Guaranteed income from real estate in Thailand: myth or reality?

Investing in overseas property is always associated with risks. However, many investors seek to minimize these risks by looking for projects with guaranteed returns. In Thailand, a popular destination for overseas investment, this question is especially relevant.

Often the answer is affirmative: yes, projects with guaranteed returns exist, and most often these are offers from hotel developers. But should you trust such promises? Let's figure it out.

Many developers in Thailand offer investors programs with a guaranteed return of 5% to 7% per annum for 3-5 years. This condition is usually fixed in the contract, which at first glance looks very attractive. What's the catch?

Firstly, a guaranteed return does not mean a net profit in your pocket. From the guaranteed amount, you will have to deduct annual contributions for property maintenance (from 100 to 500 USD depending on the complex) and taxes (5-15%), which will reduce your real income by about 1-1.5%. Therefore, carefully study all the points of the contract and clarify all expenses.

Secondly, the terms of ownership imply restrictions. Although you are the owner, you are only allowed to live in your property for a limited number of days per year (usually 14-30). This is an important point for those who plan to use the property for personal purposes.

Thirdly, the furniture is usually included in the price, but can be paid separately. Pay attention to the quality of the furniture and the style of decoration - they must correspond to the declared parameters.

The main advantage of such projects is the minimal effort on your part. The developer and the management company take care of everything: finding tenants, marketing, cleaning, repairs and maintenance. All you have to do is receive passive income.

However, the number of such projects is decreasing. In recent years, there has been a tendency to reduce fixed-income offers. This is due to market fluctuations and the desire of developers for more flexible cooperation schemes.

Alternative: Rental Pool

As an alternative to guaranteed income, developers offer Rental Pool – combining identical apartments into one pool, with subsequent distribution of rental income among all owners.

This option is riskier, since income depends on occupancy and market conditions, but can potentially bring in more income than a fixed rate.

If you want to invest in Thai real estate with minimal effort and costs, we recommend choosing properties with guaranteed profitability programs for the first few years after the project is completed.

During this time, you will be able to assess the potential of the property and the management company. After the project becomes more liquid and pays for itself, it can be sold with a good profit (30-50% or more).

Projects with guaranteed returns in Thailand are a reality, but with certain caveats. Carefully study the contract, consider all expenses and choose a reliable developer with a proven reputation.

Do not forget about alternatives, such as Rental Pool, and remember that even with a guarantee, investments always involve a certain level of risk. Professional advice from a real estate specialist in Thailand will help you make an informed decision.