What is the rental return guarantee offered to investors?
Many new property developments in Phuket are offering guaranteed rental returns in order to attract investors and holiday home buyers looking to earn income from their property when not in use. These guarantees are typically offered by reputable developments managed by international hotel chains, which run the projects like hotels.
This increases the project’s credibility and provides a good rental return guarantee for investors. The guaranteed rental returns typically range from 5-10% of the purchase price per year and can run for 3-5 years. After this period, the rental program usually operates on a profit-sharing model, known as the “Rental Pool Sharing Program,” which generates up to 10-15 years of guaranteed income from renting out the property. However, these programs come with restrictions.
Buyers are often required to purchase the furniture package from the developer, and the owner is limited in terms of personalization options in the unit.
This allows the hotel management to rent out the unit as advertised. There are also usage restrictions, with blackout periods during peak seasons such as Christmas, New Year, and Chinese New Year.
Most developers also allocate around 30-45 days per year for owners to use their property. The rest of the time, the property is used as a hotel room, generating passive income for the owner. The management team handles everything regarding rentals, making it a completely hands-free investment. Some developers also offer to buy back the property at the original purchase price plus 10-15% after a certain amount of years.