Investing in rental guarantee properties is gaining popularity among buyers in Thailand. Rent guaranteed properties offer a safe and hassle-free investment option while waiting for the property to appreciate. During the contract period, buyers can enjoy stable rental returns and the management company takes care of all maintenance and occupancy responsibilities. This investment method is particularly useful for expats and foreign investors who are often unable to manage their properties due to their frequent travels.
Rent guaranteed investments are a type of property investment in which the buyer hands the keys back to the developer for a fixed number of years and receives regular rental income payments. The amount of rental income received is generally a percentage of the property's purchase price. For instance, if you purchase a property worth 7,300,000 THB and agree to a 7% rental guarantee, you will receive 511,000 THB of rental income annually for the duration of your five-year renewable contract.
Developers who offer rental guarantees include a fixed percentage of the purchase price in the initial sale, to ensure that buyers receive a predictable rental income every month, quarter, or year, as specified in the contract. These guarantees are designed to protect buyers from seasonal fluctuations or market instability. The contract terms can range from two years to ten or more. To honor these guarantees, the developer must have adequate funding available.
Investors often invest their money in real estate by calculating the average monthly rental rates and projecting it on a yearly basis to determine the maximum value of their investment. However, they often overlook the significant amount of work and experience required to efficiently manage the property and ensure complete occupancy. Every month without a tenant can result in a loss of income. To minimize the risks associated with investing in real estate, proper management and directed work are necessary. This can be achieved by opting for a rental guarantee for an agreed period, which ensures stable cash flow and liquidity of assets during the said time period. Once the rental guarantee expires, investors have the option to manage the property themselves, resell it, or have another agent take over.
As a smart buyer, there are certain things you should be aware of. Firstly, the word "guarantee" can be tricky because nothing in life is truly guaranteed. It's possible for a developer to face market decline or run out of money before the contract ends. If a development offers rental guarantee investments, it would be dishonest to claim that such scenarios are impossible.
When considering this type of investment, it is important to assess how the management company of the development will affect the likelihood of the guarantee.
Consider this: Renting out a large number of properties on a daily, weekly, or even monthly basis is both a professional and laborious business. The developer essentially needs to act as a hotel manager, responsible for continuously negotiating agreements with travel agencies and ensuring smooth operations on a day-to-day basis.
Looking for a rental guarantee investment that can offer high returns? It's advisable to invest in developments managed by reputable hotel groups. The guarantee's credibility depends on the experience and marketing network of the guarantor. You can rely on us as your assistant to guide you through the flourishing market of rental guarantee properties in Thailand.