Negative Cash on Cash because of market rental rate?

[Ava G.]

We're eyeing a property in the Philippines (my hometown) so the actual numbers are huge (in millions) but I roughly converted the values in dollars for easier analysis. I've never purchased any property before, and if ever, this is going to be a first.

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Type: Single Family (Condo)

Property Price: $109,016

Down: $26,739

Mortgage: 20 years at $590 / month

NOI: $8329 (annual)

Cashflow: -$1309

Cap Rate: 5.29%

Cash on Cash: -4.98%

Total ROI: 12.79%

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The Cash on Cash is negative because, according to my research, the rental rate (average) in this location is just $700 / month although I've seen others renting theirs at $1200 or more (for example, in AirBNB). I need about $1100 / month to have a positive cash flow. If I'll rent it using the 1% rule, the numbers would significantly improve.

Cap Rate: 7.64%

Cash on Cash: 4.70% (still low)

Total ROI: 22.38% (2% assumed appreciation)

The great thing about this property is that, as I've mentioned in other threads, it's a location, location, location type of property. Almost perfectly positioned. It's walking distance to everything (hospital, huge malls, shopping area, international schools), it's within a rising business district (lots of companies are transferring offices here), it's beside a national park (no other building will obstruct its view), and the business district where it resides is sandwiched between two major business districts. In our country, the neighborhood is considered a bit on the high-end.

Any thoughts? Does it look like it's a disaster waiting to happen?