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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1 comment:
Rltr John,
Below comment was on year 2103.
"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)."
I'd like to know the properties in this category that you can suggest if i want a real "cash flow". Thank you
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