Renting business is one of the highest paying businesses nowadays, especially in the Philippines. The demand for a space or apartment for rent is high due to the fact that there is a huge population of families, employees, and college students every year – which even increases every now and then.
Aside from the skyrocketing demand for places for lease, the return of investment is also guaranteed which is why a lot of people are taking advantage of this as a huge opportunity for them. Rental business is a good and stable source of income which requires little effort to maintain.
However, not all people can be successful if they decided to build their own establishment on a whim as there are also a lot of aspects to consider when an individual is interested to venture in the renting business. It is important that a potential landlord/landlady is fully aware and knowledgeable enough to be able to make their business successful.
To be able to establish and properly handle an apartment renting business, here are some factors that you need to consider.
Amount of capital
Before considering anything else, your capital should be the first one you need to take note of. Building your own apartment rental business requires a bigger budget due to various aspects such as cost of materials, labor, location and more. Think carefully. Capital is the one which will determine if you’ll be able to make a lot of earnings through your business.
If your budget would only suffice for a single space, you might want to save some more or apply for a loan before investing all of your funds in an apartment rental business.
On the other hand, if you have a bigger budget, you can even opt for a more rooms or apartments to put up for lease. Also, by having a good amount of capital, you can even improve the appearance of your apartment to make it more appealing to your potential tenants.
Well-thought Plan
Business plan is always a necessary when it comes to businesses. An entrepreneur should be wise enough to prepare a business plan which will help him throughout the whole process and during the operations.
For an apartment rental business, the owner should come up with a concrete plan about every single detail in the apartment that he will put up for rent. He should plan what kind of tenants he is willing to lease an apartment to, how many persons are allowed to live in a single apartment, are the tenants allowed to bring their pets, what are the house rules, and how much should be the monthly rent.
Property Location
Property location is one of the most important aspects of apartment rental business as it will be the determinant if your business will be a hit or not.
You see, if a potential tenant realizes that the apartment is far from establishments like market, office, school or even church, the tenant would lose interest especially if it means that it will take some time before they reach their usual destination.
Moreover, the apartment should be situated in an area where it would be safe during typhoons or earthquakes. Lastly, it shouldn’t be closely built to other houses to avoid being at risk in case a sudden fire occurred in the neighborhood.
Design of the apartment
The design of the apartment is also considered by tenants at times.
Put yourself in a potential tenant’s shoes: would you rent a place that is poorly built?
Before you have your establishment built, you must first carefully plan what kind of appearance you prefer for your apartment. Is it a multi-storey building, a duplex type, or a single-floored apartment? Would you prefer sliding windows or those which have grills or jalousies?
The design of the area is important, but owners should put in mind not to go over the budget.
Acquire the necessary permits
Once your capital is already in your possession and you already got the rights for the land property, the construction can be kick started as soon as possible.
Aside from the necessary requirements, make sure that all government documents such as building permits, clearances and more are secured from authorized officers.
Register the business properly
If the building has already been finished, the apartment rental business should be registered to the Philippine government agency named DTI or Department of Trade Industry, wherein it will be declared what type of ownership the business in under and how much the rent is,
Get insurance for the property
Insurance for a property is always a must. No one knows if there will be an incident in the future that will cause damage to the property; therefore, having it insured will be a great relief for the owner and for the tenants as well.
Although getting an insurance means you will have to shoulder another expense, it is definitely worth it as it will give you a peace of mind and will assure you that your investment is secured. Moreover, it can guarantee you a lot of benefits in case accidents happen which makes it a great idea to have the apartment insured by a trusted company.
Ensure up a lease contract for every tenant
Trust is one of the most precious things in this world. Having a stranger to rent your place means you will need to completely put your trust in them with the premises. Therefore, putting your agreement in writing will give you confidence and protection for both parties as well.
