Apartment rental business plan template for the Philippines

Summary

[Building name] Apartments will rent [number] [studio / one-bedroom / two-bedroom] units at [address], [city], on monthly leases to [workers at nearby (factories, offices, hospital), students, small families]. Owner: [name]. The building is [existing and owned / to be built on owned land / leased and converted].

Project cost: ₱____ (construction or renovation ₱____, fixtures per unit ₱____, separate water and electric meters ₱____, permits ₱____, reserve ₱____). Funding: owner ₱____, bank or Pag-IBIG housing loan ₱____ at [terms].

The building and the units

Describe each unit type: floor area, rooms, toilet and bath, kitchen area, ventilation and windows, and whether furnished. Write how each unit is metered for water and electricity, because shared meters cause most tenant disputes.

Common areas. Stairs, corridors, laundry area, parking, garbage area, and who cleans them. Safety. Fire extinguishers, emergency exits, lighting in corridors, and door locks changed between tenants.

Tenants and nearby rentals

Answer these from your own visits and inquiries:

Example fill-in. "Within [distance] there are [number] apartment buildings and [number] boarding houses. On [dates] we asked about [number] vacancies: studios rented for ₱____ to ₱____ a month, one-bedrooms for ₱____ to ₱____. Most required [number] month advance and [number] months deposit. Tenants we spoke with wanted [separate meters / parking / Wi-Fi-ready units / pet-friendly]. Our units will offer [what fills that gap]."

• Who rents near you: workers, students, nurses, young families?
• What do similar units nearby rent for, and how long do they stay vacant?
• What do tenants complain about in their current places?
• Are tenants looking for monthly, six-month or yearly leases?
• What must be included: water, electricity, Wi-Fi, parking?

Leases, rent control and tax

The Rent Control Act of 2009 (RA 9653) covered residential units renting from ₱1 to ₱10,000 a month in Metro Manila and highly urbanised cities, and ₱1 to ₱5,000 elsewhere, as of its effectivity. Later extensions are set by the housing authorities, so check whether the current rules cover your rent level. For covered units, you cannot demand more than one month advance rent or more than two months deposit, and the deposit is kept in a bank.^[4]

Under the Tax Code as amended by the TRAIN law, the lease of a residential unit with monthly rent not exceeding ₱15,000 is exempt from VAT. Note the rent of each unit in your plan so your tax position is clear when you register with BIR.^[5]

Lease contract. Written lease for every tenant: rent, due date, term, deposit and advance, what the deposit covers, house rules, and move-out inspection. Keep a tenant ledger.

Permits and registration costs

The Sanitation Code requires a sanitary permit before hotels, motels, apartments, lodging, boarding or tenement houses and condominiums open to the public. The fee is set by local ordinance.^[3]

Financial plan

Filled in from published sources: DTI ₱500 plus ₱30, BIR ₱0. Deposits follow the rent control limits if your units are covered.^[1,2,4]

Rental income. Units [number] × monthly rent ₱____ × occupancy ____% × 12 = ₱____ per year. Use a vacancy allowance of [number] months per unit per year, based on how long nearby vacancies stayed open.

Payback. Project cost ₱____ ÷ yearly net income ₱____ = [number] years. Show loan payments against rental income month by month.

• Construction or renovation ₱____
• Fixtures per unit ₱____ × [number] units
• Separate meters ₱____
• DTI ₱500 + ₱30; BIR ₱0
• Sanitary permit, barangay clearance, mayor's permit, occupancy permit ₱____ (assessed by the city)
• Monthly: loan ₱____, real property tax set aside ₱____, repairs ₱____, caretaker ₱____, common-area electricity and water ₱____, insurance ₱____

Risks

Most apartment losses come from vacancies, late rent and repairs.

• Long vacancies. Price against nearby units and fix common complaints before listing.
• Late or unpaid rent. Written lease, screening of tenants, and a clear late-payment rule within the law.
• Major repairs. Set aside ₱____ a month for roof, plumbing and painting.
• Disputes over deposits. Move-in and move-out photos, signed inspection checklist.

Apartment rental permits, rules and fees

Questions people ask

How much deposit can I ask from a tenant?

For units covered by the Rent Control Act, at most one month advance rent and two months deposit, with the deposit kept in a bank.

Do I charge VAT on apartment rent?

Residential leases with monthly rent of ₱15,000 or less per unit are VAT-exempt under the Tax Code as amended by TRAIN.

Does an apartment building need a sanitary permit?

Yes. The Sanitation Code requires a sanitary permit before apartments, lodging and tenement houses open to the public.