You are looking for a Thailand property investment? You are hesitating between a property that you would rent all year round or for short periods of time? What is the most profitable? What is safest?
Two examples are presented in this article.
EXAMPLE OF A VILLA IN THE SEASIDE RESORT OF HUA HIN – RENTED ALL YEAR ROUND
Surface area: 100m2, three bedrooms, swimming pool, 400m2 of land 5km from the city centre.
Purchase price = THB 5,500,000, including furniture.
Rent = 30,000 THB/month, or 360,000 baths per year.
Annual fee = 135,000 THB :
- co-ownership maintenance fee – THB 1 500/month ;
- garden and pool maintenance – THB 3,500/month ;
- agency fees – THB 30,000 ;
- management fee – THB 30 000 ;
- miscellaneous maintenance and repair costs – THB 15,000
Yearly net rental yield = 360 000 – 135 000 = THB 225 000
Profitability (225,000 THB / 5,500,000 THB) = 4%.
EXAMPLE OF AN APARTMENT IN A COMPLEX WITH HOTEL MANAGEMENT AND RENTAL GUARANTEE:
Purchase price: THB 4,500,000
Price per night: THB 2,000 to 5,0000 depending on seasonality, average at THB 3,500
Occupation rate : 60 %
Gross yield : 17%
In the case of programs with a rental guarantee, the developers/managers pay a fixed guaranteed income to the owner-investors, regardless of the rental results.
For this example, taken from a property in Hua Hin (Grand Marina), the owner is paid 7% net of the amount of his investment. He is not liable for any charges or any maintenance or repair costs.
The difference between the percentage paid and the gross percentage covers the hotel operating costs (common to several tens – or even hundreds of apartments on certain projects) and the management’s margin.
The apartment with hotel management is a better choice from a profitability point of view as well as from a “peace of mind” point of view.
For a more detailed analysis, click here.