In the real estate market in Thailand, developers are ready to offer special programs for investors in order to increase rental income. One of such programs is the Rental pool. Let's take a look at what it is, what kind of income it is possible to receive and how profit is splitted.
Rental Pool is the actual income from the rental of real estate, which is divided in the proportion established by the contract with the management company. The management company combines several apartments of the same category into a pool. Under this program, the owner of the apartment receives income to the Thai account from the actual rent, and not a fixed amount, as with a guaranteed income.
There are 2 ways to share income. The main difference is who pays the costs of marketing and management under the contract.
Profit sharing
The management company calculates the pool's total income and subtracts marketing and management costs from it. The remaining amount is distributed in accordance with the proportions in the contract, for example, 70% - to the owner, 30% remains for itself.
However, there is a pitfall - if the management company provides a poor quality of service and cannot develop a base of regular customers, then it will be forced to drain large marketing budgets in order to maintain occupancy. Accordingly, before dividing the profit between the owners, this large piece will be cut. Therefore, if the Rental pool contract provides Profit Sharing, you need to choose companies that provide professional management of international hotel chains.
Revenue Sharing
The management company counts the income and immediately shares it with the owners. The hotel operator pays all costs for management and marketing from its own share. Therefore, the distribution of proportions at first glance is less profitable, the company can keep up to 60% of the income. However, taking into account the high cost part, this scheme may turn out to be more interesting in the end than the Profit Sharing.
Revenue sharing is usually used only by professional hotel operators who manage projects in the best locations of the island. This option is suitable for investors who value stability of income and transparency in financial matters.
Conclusion: A professional hotel operator or management company with a large portfolio of ongoing projects is a guarantee of high income. Which will pleasantly surprise you and definitely exceed the guaranteed level. Therefore, once again I urge buyers of real estate to approach the choice in a comprehensive manner and consider all the criteria for choosing an investment property.
