Manila 5-bed duplex at PHP 75.98m: does 6.9% gross leave enough margin?

[canvas.grand]

I’d like this duplex to stand on its rental income without needing capital growth, but the margin may be too thin. The asking price is PHP 75,980,000 for a 5-bed property in Manila, with projected rent of PHP 437,600 a month. That produces roughly 6.9% gross.

I have allowed for empty periods, management, ordinary upkeep and occasional substantial work. I am less confident about turnover costs, insurance, property tax and any building-related charges. The rent estimate also needs testing against actual leases rather than asking prices.

If PHP 437,600 is supportable, what recurring expense would you investigate first? For a cash purchase I would judge it on net yield; with borrowing, I would also stress the figures for higher interest and repayments. Where would you draw the line in either case?

 

[ClearTrail]

The 6.9% calculation is right, but I would focus on tenant turnover. A 5-bed property has a narrower renter pool than a typical unit, so one extended gap can outweigh several smaller maintenance savings. Make sure your vacancy assumption includes leasing time between tenants, preparation work and management charges connected with finding the next tenant. I’d also use actual figures for property tax, insurance and any building or association costs rather than broad percentages.

 

[FinnDale]

I’m not convinced costs are the first issue. How firm is PHP 437,600/month? Is that based on an existing lease, comparable signed rents, or an asking figure? At this price, a modest rent miss changes the result quickly.

Also, is the purchase all-cash? If financed, the interest-rate and repayment assumptions may matter more than whether maintenance runs slightly above budget.

 

[ClearTrail]

Agreed that the rent needs proving before debating the acceptable net yield. I’d run three cases: full expected rent, a lower achieved rent, and several months without a tenant. Then add a separate turnover expense instead of hiding it inside routine maintenance.

For financing, stress both the borrowing cost and the period with no rent. If the deal only looks attractive with PHP 437,600 collected continuously, the 6.9% headline yield is not providing much cushion.