow  :boohoo:  :) - internet connection.)

 

Concerning different retirement age, EARLIER I thought retire as late as possible, because I plan to become elder than 81  :)   (=Get more total)

BUT I have changed my mind to get the money earlier and invest them instead.  

 

I would like to semi-retire at 53 I can still work part time for fun, but as a business man and in another field I'm passionate about, This is the reason why the consulting work in the Philippines, mostly online based, It is appealing as I can start setting it up and seeing what I can do there as a business--- I'll be paid about $7,000-$8,000 gross a month and can do extra hours with them for more income another thousand bucks or 2.

With the customers in Phils or abroad?

If in Phils, you will need an EXTRA approval to be allowed to do consulting. 

 

Strange, I thought as a foreigner you are not allowed to own property or do you have right's as the son of a Filipino?

And if that's the case are you allowed to own more than one, as a non resident?

This a genuine question on my part. JB

I haven't heared of any limit IF they are all condos (and max 40% foreigner owned in each condo project.)

(But he told in a later post he has dual citizenship anyway.)

 

 

Hi Thomas, Bows000, Larry, Chris,

 

My understanding is I will have US clients but will check to make sure and everything is done right. Thanks! The thing I want to make sure is to have enough while waiting for the retirement benefits to kick in, 62 for IRA and Ssocial Security. To be honest, having lived in a big city all my life my dream is to live in an island by the beach in my 60's. But if my semi-retirement plan works out at 53, I feel I want to live in MNL and planning to have enough money and cash flow to travel a lot, I intend to travel on budget but as we all know it adds up.

 

Bows, chris,

I'm begining to enjoy the benefits of the dual citizenship, but have not fully explored what I can do with it on the Philippine side. I will look at SRRV for sure browsing it seems that I can have some tax exceptions.

 

Good point about the condo investments in the Philippines, some of the buildings look really good outside but the finish has a lot left to be desired. The developers even big name ones are very disorganized and buyers seem not to be protected as a consumer.  For instance, one of my condo unit was fully paid but the actual turnover was a guessing game, it took months before I got posession. In the end though, if the financial strategy is sound I'm preapared ro  just eat it up and make it work out, but unfortunately after after unnescessary hassles because of teh developers disorganization and sometimes not being upfront.

 

I was here in New York when the real estate market bubble crash, and I somehow see a lot of the same things happening when I was In Manila  for a couple of weeks last April, specifically in the overbuilding and the vacancy/availability of units of the new buildings, easy downpayment terms etc... I should be fine because I'm in it long term, but I'm eager to pay the investment off in a few years, get it properly insured and I'm planning to have a high vacancy rate as I'm aware if I don't play real estate smart it can go back to bite you. The  rewards if I pull it off is worth the risk.

 

Larry,

Yes I'm tempted to just pack it and go to Manila but I do have other work commitments here  and also I want to have huge reserve as back up, I really wnat to take my time too and be smart about it, so a year or so is my timeline. I really don't want to have kids, so I feel I have no time pressure, but yes in my 40's will be ideal, after a few relationships, living in with ex-fiance here somehow  I always knew that I will marry a simple Filipina from one of the islands and seems destined to do so. We shall see.

 

Thanks all it has been very educational hope to hear more of your experiences there too. I have more questions but I'll save it for later. Regards,

 

Roger

[jon1]

If you have to live in Manila, why not Eastwood City? It's a little cheaper than Makati and you will have good Internet. There are many call centers and IT related businesses within Eastwood City.

 

You could also easily launch off from there and take short getaways to explore the islands. With the expressways being expanded you can get to Baguio in about 5-6 hours, La Union - 5-6 hours, Subic 3-4 hours, Baler - 6-7 hours, Puerta Guellara - 6-7 hours. 

 

I agree about the glut of condos on the market. 

 

You could live in Eastwood off of $2000 per month with ease and save the rest. That's almost $70,000 annual in savings and you are getting the on the ground experience that you want. 

 

Lots of us want to live on the beach but find out instead it is not all that. I used to feel like that but now live up on a hill on the edge of the Jungle. I like the seclusion and peace. I can be at the beach in about 20 minutes if I want and find that I go there less and less. Also beach front property has to worry about tidal surge, tsunamis and usually end up crowded, especially this time of the year.

 

Like others have said, you are in envious position (dual citizen, with a lucrative opportunity and some capital investments already paying for themselves). 

Edited May 26, 2015 by jon1

[newyorkmind]

You could also easily launch off from there and take short getaways to explore the islands. With the expressways being expanded you can get to Baguio in about 5-6 hours, La Union - 5-6 hours, Subic 3-4 hours, Baler - 6-7 hours, Puerta Guellara - 6-7 hours. 

 

I agree about the glut of condos on the market. 

 

You could live in Eastwood off of $2000 per month with ease and save the rest. That's almost $70,000 annual in savings and you are getting the on the ground experience that you want. 

