Buying a Condominium as a Real Estate Investment
Real estate in Thailand is a primary area of activity for investors of all nationalities and investment sizes. What makes resort property so attractive? There are two main factors influencing the decision to purchase a condominium: first, the opportunity to spend holidays in Thailand in your own home, and second, the ability to rent it out for the rest of the year.
The prospects are appealing, but in practice, things are not always so straightforward.
A good return on real estate investment is typically 5–8% per annum. Let’s consider an example of rental conditions required to achieve such a return, as well as other important factors investors should be aware of.
Assume the apartment costs 2,000,000 Baht.
An 8% annual return equals 160,000 Baht per year.
Annual condominium maintenance fees: approximately 15,000 Baht.
Annual cosmetic repairs (especially relevant for short-term rentals): 20,000 Baht.
The owner plans to use the apartment personally for 1 month per year.
To cover all expenses and achieve an 8% return, the required monthly rent would be:
(160,000 + 15,000 + 20,000) ÷ 11 months = 17,700 Baht per month
These calculations do not include real estate agent commissions, assuming the owner finds tenants independently. However, in this case, the owner is required to register each tenant with the Immigration Office within 24 hours of their arrival. This involves preparing a lease agreement, collecting passport copies, and submitting the appropriate form.
If the owner spends most of the year outside Thailand, an agent will likely be needed to handle tenant registration. If the owner manages registration personally, immigration authorities may raise questions regarding the need for a work permit.
Taxation
Another important issue is taxation. Registering with the Thai tax authorities and paying tax at progressive rates is only possible if the individual holds a long-term visa. Otherwise, rental income earned in Thailand by a non-resident is subject to a flat withholding tax of 15%.
This means that to receive a net income of 17,700 Baht per month, the rent must be approximately 20,800 Baht, of which 3,100 Baht would be paid as personal income tax.
As a result, to achieve an 8% annual return, the monthly rental price should be around 1% of the property value.
The key question an investor should ask when purchasing property for rental purposes is:
Will this property realistically be rented out at a price close to 1% of its value per month?
Purchasing Multiple Properties
Increasing the scale of real estate investment creates a need for stable property management—typically through cooperation with a real estate agency. At the same time, it expands the investor’s opportunities and potential profitability.
For example, an agency managing around 10 units of varying price categories from a single owner has much greater flexibility. Depending on location, size, and market rental value, some units can be assigned to long-term rentals, others to short-term or even daily rentals (if allowed by condominium regulations). An experienced agency can maximize income based on current market conditions.
Owning 10 or more units may also justify establishing your own management company, either by running the business yourself or hiring professional managers. However, this involves additional costs: company registration, office maintenance, marketing, accounting services, taxes, and other operational expenses.
The key question remains: what is more profitable—setting up your own business or paying for a real estate agency’s services?
In either case, no one can guarantee profitability. Many factors influence success, including management quality, seasonality, and overall economic conditions.
Author: Alexandra Agapitova.
All rights reserved.
Copying and use of materials without the written consent of the owner is prohibited.