Headline yields versus what you keep
The figures below are working ranges drawn from what established landlords actually achieve, not from developer pro formas. Individual buildings and villas vary, but if an underwriting case sits above these ranges, the assumptions deserve scrutiny rather than celebration.
| Segment | Typical gross yield | Realistic net yield |
|---|---|---|
| Prime Bangkok condo, long let | Roughly 4 to 5.5% | Roughly 2.5 to 4% |
| Mid-market Bangkok condo, long let | Roughly 5 to 7% | Roughly 3 to 4.5% |
| Resort condo in a managed pool | Advertised 6 to 8% | Often 2 to 5% after all costs |
| Villa on short lets, well run | Advertised 8 to 12% | Often 3 to 6% after all costs |
| Villa on a long let | Roughly 4 to 6% | Roughly 3 to 4.5% |
Where the gap comes from
Gross-to-net erosion in Thailand comes from a longer list of costs than most buyers expect, and several of them scale with revenue rather than sitting as fixed overheads.
- Management: long-let agents typically charge around one month's rent per contract signed, plus a monthly fee if they manage the tenancy; short-let operators commonly take 20 to 35% of revenue.
- Common area fees and sinking fund contributions for condos, paid whether the unit is let or empty.
- Utilities, internet, pool and garden care, which the owner carries on short lets and villas.
- Wear, repairs and periodic furniture refresh, which short-let use accelerates markedly.
- Vacancy between tenancies, and low season in resort markets.
- Thai tax on rental income, which is assessable whether or not it leaves the country.
Two of these deserve emphasis. Vacancy is chronically underestimated: even in Bangkok's long-let market, a unit commonly sits empty for one to three months between tenancies, which alone shaves half a point or more from the gross figure in an average year. And furniture packages age fast in the tropics; owners who plan a meaningful refresh every four to six years are budgeting, while owners who do not are simply deferring the same cost into a weaker future rent.
Occupancy honesty
Short-let projections are usually built on occupancy assumptions of 80% or more. In resort markets, a well-located, well-marketed villa that achieves 55 to 70% across a full year, blending high and low season, is performing well. Bangkok short lets face the additional problem that most condominium buildings prohibit them outright, which limits inventory to a small set of buildings and licensed operations.
Seasonality also affects rate, not just occupancy. Low-season rates in Phuket or Samui can run at a fraction of peak-season pricing, so annualised revenue is far below what peak-week rates imply. Any projection that multiplies a December rate by a full year of nights is a fiction.
The hotel licence problem for short lets
Under the Hotel Act, offering accommodation for stays of less than 30 days on a commercial basis generally requires a hotel licence, with a registration exemption available only for small properties of no more than a handful of rooms. Most individual condo owners and many villa operators letting nightly do not hold a licence and cannot obtain one, because their building or zoning does not qualify.
Enforcement is uneven but real: fines, orders to cease, and complaints driven by condominium juristic persons whose regulations ban sub-30-day letting. The practical consequence for underwriting is simple. Nightly-let income from an unlicensed property is fragile income, and a valuation or purchase price built on it embeds regulatory risk. Monthly and longer lets sit outside the hotel regime and are the defensible baseline case.
Tax on the income
Rental income earned in Thailand is Thai-source income and is assessable here regardless of where the owner lives or where the rent is paid. Rates are progressive, deductions are available either as a standard percentage or on actual documented expenses, and tenants who are companies withhold tax at source on rent paid to individuals. Owners letting through a company structure face corporate filing obligations instead. None of this is onerous at typical rental scales, but it belongs in the net yield line, and unfiled years surface awkwardly when a property is eventually sold and the money needs a clean history.
If a developer or operator promises a rental guarantee, treat it as a discount on the purchase price funded by the developer, not as evidence of underlying yield. Check what happens in year three, after the guarantee ends.
Underwriting the honest way
A defensible Thai underwriting case starts with the long-let net figure, treats short-let upside as optional and conditional on licensing, and stress-tests occupancy 15 to 20 points below the operator's projection. Capital growth, not income, has driven most of the real returns in prime Thai property, and buying the right asset at the right basis matters more than squeezing yield. Asia Global Partners reviews rental projections against real operating data from comparable properties before clients commit, and can introduce management arrangements whose numbers survive contact with a full year's seasons.
Continue reading.
This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.
Where a conversation helps.
Briefings generalise; your situation will not. We work with a limited number of private partners, and if any of the above touches a decision you are actually making, we would be glad to consider it with you, privately and without obligation.
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