The usual problem of Thailand rental property owners is the difficulty maximising one’s rental income. These things happen because of the lack of strategy, the inability to get help from local property management services, or the lack of experience, among other things.
Several factors such as the location of your property, the common real estate market pricing, and the facilities available in your rental property affect your property’s desirability and marketability — your whole rental income, in general. This means that there are different strategies suited for each rental property. For a glimpse of Thailand’s average rental yield, see this article on realistic rental yields to expect.
This article will serve as a guide your guide in maximising your rental income and, overall, your return on investment. However, we always advise property investors, especially first-time foreign buyers, to ask the help of property management services, real estate agents, and lawyers when acquiring a Thai property (see Common Mistakes When Buying Thai Property). These people usually have the knowledge and skills to rally your rental property towards the local market.
Choose the Right Location
Different areas in Thailand cater to a specific target market. You can either get your property investment into the holiday hotspots, residential areas in the central business districts, or even in the suburbs. Your chosen location can highly affect your rental property yield, so it is important that you think this through.
For instance, if you are planning to invest in residential and retiree expat rental market, it’s wise to choose a property in popular areas such as Bangkok, Chiang Mai, Pattaya, or Phuket. It is especially advantageous for long-term foreign residents.
However, instances such as poor weather, unfavourable exchange rates, and other issues may affect your rental property wherever your location might be. To have a stable income, we suggest that you invest in properties that cater to Thailand’s international workforce.
Balance Short-term and Long-term Leases
Naturally, there are peak seasons where most visitors come at a particular date or month in the country. Rental properties who offer short-term leases (daily to six months) usually benefit from higher rental rates, but run the risk of having vacancies.
On the other hand, long-term leases (six months or more) gain more stable income but usually have lower rental yields. For that matter, an assuring strategy is to have a mix of short-term and long-term leases for your rental properties.
A combination of a leasing strategy with short-term holiday leases during peak season and medium-term or long-term leases at lower rates for the rest of the year can give satisfactory results.
Whatever your strategy is, make sure that you aim for a minimum occupation rate of nine months per year. Within that time, you could secure coverage of all expenses (including mortgage if applicable) and provide a reasonable profit on your investment.
Calculate Expenses, Learn to Compensate
Short-term leases usually carry higher maintenance costs due to the need for constant cleaning and checking of facilities. In addition to that, advertising costs can also increase your expenses. To balance everything out, landlords need to make allowances for increased overheads.
Other than that, if your buy-to-let property was purchased with the aid of mortgages, you better set a rate that covers your repayment and foreseen or unexpected vacancies.
Offer Facilities Slightly Better Than Others
Complete and high-standard facilities always attract the interest of potential lessees. This will bring your rental property a step higher of your competitors. However, keeping the quality of your facilities might be expensive, so be wary.
Research the Current State of the Local Property Market, Especially in Your Area
Having the right knowledge always puts you in a much better perspective. Given that, we advise property buyers to check other developments in your chosen area. This will allow you to assess the average Thai property prices juxtaposed with the rental properties’ facilities and overall condition. Aside from this, you can also know the current trends in the local property rental business.
A little time researching would not hurt, right? Investing your time in researching will help you set achievable monthly rents for your Thai rental property.
Investing in rental properties can turn from lucrative to a waste of money real quick. But if you take precautions, you’ll be just fine.
If you are looking for Thailand property for rent or sale, visit our website for the updated property listing.
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