P20,000/month is the benchmark 2 bed leasing in Metro Manila
QUESTION: Rltr John, I am planning to buy a condo unit as an investment so I can rent it out. What is the maximum rent for a 2 bedroom condo unit that I plan to buy at P4 Million? What is the expected ROI?
ANSWER: Check out the best alternative from the point of view of the renter/lessee. The benchmark in terms of price and quality would be whatever hotel can provide the cheapest yet quality service. If you are renting out a unit with two good beds with free Wifi and services, it cannot be higher than P20,000 nowadays. Any 2 bed unit with renting price higher than P20,000 would make the person think it is better to stay in Go Hotel at less than P20,000 a month.
Assuming you have zero operations cost, your annual ROI would be no higher than six percent (6%) if you buy a 2 bedroom unit at P4Million and have monthly rent income of P20,000. You are most fortunate if you can buy a 2 bedroom at P4 Million and also lucky if you can easily find a tenant and get your unit occupied the entire year.
That's why I was saying, for "investment" purpose wherein you want real cash flow, I would recommend you buy only a studio-type in school or business district area that is no more than P1.4 Million cash price (ask me if you want an example). Anything bigger than that would not be a good "investment" in terms of value. If you buy a unit proximate to isolated gambling places and far from the regular business and school district, you are done, investment down the drain!
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