Rental Income & Cashflow
What rental yields can investors expect in Thailand?
Direct Answer
Realistic net rental yields range from 3–5% in Bangkok (long-term lease focus), 5–7% net in Pattaya and 5–8% net in Phuket resort-managed product. Brochure gross figures of 8–10% routinely collapse to 4–6% net once operator share, FF&E reserve, sinking fund, vacancy, FX and withholding are deducted.
Detailed Explanation
Yields vary by sub-market and product type. Hotel-managed resort residences in Phuket and Pattaya target gross 7–10% with net 5–7% after deductions. Bangkok long-term leasehold targets gross 4–6% with net 3–5%.
The Net Yield Underwriting Method formalises the deduction stack: operator share (typically 30–50% of gross room revenue), FF&E reserve (3–5%), sinking fund (1–2%), vacancy adjustment (10–25% depending on sub-market), FX conversion cost, and 15% withholding on distributions to non-residents.
Yield variation within a sub-market is large. Hotel brand, building age, beachfront proximity, room mix and season-balance all materially affect realised yield. Single-property anecdotes are unreliable — use cohort data.
Investor Considerations
- Always underwrite net, never gross.
- Use cohort data for the sub-market, not single-property anecdotes.
- Match product type to yield target — resort managed for cashflow, Bangkok for total return.
Risks & Limitations
- Brochure gross figures consistently over-state realised cashflow.
- Operator-share misalignment can flip a marginal investment into negative net.
- Vacancy and seasonality can compress realised net by another 10–20%.
Related Pillar
Cash Flow Property Investment →Related Frameworks
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