Screen your potential tenants
Having tenants who fail to pay their monthly rent is inevitable as there might be certain circ*mstances in their sides that make it hard for them to pay their bills for the month. However, it is truly a disappointment especially for the landlord/landlady who is trying to make ends meet through the rent they receive from the tenants.
Therefore, it will be a wise move to try to at least screen potential tenants before having them sign the contract. They should be able to prove that they are capable of paying the monthly fees and will not cause any trouble in the neighborhood.
Maintenance of the property
It is the responsibility of the owner to regularly inspect the premises to ensure that the apartment is well-maintained for the next tenants. If a tenant also complains about a part of the space that is broken, it should be fixed immediately to preserve the property for a longer period of time.
There you have it, then. When are you planning to launch your apartment rental business?
FAQs
Get a Barangay Clearance. Obtain a Building Permit and Occupation Permit from the municipal or city hall. You must also secure your Fire Safety Permit there. Register with the Bureau of Internal Revenue (BIR).
How much does it cost to build an apartment complex in the Philippines? ›
Total Construction Costs as of 4th Quarter of 2018 (Peso per Square Meter)
| DOMESTIC | BUILDING |
|---|
| Apartments, high rise, average standard | 39,790 – 46,650 |
| Apartments, high rise, high end | 53,526 – 92,080 |
| Terraced houses, high end | 36,813 – 43,581 |
| Detached houses, high end | 76,027 – 127,806 |
Apr 10, 2021
It depends on the grade or finish of your apartment and of course size. There are apartments that can be built from P15,000 to say, P30,000 per sqm or higher. The cost depends on the materials you use, the labor or workers you deploy and the methodology of your apartment construction.
What are the requirements for rental in Philippines? ›
The requirements to rent a car in the Philippines are a valid passport, a major credit card (Visa, Amex, Mastercard), and a valid driver's license. As a foreigner, you may use the driver's license issued by your country for 90 days, but the license needs to be written in English.
How much is the tax for apartment in Philippines? ›
Based on Section 218 of the Local Government Code, these are the typical assessment levels: Residential: 20% Agricultural: 40% Commercial, Industrial, and Mineral: 50%
Do apartment owners make money? ›
Rental income is the primary way that an apartment building makes money. The rents collected become the biggest chunk of the gross income for that month.
Can you own an apartment Philippines? ›
Foreigners are prohibited from owning land in the Philippines, but can legally own a residence. The Philippine Condominium Act allows foreigners to own condo units, as long as 60% of the building is owned by Filipinos. If you want to buy a house, consider a long-term lease agreement with a Filipino landowner.
What is the average apartment size in the Philippines? ›
A 2020 survey of Filipino households revealed that the majority of households resided in a residential unit that had a floor area of around 10 to 29 square meters. On the other hand, about 30.2 percent of households occupied a housing unit with a floor area of around 30 to 49 square meters.
How much is the average rent for an apartment in the Philippines? ›
46,540.00 PHP – 116,350.00 PHP
| Average Monthly Rent Expense in The Philippines | USD $ |
|---|
| Average monthly rent for a studio in The Philippines | $127 |
| Average monthly rent for a 1-bedroom in The Philippines | $163 |
| Average monthly rent for a 2-bedroom in The Philippines | $218 |
| Average monthly rent for a 3-bedroom in The Philippines | $272 |
Oct 27, 2022
(2) Rooms shall have a minimum size of 6.00 square meters (65 square feet) with a least horizontal dimension of 2.00 meters (6 feet, 7 inches) for rooms of human habitations; 3.00 square meters (32 feet) with a least horizontal dimension of 1.50 meters (5 feet) for kitchens; and 1.20 square meters (13 square feet) with ...
Studio Type
The size of a studio unit can go as low as 18 square meters in total floor area. Usually, it has an open floor layout where the living room, kitchen, bathroom, and bedroom are all integrated. This type of condominium unit is ideal for single dwellers and couples because of its limited size.
