How to Make Money from Real Estate in Thailand
This article is for those considering what to do after purchasing property in Phuket. Should you manage the property yourself, sign a contract with a hotel operator, or hand it over to a real estate agency? Let's dive into each option:
1. Managing the property yourself
Renting out apartments or villas is a full-fledged business and not an easy one. Simply placing an ad won’t guarantee success. You’ll need to deal with:
Time
Handling check-ins, check-outs, cleaning, sudden repairs, and solving tenants' problems can take a significant amount of time, especially during peak season.Pricing
In complexes without hotel management, each owner sets their own price, leading to potential undercutting by other owners.Cleaning and repairs
You'll need to find contractors for cleaning and maintenance.Hotel license
In Thailand, renting out property daily without a hotel license is illegal. Therefore, you'll need to find long-term tenants.Taxes
There is no property ownership tax in Thailand, but you must pay taxes on rental income.Profit
The biggest advantage is that you keep all the profit yourself. Unlike hotel management, where 30-50% of your earnings are taken, you retain everything.
2. Renting through a real estate agency
This option involves entrusting your property to a real estate agency. The agency handles all the management.
Time
The agency takes care of everything, from advertising to solving tenant issues.Pricing
Agencies operate in residential complexes without hotel management, where independent pricing is allowed.Cleaning and repairs
Agencies typically have their own staff for maintenance and cleaning.Hotel license
Agencies can only manage properties in residential complexes for monthly rentals without a hotel license.Taxes
Agencies generally only pay taxes on their activities, not on your income.Profit
Agencies typically charge 10-20% commission on the rental price, which is much lower than hotel operators.
3. Renting through a hotel operator
A hotel operator manages everything, offering you a guaranteed annual income of 7-10%.
Time
You are free from all responsibilities, as the hotel takes care of everything.Pricing
The operator sets uniform pricing, avoiding any internal competition.Cleaning and repairs
All services are handled by hotel staff.Hotel license
The complex has a hotel license, allowing for daily rentals and maximizing income.Taxes
The hotel acts as a tax agent, paying taxes for you, so you receive clean profits.Profit
While the hotel takes a portion of the earnings, the overall income can be higher due to maximum occupancy and rental rates.
Conclusion:
Self-management can yield higher profits but requires time and effort. Renting through an agency is a good balance for those who use the property themselves. Renting through a hotel operator is perfect for those who want a steady income without the hassle.