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(New page: MACTAN STATUS 12/18/20 by ian valuing our mactan lot: mactan was appraised at P49 million. i included the appraisal report in this package. also note that if we had a right of way wide e...)
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MACTAN STATUS 12/18/20 by ian

valuing our mactan lot:

mactan was appraised at P49 million. i included the appraisal report in this package. also note that if we had a right of way wide enough for cars, the value is easily P50k/sqm or P82.75m. but i think it's a blessing in disguise because even if we had a wide right of way, the most ideal use of the property is bed spacing or something similar to munoz. bed spacers don't usually have cars. note that the width of the current right of way is more than enough for motorcycles. because of the very strategic location, workers in mepza, city hall, gaisano malls, hotels and resorts will be clamoring to rent it if we only offer P4k/month per room (note munoz's m5 si P6k/month per room). they can have a roommate so they only need to pay P2k/month. note most bedspacers are usually jam packed with at least 4 people per room and at least 8 people sharing a bathroom. with ours, each room have a bathroom (similar to m5). so imagine the full occupancy and even the long waiting list of bedspacers clamoring to live in our C1 C2 and C3.

now let's compute the potential earnings. note i am being very conservative here. i'm even assuming P4k/month per room instead of the realistic P6k/month. m5 has 52 units on a 444 sqm property. that already includes parking space. that means we can easily have 3 m5's on our 1,655 sqm with 323sqm left to spare (in case there are easement requirements). our caretaker insisted it's 2,444 sqm but i walked the dimensions and it's only 65 steps by 27 steps. after playing golf for 25 years i know my 1 step is 1 yard so it's 65X27 = 1,755 square yards = 1,579 sqm. so 52 X 3 = 156 units. let's assume worse case scenario where we only have 75% average occupancy. so 156 (.75) = 117 X P4k = P468k per month earnings or P5.616m/year. let's assume a PE of 20 which is very low considering the PE of S&P500 right now is 31. using a PE of 20, the value of mactan lot is a whopping P112,320,000 minus cost of construction. and that's using assumptions that insanely and intentionally undervalues the property. note the PE of our valle verde condo is 27 (P10m/P360k). and i'm giving our mactan property only a PE of 20. munoz is selling m5 for P20 million. the land value is P20k/sqm X 444 = P8.9m. that means the cost of the building is conservatively around P12m. so P12m X 3 = P36m. let's deduct it from P112,320,00, so the land value of mactan to our family is around P76,320,000, using insanely conservative assumptions. so next time a buyer of mactan offers P20m, give them the finger. i'm kidding actually if we haven't sold any property yet and haven't paid the estate taxes we should take the P20m offer.

where in the world can we get P36m for the buildings? the beauty of this idea is that we can start with just 1 building so we only need P12m. this is actually small relative to the sale of any toledo property.

the bedspacing idea does not really require expertise. we don't have to reinvent the wheel we can follow m5 design and call ours c1, c2 and c3. even hire the same architect or contractor. except of course we need them to explain to us the architectural flaw of m5 that is causing the leaking problems so we can verify if they fixed the design. i feel sorry for munoz we just made him our guinea pig.

it's very easy to collaborate nowadays using online collaboration tools and accounting systems that provide transparency where everyone can see the revenues and expense down to the last cent. christian can help with the IT area. i can also help with setting up a system and documentation for all kinds of operations such as maintenance schedules. we just need to document all responsibilities and duties to make it flexible for any member of the clan to join and leave the business. there are so many members in our clan each with our own skill set so we will never run out of manpower.

i'm not saying we will pursue this idea. we should still try to sell mactan at P20m. i'm just saying if nobody buys our mactan lot 5 years from now because of the right of way issue, then we should be happy because that means we have the opportunity to provide stable cash flow for all the heirs and their family.

i interviewed one of the tenants of munoz C5. here are more details on the problems of the building. the drain pipes are leaking and it wets their bed cushions. they know it's the drain pipes and not water supply pipes because it really smells. there's no spacing or kesame between the floors. the pipes, are embedded inside the cement so the problem is very hard to fix. what's worse is that the sinks, shower drain and toilet share the same drain lines. so when one unit flushes their toilet, the tenants in other units taking a shower will smell the tae. he said the smell is strong and terrible. there is no exhaust or hungaw. the lesson we should learn here is never share the shower and sink drain lines with the toilet drain. they have to be separate lines. there should also be exhaust (hungaw). another important lesson is something i always thought about since i started working with houses - route all pipes (drain, water, electrical) outside the walls, not inside. it always made me angry why electrical conduits, water pipes and drains have to be embedded inside walls and under the ground. and it turns out nowadays, it's standard construction design to put all these pipes outside - they just cover it with something that's easy to remove for aesthestics so that it will look nice. so another lesson here is that when my views and opinions goes against common convention, most likely my unorthodox views will turn out to be correct.

another major problem is that the walls and ceilings have cracks. even if you live in the second floor, rain water will seep through the cracks and drip in your room. only engineers or architects can solve this.

i thought each floor has a common kitchen. turns out there is just 1 dirty kitchen on the roof top where only 4 people at a time can cook.

keep in mind despite all these problems, the building is always fully occupied, but the turnover is very fast.

note C5 means it's the 5th building of munoz. so another important lesson to learn here is that that even with all his past experience, mistakes and problems still happen. it's not a sure thing which means if we get into this business we really need to devote all our time and effort.

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