How much is rent for small business in Philippines? ›
Office rental rates Manila
Prior to COVID, very basic guide to office lease costs were: Ortigas: Php 700-1,100 /sqm/mo ($14-$22) Makati: Php 1000-1500 /sqm/mo ($20-$30) BGC: Php 1200-1700 /sqm/mo ($24-$34)
Who pays the rental tax Philippines? ›
Like other taxes, there are provisions that make an owner of a rental property or lessor subject to rental income tax. You're obliged to pay when: The gross rental income earned by the lessor/rental property owner and his or her spouse from a property is at least $1,500 or less than Php64,000 per month.
Is rental income taxable in Philippines? ›
Under existing VAT regulations, rental payments exceeding PHP10,000 (US$216) per unit received by landlords whose gross annual rental income exceed PHP1,500,000 (US$32,427) are subject to 12% VAT. If the gross annual rental income is less than PHP1,500,000 (US$32,427), the applicable tax rate is 3%.
Can a foreigner be a landlord in the Philippines? ›
Are foreigners allowed to own land in the Philippines? As a general rule, ownership of any land in the Philippines is exclusive and limited only to Filipino citizens. This is enshrined in the 1987 Philippine Constitution.
How often do you pay property tax in Philippines? ›
It accrues on the 1st of January and is payable in one or four equal installments. RPT installment payments must be made on or before the end of each quarter, making the first installment due on or before March 31.
What is the leasing tax in the Philippines? ›
A 12 percent VAT is imposed on residential property leases that satisfy certain conditions. The VAT burden is generally shouldered by the tenants but for calculation purposes, it is added to the landlord's tax liability.
What is the real property tax on a condo in the Philippines? ›
For residential properties including condos for rent in the Philippines, the maximum percentage is 20% while the ceiling for commercial and industrial properties is at 50%. In addition to the real property tax, the LGU may levy and collect an annual tax rate of 1% on the assessed value of the property.
How much money can you make from owning an apartment complex? ›
Apartment Complex Owner Salary
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $61,500 | $5,125 |
| 75th Percentile | $56,000 | $4,666 |
| Average | $49,329 | $4,110 |
| 25th Percentile | $42,500 | $3,541 |
Over the past 10 years of operating results, the average profit margin is as follows: Retail (28.7%) Apartment (23.7%)c.
Leading apartment owners in the U.S. 2022, by units owned
Starwood Capital Group, which was the largest owner in 2022 with 115,000 units, is a private investment firm headquartered in Miami, Florida.
How many properties can you own in Philippines? ›
A natural-born Filipino may only own two (2) lots, each of which must be located in a different municipality or city in the Philippines and have a combined area of no more than 1,000 square meters for urban land or one (1) hectare for rural land used for residential purposes, or no more than 5,000 square meters for ...
How much property can I own in Philippines? ›
Up to 5,000 square meters of urban land. Up to three (3) hectares of rural land.
Can a foreigner own a small business in the Philippines? ›
Yes, foreigners possessing the 9G visa can start a business in the Philippines. Furthermore, foreign-owned enterprises can invest a small amount for conducting operations in the Philippines.
Is apartment business profitable in Philippines? ›
Overall, the house rental business in the Philippines can be a lucrative investment opportunity for those willing to put in the time, effort, and resources needed to acquire, manage, and maintain rental properties. However, it also comes with risks and challenges that must be carefully considered and managed.
What is the standard 1 bedroom apartment size in the Philippines? ›
Typical sizes:
For smaller households, one-bedroom units provide a larger option, as well as the added privacy of a closed-off room. In the Philippines, one-bedroom condo unit sizes range from just under 30 square meters to footprints that are closer to the average size of 50 square meters.
Is it cheaper to live in the Philippines than the United States? ›
According to Numbeo's cost of living index by country, the Philippines ranks as the 54th cheapest country in the world (out of 138 countries), 58 spots above the 112th ranked United States. The country's cost of living index score estimates the Philippines is roughly 43% less expensive than the US.
