As a property owner in Thailand, You can either use Your property for personal purposes or generate rental income. If You are not managing rentals yourself, income is typically generated by a management company or real estate agency, which will retain a portion as their fee.
Basic rental model
Rental is straightforward:
– If the property is rented out — You receive income
– If not — there is no income, only maintenance expenses
There are also alternative options, often offered by developers at the construction stage, such as guaranteed rental or participation in a rental pool. What is the key difference between these programs?
Rental Pool
A rental pool combines rental income from multiple units of the same type and distributes both income and expenses among owners.
Advantages:
– Income is shared regardless of whether Your specific unit is rented
– Reduced dependency on occupancy of a single unit
– Potentially lower wear and tear if Your unit is not heavily used
Disadvantages:
– Income is not fixed and depends on the total performance of the pool
At the same time, this can be seen as an advantage:
– The management company is motivated to maximize overall profitability
– Higher total income means higher returns for both owners and the management company
However, the management company will first cover maintenance and operational costs before distributing profits.
Guaranteed Rental
Under a guaranteed rental scheme, the developer or management company promises fixed income.
However, this comes with risks — especially highlighted during the pandemic:
– If the company cannot meet its obligations, payments may be reduced or not made at all
– The company has less incentive to generate additional income beyond fixed commitments
– In case of non-payment, options are limited to negotiation or legal action
Conclusion
In uncertain market conditions, rental pool programs have become more popular due to their flexible and performance-based structure.
However, each option should be carefully evaluated based on:
– Contract terms
– Payment structure
– Tax implications
– Responsibilities of each party
Author: Alexandra Agapitova.
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