Resort real estate is simply created in order to receive rental income with its help, which attracts investors to Thailand. Large developers create special offers for investors, and one of them is Guaranteed Rent. Let's take a look at what it is, how this rental is guaranteed and who really suits such programs.
Guaranteed rent is the amount of your income fixed in the contract for a certain period of time. As a rule, it is a percentage of the cost of the apartment. The rent is paid to your Thai account with the frequency specified in the contract. On the one hand, this is very convenient, since all obligations are known in advance, on the other hand, if the property has increased in price many times more, then the owner cannot claim an additional payment.
In fact, the owner transfers his property to the management of the hotel group or management company. Self-occupancy is limited to 14-30 days depending on the desired month of use. The management company rents out real estate at a high price, pays the owner the percentage fixed by the contract, and keeps all the funds received in excess of this.
Quite a few companies in the Phuket real estate market offer a guaranteed income upon purchase. It is necessary to take into account what will happen to the property after the end of the program. The following options are available here:
- Guaranteed income + buyback. After the expiration of the program, the developer buys your object on the terms specified in the contract, as a rule it is 100%+, since capitalization is taken into account. This option relieves the owner of the burden of finding a new buyer and minimizes the risk of selling the object at a loss.
- Guaranteed income + Rental pool. For the first few years after the launch, while the hotel earns its reputation in the market, the developer offers a guaranteed rental so that the owners do not lose income due to low occupancy. After the expiration of the program, the property "transfers" to the rental pool program, where the owners will receive the maximum income, depending on the occupancy, and the hotel will take part of the profits for accommodation and marketing services. If the quality of service in the hotel is at a high level, then when you switch to the rental pool, your income will increase significantly. Therefore, it is necessary to carefully check the company that will manage the facility in the future.
- Guaranteed income + self-management. In this case, after the end of the program, the apartment is given to the owner. Who can rent it out on their own or use the services of a real estate agency. In fact, the income that has been fixed in the contract is a discount on the cost of the apartment. Therefore, if the developer does not intend to manage your property for a long time or is not going to buy it, you need to make a very wise choice. And this article will help you to choose an investment property.
In summary: Guaranteed Rental is of great interest to investors who want to understand exactly how much they will receive from an investment over a specific period. Since such programs are limited in time, the investor must have a clear strategy for how to proceed: whether it is a buyback, management through an agent, or independent living.