How much money do you need to live good in the Philippines? ›
The cost of living in the Philippines in 2023
A single person needs at least $600 average monthly budget to live comfortably, with a family of four needing at least $2,500 average monthly net salary. The monthly cost for rent alone can be as high as $1,000 for a two-bedroom apartment.
How long does it take to build an apartment in the Philippines? ›
Complete construction (including finishings) of houses in the Philippines takes on average 4 to 6 months but you need about 6 weeks for blueprints and building permit.
What does 2.5 apartment mean? ›
A small, one-bedroom apartment. 2 ½ apartments have a separate bedroom with a living room, kitchenette and bathroom. Some 2 ½ apartments are L-shaped. This type of apartment can also have a small open alcove attached to the living room (a double room), with a separate kitchen and bathroom.
Low-cost housing is defined as units sold for more than P1. 7 million but less than P3 million. Residences that sell for P450,000 to P1. 7 million are classified as economic housing, while homes that sell for less than P450,000 are classified as socialized housing.
Can 2 people live in a studio flat? ›
In most cases, you can have a roommate in a studio apartment. Most occupancy standards state that two people per bedroom is acceptable, and a studio apartment is considered to be a self-contained unit with a bedroom.
What is the difference between studio apartment and apartment? ›
The defining difference between a studio and 1-bedroom apartment is that a 1-bedroom features a separate bedroom area that is distinct and closed off from the living room and kitchen area. A studio apartment is generally a self-contained space that houses everything in a single room with a separate bathroom.
What is the difference between studio condo and apartment? ›
The biggest difference between a condo and an apartment is ownership. An apartment is defined as a residence that is rented, often as part of a larger residential building. A condo can be similar in structure to an apartment — usually a unit within a larger residential building — but condos are owned instead of rented.
How much tax do I pay on a small business Philippines? ›
Domestic micro, small, and medium-sized companies will directly benefit from a preferential rate of 20 percent (businesses with taxable income of up to PHP 5 million (US$89,270) and not exceeding PHP 100 million (US$1.7 million). The CIT of 25 percent is levied on net income on all sources.
How much does it cost to license a business in Philippines? ›
Department of Trade and Industry (DTI) Registration Fees: For Barangay: ₱200. For City/Municipality: ₱500. For Regional: ₱1,000.
How much of my salary should go to rent Philippines? ›
50% goes to essential spending with about 25% on mortgage or rent.
What is an example of a rental income? ›
Rental income includes any payment received for use or occupation of a rental property.
...
Examples of rental income include:
- Rent received from a tenant, including additional rental income such as pet rent or late fees.
- Advance rent received, such as the first and last month of rent.
The formula to compute real estate tax is REAL ESTATE TAX = REAL ESTATE RATE X ASSESSED VALUE OF THE PROPERTY. The assessed value of the property is defined by its fair market value multiplied by the assessment level fixed through ordinances. The assessed value may be defined as the property's taxable value.
What to pay when buying a lot in the Philippines? ›
Registration Fee – 0.25% of the selling price, or zonal value or fair market value, whichever is higher. Transfer Tax – 0.5% (in the provinces) or 0.75% (in Metro Manila) of the selling price, or zonal value or fair market value, whichever is higher.
In general, the money you earn as a host on Airbnb is considered taxable income which may be subject to different taxes like income tax, VAT or percentage tax. Income tax returns for the Philippines are due on a quarterly and annual basis.
How much is the property tax in the Philippines? ›
Based on Section 218 of the Local Government Code, these are the typical assessment levels: Residential: 20% Agricultural: 40% Commercial, Industrial, and Mineral: 50%
How much income is exempt from income tax in the Philippines? ›
“The income tax exemption for the first P250,000 that every compensation earner makes annually is the gift of President Duterte to the Filipino people,” Finance Secretary Carlos Dominguez III said. “This means that those earning around P20,000 and below per month will pay zero.”
