Money Matters

I've never been good at money. I think I inherited this trait as a recessive gene on my mother's side. Hence, this is definitely my number one concern when it comes to picking up and moving to another country. I've been doing a bunch of research this week on how we would finance our dream.

There are 37 universal and commercial banks operating in the Philippines, in which 17 are foreign banks. The top three banks in the country are Metrobank, Bank of the Philippine Islands and Banco De Oro Unibank. All three provide small business financing. The good news is that the Filipino government has been encouraging foreign investment, especially in tourism. There are special products at each of the banks specifically for building and renovating hotels or other tourist facilities.

So here's how it would break down. I'm anticipating that we would spend about US$600K on purchasing a property and then spend another US$200K on renovations and supplies and then have US$200K for working capital. From what I've been reading, it's likely that we could get financing for 75% of the project. That means that we would need at least US$250K in cash to get started. So where the heck are we going to get this much money?

1) Savings

JT has been bugging me to really take a good hard look at my finances and actually start spending and saving from a budget. He seems to think that we could come out with at least 100K from this if I continue to make the salary that I do and if he takes over managing our money. I think he's being overly optomistic, but I'm willing to hand over my paycheck to him every month if it makes this dream become a reality.

2) Kate's 401K

I am saving for retirement, but that's only because they take it out of my paycheck every month. I've built up some money here and while the thought of spending all of it on this venture is scary, I like to think that if we lost it all, then I'm still young enough that I would have time to catch up in that department.

3) The sale of our three properties

I have bought 2 houses in my time in Charlotte. I say those are "real estate investments," but at the time my main motivation for buying them was that I wanted to have a place to live and decorate. At least now they are both rented out and are actually earning equity.

The house we live in, we bought for a great deal. If the economy was at it's peak, we would have about $60K in equity already. Here's hoping that when we finally move, we'll have enough in those three houses to take a big chunk out of our $250K goal.

4) Investment from family members

I am most wary of this one. While I know my family members would willingly invest in our venture, it's one thing to risk your life savings, it's quite another to risk someone else's money - especially when it's people you love and care about. Ideally, we'd like to do this all on our own.

Some links:

Information from Metro Bank on Small Business Financing

Information from Banco de Oro Financing

Bank of the Philippine Islands

Thoughts on Leyte

Today, I'll be sharing my thoughts/research on Leyte. Ting had indicated that it is the next up and coming location for diving, which would certainly drive traffic to our resort. There seems to be a lot of interesting dive sites, especially viewing whale sharks. There also seems to be a ton of places to go trekking in the jungle, which I know JT will like. I get the sense that it's more "untouched" than some of the other sites.

Resorts For Sale:

Hindang, Leyte, Philippines

Mahayag, Albuera, Leyte, Philippines

Both of the resorts seem to be well established, but I wonder why they're selling. I would think that given that the area is still up and coming, we would have to have capital to keep us afloat until we can establish regular clientele.

JT and I were discussing this weekend if we would want to be somewhere that is established, with steady traffic of vacationers/divers already travelling to the area vs. being in a smaller resort village where we would need to do a lot more marketing, but there is less competition. There are pros and cons to each, but ultimately, we couldn't come up with an answer until we actually visits the sites.

While it's important to us to be monetarily successful, it's more important that we live somewhere where we like the lifestyle. JT would be all about living in the jungle, with no city resources around. I would want to be able to do a little shopping without having to drive more than an hour. Can you imagine if I had to take a boat to buy diapers? It's a balancing act.

Vitamin Sea Resort

Just for fun I emailed the owners of the Vitamin Sea Resort. Here's what they said:

We have cut the asking price from 29 million pesos to 25 million pesos! for a quicker sale. The resort will sell all of the buildings and their contents along with the boats in the sale. My wife (Anecita Midkiff) will sell the land. As the new owner you will own 100% of the titled land and the resort The resort is designed to have 6 luxury Suites about 40 sqm and a Presidential Suite about 80 sqm on the first floor. Each room has a private terrace, living room, bedroom and C/R (bathroom) with dual sinks outside the C/R. The presidential suite is designed to have a private kitchen. There is a 145 sqm restaurant/ bar plus a partly furnished 3 bedroom 145 sqm air conditioned apartment on the second floor with breath taking ocean and mountain views Also , we have a luxury beach bar with billiard area 90% complete. The suggested rental prices for this resort as compared to our neighbor Anda White Beach Resort is 5,000p or more a night for the 6 suites and 10,000p per night for the presidential. Pool is dug but not started and is designed to be an infinity pool. The Resort is currently 75% finished. An extra 4 million pesos ($85,000 USD) will “turnkey” the resort.

Nearby cliff top resort “Bluestar” just sold this past year and was on the market for 35 million pesos with only 7 fan rooms and no restaurant. Anda is slated to be the next great destination in Bohol. There is a pristine 14km reef for diving right in front of the resort. Sand is whiter than Boracay. The resort comes with 32 foot banca style boat good for snorkeling or diving trips and (2) 15 foot paddle bancas. A large storage Building with (3) 2000 liter blue poly water tanks and a beautiful cottage for 4 stay-in workers with an extra storage area in the attic. Also, you have sellable rights to 1/2 kilometer of power lines that we had installed by the electric company. We also have a new 25 KVA transformer and 5 brand new Sanyo split type air conditioners. Various tools, small generator, jack hammer and many other items convey.

Our reason for selling is a disappointing story. My wife’s relatives were supposed to help us build the resort and instead embezzled and stole funds to the extent that we ran out of money before we could get it functioning. We do not want to use financing and my 2 young american children wish to go home. All papers for titled land and buildings are clean. This sale is distressed due to the fact there are no more funds left to get resort operational. I hope you can take advantage of this sale to purchase this titled land with a beautiful 3 bedroom 145 sqm apartment attached to a 7 room luxury resort with restaurant. Paradise awaits!

Thoughts on Cebu

I've been researching all of the suggestions that Ting had, starting with the first location - Cebu.

So far, most of what I know about Cebu is what I've read on Wikipedia. Kind of pathetic. I've never had the opportunity to visit.

What I like most about Cebu is that there's both a city and remote island locations close by. I've mentioned before that I would like Elyanna to attend an IB school and there is one in Cebu City. The logistics of going from our resort to that school are yet unknown though.

Another benefit is that there's already an international airport there as well. This will be essential for our potential guests.

The island of Mactan would be ideal since it's the closest to the city. However, I think my favorite is Bohol on the Comotes islands. According to my aunt, they have clients there with beachfront properties. It would be great to have contacts already. I even found a resort that is for sale there, called Vitamin Sea Resort. It only has 7 suites, so we'd have to expand, but how beautiful. I contacted the realtor, and we plan on seeing the property when we visit in February. Hopefully, it will still be available.

More interesting links:

Doing Business In Bohol

Another Resort for Sale - This one seems to be really hard to access though.

Augh...does anyone want to lend us $700K US to get us started now?