The principle is simple and well known: to own an apartment in a residence for tourist rental. The resort is managed by an independent or an international hotel brand such as Best Western, Marriott, Wyndham – or a local brand like X2 or Anantara. In Thailand, most of these residences are luxurious projects, in secured residences, with swimming pool, security service, garden, restaurants, seaside location, etc.
Here are four reasons why you should invest in a hotel residence in Thailand.
1. The terms of purchase
These packaged offers are financially accessible. It is indeed possible to buy small units from 60 000 or 70 000 euros (approximately 70 000 or 80 000 USD). Most investors enter the project before or during the construction, buying on plans. They must then wait between one and two years before the property can be rented.
In order not to see its capital immobilised during all this time without getting any return, there are two
• First, in a fairly traditional way, there is a payment plan, which spreads the amount out as the complex is built.
• Second, there is a system called “cash-back”. The entire amount of the property must then be paid at the signing of the contract, however, the promoters pay this contribution back at a rate set before, usually between 5 and 10%, until the property is placed on the rental market.
2. The rental guarantee
With this packaged offer system, you know in advance how much you will earn from your investment. Even better, it can be guaranteed! You sign a management contract when you purchase the property, which states how much the developer or the hotel chain will pay you.
“Either the residence operates on the basis of profit sharing and the owner receives 70% of the rental value of his property, the rest being returned to the manager. Either, there is a formula of
rental guarantee. The yield is guaranteed, fixed at a certain rate, depending on the purchase price. The duration of these guarantees can range from 5 to 20 years and yields from 6% to 15% of
Thus, your incomes are guaranteed, regardless of your property’s actual occupancy rate. “The difference between the gross and the net is minimal as the charges are low,” says Cyrille
Hareux, managing director of Vauban Thailand, real estate agency specialising in Thai market.
Cyrille Hareux mentioned some developers offers small units such as studios.
• Purchase price: 100,000 €
• Guaranteed yield: 10% over 10 years
• Gross monthly income: € 830
• Net monthly income: 795 €
For a starting price of nearly 79 000 €, you can also have a studio in Phuket with 10% yield
guaranteed for 10 years, located only 150 meters from the beach,
featuring pools, spa, sauna, restaurants, shops, and 5-star management. For a budget a little higher, 140
000 €, you can also prefer a cottage, with private pool, in Patong Bay Hill in Phuket Province.
3. Integrated management
As we said, you do not have to worry about finding a tenant or worrying about length of his stay, which can be a black spot, as Mike Wall, author of Buying a condo explains unit in Thailand: “There is a” Hotels Act” in Thailand, which states that apartments can not be rented for duration of less than 30
days. But by buying a condo within a residence hotel, you can. The operation is the same as for a hotel”.
You also do not have to handle the maintenance of your property, or to worry about the household with each change of tenant, repairs to be made or maintenance of the pool. Everything is taken care of by the manager of the hotel residence, and most often these expenses are taken into account upstream and already deducted from the rental yield that offered to you, as well as the cost of water or electricity. Pay attention to what is written in your. High quality services will not affect your performance. Because it is indeed one of the other positive points of Thailand, the charges are extremely low, count 1.50 euro (1.70 USD) per month and per square meter. This includes all condominium fees, the maintenance of the common parts, the 24/7 security, as well as swimming pool, gym, etc. “.
4. Preserved freedom Obviously, since you are committed to achieving a certain profitability over a fixed period, comes the question “what if I want to sell my property?”. Fortunately, it is possible to sell your property before the end of contract. You are not tied with your manager. If the property is on the market, it is then sold with a guaranteed rate of return for the remaining term of the original contract. It is also possible, at the end of the lease agreement with the manager, to negotiate a new contract.
5 TIPS FOR A SAFE INVESTMENT
1. These offers are obviously attractive, but as for any real estate project, especially off-plan, there are still risks, such as the bankruptcy of the developer. Only invest in a project carried by a trusted real estate developer or a recognized hotel chain.
2. Check the guarantees offered by the promoter, especially in case of delay in delivery, as well as the terms of payment.
3. Carefully examine the conditions associated with the proposed rental yield: duration commitment, integration or not of the expenses or scope of covered expenses.
4. Check if you have the possibility to resell the property when you want and if the resale is subject to specific conditions.
5. Visit the property or meet the developer. Feel free to negotiate the terms of your travel, some promoters even offer the plane ticket.