Rental Income & Cashflow
What is the difference between gross and net yield in Thailand?
Direct Answer
Gross yield is annual rental revenue divided by purchase price — the figure on brochures. Net yield is annual distributed cashflow to the investor after operator share, FF&E, sinking fund, vacancy, FX and withholding, divided by total invested capital. In Thai resort product, 8% gross commonly converts to 4–5% net.
Detailed Explanation
The gap between gross and net is dominated by operator share (30–50% of gross room revenue in managed product) and the small-but-recurring building-level and tax deductions. Bangkok long-term-lease product has a smaller gap because there is no hotel operator taking a share.
Investors comparing Thai property to home-country property must compare net to net — home-market gross yields commonly exclude property management fees, vacancy and tax that are pre-baked into Thai net.
The Net Yield Underwriting Method exists specifically because the gap is large and inconsistent across deals. Standardising the deduction stack makes deals comparable.
Investor Considerations
- Reject any deal evaluated only on gross yield.
- When comparing to home-market property, compare net to net.
- Use a single standardised deduction stack across all candidate deals.
Risks & Limitations
- Gross-yield anchoring is the largest single source of investor disappointment in Thai property.
- Mixing gross and net across comparison deals biases capital allocation.
- Marketed gross figures often exclude even building-level mandatory deductions.
Related Pillar
Cash Flow Property Investment →Related Frameworks
Related Location Pages
Related Questions
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