 

Lots of us want to live on the beach but find out instead it is not all that. I used to feel like that but now live up on a hill on the edge of the Jungle. I like the seclusion and peace. I can be at the beach in about 20 minutes if I want and find that I go there less and less. Also beach front property has to worry about tidal surge, tsunamis and usually end up crowded, especially this time of the year.

 

Like others have said, you are in envious position (dual citizen, with a lucrative opportunity and some capital investments already paying for themselves). 

 

Hi Jon, Eastwood may be ideal esp that it is an outsourcing town, and I imagine they have advance fiber optics. I'll look into it. In going to the places in Luzon you mentioned do you drive on your own?  and what are the road conditions? safety?  I take one needs an SUV of some kind to go to those towns? or not necessarily. The only place i've been to iin your list s Baguio but I always hear subic etc.. and want to go at some point. Roughly how much should I budget for a car/SUV?

 

Yes, $2K a month is ideal i'll prolly save around $45K a year after taxes which is very significant for my early semi-retirment goals. 

 

You're actually not the first one to tell me that liviing beach front is not all that, hope it has a different effect on me. I intend to do a lot of writing when the time comes, and the water inspires me.

 

Thanks Jon!

[jon1]

 

You could also easily launch off from there and take short getaways to explore the islands. With the expressways being expanded you can get to Baguio in about 5-6 hours, La Union - 5-6 hours, Subic 3-4 hours, Baler - 6-7 hours, Puerta Guellara - 6-7 hours. 

 

I agree about the glut of condos on the market. 

 

You could live in Eastwood off of $2000 per month with ease and save the rest. That's almost $70,000 annual in savings and you are getting the on the ground experience that you want. 

 

Lots of us want to live on the beach but find out instead it is not all that. I used to feel like that but now live up on a hill on the edge of the Jungle. I like the seclusion and peace. I can be at the beach in about 20 minutes if I want and find that I go there less and less. Also beach front property has to worry about tidal surge, tsunamis and usually end up crowded, especially this time of the year.

 

Like others have said, you are in envious position (dual citizen, with a lucrative opportunity and some capital investments already paying for themselves). 

 

Hi Jon, Eastwood may be ideal esp that it is an outsourcing town, and I imagine they have advance fiber optics. I'll look into it. In going to the places in Luzon you mentioned do you drive on your own?  and what are the road conditions? safety?  I take one needs an SUV of some kind to go to those towns? or not necessarily. The only place i've been to iin your list s Baguio but I always hear subic etc.. and want to go at some point. Roughly how much should I budget for a car/SUV?

 

Yes, $2K a month is ideal i'll prolly save around $45K a year after taxes which is very significant for my early semi-retirment goals. 

 

You're actually not the first one to tell me that liviing beach front is not all that, hope it has a different effect on me. I intend to do a lot of writing when the time comes, and the water inspires me.

 

Thanks Jon!

 

 

I have been driving on my own. But I would not recommend it until you get the feel for how they drive. Manila has vehicle coding, where you cannot use your vehicle one day per week based on your license plate number. If in Eastwood, you do not need a vehicle as the condos are across the street from the business offices. I do not know what the rent is for the business space but the condos used to be 20,000php for a studio and up. An SUV is ideal as you get a vehicle with a good suspension and for the not so good road conditions (country wide except for the NLEX, SCTEX, TPLEX).  SUVs brand new (Mitsubishi, Toyota, Ford) are going for around 1.2Mphp. Most banks want a minimum of 20% down. You can drive here for 90 days on your US license and then you need to get a Philippine DL (very easy to do). 

 

On taxes, by you living and working overseas for 330+ days per year, you qualify for the Foreign Earned Income Credit. Last year this credit was at $99,200. So unless you are a resident of a state with Income Tax (all but TX, NV, AL, FL, SD, WA, WY) you would not end up paying any Federal Income tax as the 2015 Credit is $100,800. You still will be required to pay for SS and Medicare. You might want to look into getting a residency in one of the above listed states established prior to your departure (minimum is an address and a driver's license typically). As a consultant however, you may have to pay the employer's share of SS and Medicare. 

[newyorkmind]

On taxes, by you living and working overseas for 330+ days per year, you qualify for the Foreign Earned Income Credit. Last year this credit was at $99,200. So unless you are a resident of a state with Income Tax (all but TX, NV, AL, FL, SD, WA, WY) you would not end up paying any Federal Income tax as the 2015 Credit is $100,800. You still will be required to pay for SS and Medicare. You might want to look into getting a residency in one of the above listed states established prior to your departure (minimum is an address and a driver's license typically). As a consultant however, you may have to pay the employer's share of SS and Medicare. 

 

Thanks so much Jon, this is very helpful! I'm definitely consulting  with my accountant as I may be a candidate for this exclusion. I may still have US income coming in, I hope that doesn't disqualify me, this may be significant. 

 

Yes, Initially I thought I can drive there as I've navigated very well in NY traffic, but I know what you're saying with Manila driving, but maybe an occasional driver may do the trick if not too expensive. Thanks again!