Liquidity is the twin of opportunity

Femaad’s experience on accidentally stumbling upon a townhouse on rush sale is a perfect opportunity to start a discussion on home-buying tips, especially now that Filipinos are buying houses both for investment and for old age.

(Photo courtesy of Michelle Morelos).

It also illustrates how liquidity is the twin of opportunity. This is what she shared:

My husband and I have been renting since we got married in 2000. Medyo mahal rent namin - P30,000 a month. Before reading on financial independence, okay kami with that rent. Afterwards, we decided to downgrade and look for a cheaper place na comfortable, nice-looking naman, and secure. In the process of looking for a place to rent, we came across a townhouse for sale. Wala pa sanang planong bumili, but the corner unit’s price was a good deal, considering it was within town (hindi outskirts), about 500 meters from a jeepney line, with adequate water, good neighbors. It had three toilets and baths, four bedrooms, and a two-car garage. Nearby units were selling at P1 million to P2 million more. Cash kasi gusto ng nagbebenta kaya mas mura. Even my brother who’s a realtor and his friend, the head of chamber of commerce in our place, said we might not come across such a deal again.

So, we bought the place — but, in the process, we had to exchange all our saved foreign currency; had to sell all stocks at PSE - buti na lang matataas prices in March; sold some shares I held at a hospital I am affiliated with; and we owed a little from the bank for our renovation since the interiors were not to our taste. Philequity shares na lang naiwan, pero konti lang yon.

Our architect-friend scraped off all paint outside & inside, waterproofed, then repainted; changed all trusses to metal; treated all metal works with anti-rust; reinforced the floors; used anti-bacterial paint; changed all lavatories/sinks; recomputed electrical power needs, and rewired; fixed all leaks…etc etc…had to owe a little more for renovation costs

We now have our own place, which we are so happy about. But, we only have a months’ worth of emergency money left (nakaka-insecure); and I have just gone back to buying stocks again, pero konti lang.

Start from scratch ulit, pero we all have to start, di ba? Honestly, sometimes we feel we made a mistake, since our plan was to get our own place in five years’ time pa; but then, when opportunity knocks, open the door, di ba? What do you guys think?

Some have been known to profit from investing using borrowed money, but that’s always an “iffy” proposition. That’s something that should have a “proceed at your own risk” sign in big bold letters. Remember the mantra “high-risk, high return” is often repeated without the most important word in the catchphrase – probability.

I’m not saying it can’t be done. I’m saying it’s best done based on rigorous study — not on a whim. However, those who have their backs covered with ample cash can easily gain from unexpected good buys or good investment opportunities.

Advice from Orly Javier, whose advocacy is called Wealth Trigonomics, and JC were both sound and sensible. But I believe the tone would have been different if the house had been bought on credit and if the transaction endangered all rainy day funds and income opportunities for the couple. Liquidity was your family’s best friend, femaad . Now, the best thing to do is to ramp up your savings again.

(Filipinos would do well to learn from ants’ successful technique in preparing for the rainy day — just keep on doing it!)

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