How much property can a US citizen own in the Philippines? ›
Foreigners are prohibited from owning land in the Philippines, but can legally own a residence. The Philippine Condominium Act allows foreigners to own condo units, as long as 60% of the building is owned by Filipinos. If you want to buy a house, consider a long-term lease agreement with a Filipino landowner.
What is the maximum lease term in the Philippines? ›
Can these be extended? Lease of private land to Philippine citizens and corporations that are at least 60% owned by Philippine citizens, as well as lease of any other type of real property (except public land) to Philippine citizens, foreigners and foreign-owned corporations, can have a term of as long as 99 years.
Is flipping condos profitable in Philippines? ›
Profiting from this type of business is never simple or quick. Yet still, even with challenges, condo flipping can be profitable. It is more than just cleaning the condo unit, repainting it, enhancing the condo inside, and selling it. Many processes must be completed before a substantial profit may be generated.
Can a foreigner start a small business in the Philippines? ›
Yes, foreigners possessing the 9G visa can start a business in the Philippines. Furthermore, foreign-owned enterprises can invest a small amount for conducting operations in the Philippines.
How to start investing in apartments? ›
6 Ways to Start Investing in Apartment Buildings
- Do Your Own Due Diligence and Real Estate Investing. If you invest on your own, you get to keep all of the profits. ...
- Team Up with a Partner. ...
- Invest through a Syndication Arrangement. ...
- Invest through a Real Estate Fund. ...
- Invest through a REIT. ...
- Crowdsourced Investing.
How to budget for apartment expenses in 5 easy steps
- Figure out your monthly income. ...
- Determine your monthly expenses. ...
- Subtract your expenses from your income to determine what's left. ...
- Calculate what you can afford to pay in rent. ...
- Choose a budgeting system that works for you. ...
- Rent. ...
- Security deposit. ...
- Utilities.
Get Some Smart Sockets
- Get Some Smart Sockets.
- Bluetooth Controlled Lights.
- Boost Your Apartment Security With A Smart System. Smart Cameras. Entry Sensors. Panic Buttons. Glass Break Sensors. ...
- Install Smart Clocks.
- Install Smart Locks.
- Get an Amazon Echo.
- Improve Your Home Theater Options.
- Install Smart Smoke Detectors.
Cebu. Outside of Metro Manila, Cebu is the country's busiest and most developed metropolitan. Other than a tourist destination, it's home to a slew of industries, too, attracting major investors and professional workers. effectively raising the demand for real estate properties in the area.
Is the Philippines a good place to invest in real estate? ›
The Philippines Offers an Affordable Entry Cost to Real Estate Compared to Other Nations. Enjoy Passive Income via Rentvestment Opportunities in the Metro. Enables You to Diversify Your Investment Portfolio in a Developing Industry. The Value of Real Estate Provides Long-Term ROI.
How much should my salary be to buy a condo in the Philippines? ›
Ideally, your monthly mortgage should not exceed 30% (if your loan is above PhP 1,250,000) and 35% (if loan is below PhP 1,250,000) of your monthly income. That means, metro-wide, a prospective condo buyer needs to have a salary of at least Php 100,444 to PhP 150,000 per month in order to afford a 60-sqm condo.
What is the 60 40 equity rule in the Philippines? ›
7042, 1991, amended by R.A. 8179, 1996) states that at least 60% of the business should be owned by a Filipino citizen, while the rest can be owned by the foreign investor. This Foreign Investment Act contains policies and rules that govern the registration of foreigners looking to do business in the Philippines.
Can a foreigner own 100% of a business in the Philippines? ›
Foreign investment in domestic market enterprises. Non-Philippine nationals may own up to one hundred percent (100%) of domestic market enterprises unless foreign ownership therein is prohibited or limited by the Constitution existing law or the Foreign Investment Negative List under Section 8 hereof.
