Building a rental property has become one of the most sought-after investment strategies in the Philippines, especially among Filipinos looking to secure long-term, passive income. Whether you’re an overseas Filipino worker or someone who has saved enough, knowing the real construction cost to build a rental property and how it affects your rental income is key to making a smart investment.
This guide breaks down the actual construction costs, key considerations, and income potential based on current market conditions across different regions in the Philippines.
This article is based on years of observing the construction and housing market, and it aims to share real numbers, often-overlooked costs, rental yield expectations, and practical tips to help investors get the most value from their property.
You may also want to get equipped with the things to inspect/check before your next real estate deal. Read more here.
Quick Answer: How Much Does It Cost to Build a Rental Property?
As of 2025, the cost to build a standard rental property in the Philippines ranges from ₱18,000 to ₱40,000 per unit, depending on:
- Location (urban vs. rural)
- Materials and finishes
- Type of property (boarding house, apartment, duplex, studio units, etc.)
With these generic construction cost data, we have plot the approximate construction cost of typical rental properties in the Philippines.
| Property Type | Approx. Floor Area | Estimated Cost (PhP) |
|---|---|---|
| Boarding House (4 units) | 96 sq.m. (12sq.m. per unit) | 1.6M – 2.4M |
| Studio Apartment | 25 sqm/unit | 500K – 875K per unit |
| Duplex Unit (single story) | 50 sqm (25 sq.m. per unit) | 900K – 1.9M |
| Duplex Unit (two story) | 72 sqm | 1.8 M – 2.8M |
We will put a sample drafted floor plans for each property type to help visualize it. We are also working on the complete ‘basic’ plan with cost breakdown for each rental properties (except for the two story). So, make sure to subscribe to keep posted.
Click this if you are looking for a construction cost guide to build a house in the Philippines 2025.
Here are the samples floor plans. The cost breakdown is also posted down below.
The following is a good baseline data. But, take note that this is not a perfect cost breakdown. This is done swiftly. Meaning, this is not 100% accurate. As we keep on saying, construction cost and breakdown is tailored based on the singed and complete plan. And such plans differ per location in a lot of ways due to different structural calculation factors.
If such ‘complete plans’ do not exist, then, it’s a clear indicator that it is just a ballpark figure. Just like below.
Understand that this prices doesn’t include any appliances yet. Only cabinetry was included.
Furthermore, you need to understand that rental property construction isn’t just about walls and roofs. It includes a full set of expenses that many first-time builders don’t always expect.
Now, if you want to make your life easy, you can directly hire a contractor with complete set of professionals (Architect and Engineers) that offers design and build. That way, it wouldn’t eat up some of your precious time looking for the Architect to design your house, and then the searching for the most affordable builder to construct it.
Now that you know the cost you needed, let’s proceed to the return of your investment.
Sample Rental Income: Real Numbers
Below is the sample computation of the rental income in real numbers. The payback period considered is the most ideal one. Meaning, there are no vacancies, and there will be zero to minimal maintenance costs considered. Please take this lightly.
| Description | Four Unit Boarding House (96 sq.m.) | Studio Apartment (25 sq.m.) | Duplex Studio Apartment ( 50 sq.m.) | Two Story Apartment (72 sq.m.) |
|---|---|---|---|---|
| Total Cost to Construction | P 2,100,000 | P 650,000 | P 1,500,000 | P 2,300,000 |
| Monthly Rent Per Unit | P 6,000 | P 10,000 | P 10,000 | P 25,000 |
| Total Monthly Rent | P 24,000 | P 10,000 | P 20,000 | P 25,000 |
| Yearly Income | P 288,000 | P 120,000 | P 240,000 | P 300,000 |
| Payback Period (excluding vacancy and upkeep) | ∼ 8 years | ∼ 6 years | ∼ 7 years | ∼ 8 years |
Properties located near schools, workplaces, and public transport tend to perform better, with faster occupancy and more stable tenants.
With these numbers, it would be safe to say that the complete return on investment will be by the 10th year.
Construction Cost & Average ROI by Location
| Area | Average Build Cost/SQM | Rental Returns (Est.) |
|---|---|---|
| Metro Manila | ₱28K – ₱45K | 6–9% |
| Cavite/Laguna | ₱22K – ₱30K | 7–10% |
| Cebu/Iloilo | ₱24K – ₱35K | 8–12% |
| Davao City | ₱20K – ₱35K | 9–13% |
Metro Manila continues to be the priciest area for property investment in the Philippines, but many regional cities are gaining attention for offering better value. In cities like Cebu, Iloilo, and Davao, real estate prices are generally more affordable compared to the capital, yet they still deliver solid rental yields.
Some locations even outperform Metro Manila in terms of return on investment. This makes provincial cities attractive for both new and seasoned investors who are looking for lower entry costs and strong income potential from rentals.
Build vs. Buy: Which One Makes More Sense?
When investing in rental properties, one key decision is whether to build a property from scratch or buy a ready-made unit from a housing developer. Each option has its pros and cons, depending on your goals, budget, and timeline.
This is discussed thoroughly in this post. We know you are in hurry so we also summarized it here.
| Factor | Build Your Own | Buy a Ready Unit |
|---|---|---|
| Customization | Full control | Limited options |
| Timeline | Longer (months) | Ready for occupancy |
| Capital Requirement | Flexible in phases. Paid upfront down payment to construct. | Paid upfront or Equity |
| Profit Potential | Higher (if done right) | Usually costs more per sqm |
Those who already own land—or have access to cheaper plots—usually get better long-term value by building from scratch.
Tips to Maximize Your Investment
- Start with solid planning: Sketch your expected rental income vs. cost to build.
- Hire the correct professionals and contractors: Keep designs efficient, maximize usable space, minimize waste.
- Source materials wisely: Compare local suppliers before buying in bulk.
- Stay involved: Regular site checks reduce delays and hidden costs.
- Think long-term: Pick finishes and materials that reduce future maintenance.
🗂️ Key Takeaways:
- Average construction cost ranges from ₱18,000 to ₱35,000+ per sqm.
- Location and accessibility significantly affect land prices and rental potential.
- Building gives you flexibility, but requires more time and management.
- Buying from developers offers convenience, but often at a premium price.
- Always include a buffer for contingencies (10–20% of the total budget).
- Always consult with the right professionals to avoid costly mistakes.
Final Thoughts
Rental property is not just a side hustle—it’s a real investment that can generate consistent income if done properly. For 2025 and beyond, those who plan smartly, build wisely, and manage efficiently stand to gain the most.
Building may take time and effort, but the long-term returns, for both financial and personal, are often worth it.
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