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Property Investment; Pattaya Rental Prospects

"How to have attractive rental Prospects of a Property Investment"

With the influx of western Retirees, Expatriates as well as Holiday Makers the property rental market in the greater Pattaya area can be very rewarding. Especially the short term rental market, as the short term rental rates can be set much higher and with an occupancy level of just 140 days a year it will generally outperform the long rental leases.
 

Apartment & Condo Market for Investment purposes:

As Pattaya/Jomtien is still a 'punter' city the only way to invest wisely is to invest in studio units or maximum 1 bedroom apartments.

Bungalow & Villa Market for Investment purposes:

This market is changing rapidly, especially the last 2 years the amount of families looking for homes and condos to rent increased. Next to that you see many 'expatriates' who work in the Middle East offshore industry looking to settle in Pattaya/Jomtien as well, wanting homes to relax while on their shift. Moreover the Greater Pattaya area has large industrial Estates like Amata City, Map Ta Phut, Hemaraj, and deepsea ports like the Rayong Bulk Terminal and Laem Chabang International Terminal. For short term rentals the best rental prospects are homes with 3-4 Bedrooms with private pool, within easy reach of the beach and the nightlife of Pattaya.

Setting of Rental Rates:

Market segment: Low Range (2-4.5 Million Baht.)

The lower priced houses & mid range condo's have the best rental return rate. Houses are hard to find on good rental locations in this segment, but there is a wide range of apartments in Jomtien. Most houses in the 2-4.5 Mil Baht range are on the other side of Sukhumvit and not very attractive for rental tenants. Moreover the highest return on investment are the Short Term Rentals, where location is as important as rental fee !.

Market segment: Mid Range (4.5-7.5 Million Baht.)

In the mid price range home & condo market in Pattaya, you see quickly a rent to sale ratio of 1/120; simply said, if a property is worth 6.0 Mil. Baht the long term rental price will be near 50 K. Baht a month.

Market segment: High Range (7.5-15 Million Baht.)

In the high price range of homes, the rent to sale ratio with gradually shift towards the less attractive 1/150 range. You see many 15 Mil Baht homes for rent in Pattaya in the 95.000-125.000 K Baht bracket.

Short Term (Rental Only / Full Service) v Long Term:

In our example calculation we take a 6.0 Million Baht Home/Condo, with 50.000 Baht Long Term Rent expectation.

(A) Short Term Rental Only

Expected Short Term Rental Fee: 3.333 Baht a night (Rental Only Service)

From our own experience a property owner can get two times the rental fee from a long term rate. So if a Long Term rate is 50 K Baht a month, the short term rental rate on nightly basis will be 3.333 Baht (50.000 Baht :30 * 2). Moreover during the main peak period (15 Dec. - 15 Jan) often around double the amount a night can be asked, but we did not put this into our calculations !.

(B) Short Term Full Service

Expected Short Term Rental Fee: 6.666 Baht a night (Full Management)

From our own experience a property owner can get four times the rental fee from a long term rate. So if a Long term rate is 50 K Baht a month, the short term rental rate will on nightly basis will be 6.666 Baht (30.000 Baht : 30 * 4). Moreover during the peak period (15 dec-15 Jan) often up to 8.000 Baht  a night can be asked, but we did not put this into our calculations.!.

(C) Long Term

Expected Long Term Rental Fee: 50.000 Baht a month. (Rental Only Service)

This based on the local market conditions we currently see in Pattaya, When location towards public transport, and walking distance to the sea, is better the rates will go up slightly, but commonly Sales prices will go up as well, so it evens out..

Expected occupancy level a year: 185 Days. (1)

Gross Income: 616.605 Baht

Rental agency fee 10%: 61.660 Baht

Additional Cost of Owner: 25.000 Baht (2)

Nett Income: 529.945 Baht.

Nett Income per month: 44.162 Baht

Note: This 3.333 Baht a night rate is without any additional services. The Customer / Tennant pays for: Electric, Water, Cleaning & Bed making, Laundry service of linen. Linen & towels are commonly provided free of charge.

(1) Commonly the high season is fully booked with occupancy rate of above 20 days a month, while September the slowest month of the year the occupancy rate will most likely drop to around 10 days.

(2) Security Fees / Pool Maintenance

Expected occupancy level a year: 185 Days. (1)

Gross Income: 1.233.210 Baht

Rental agency fee 10%: 123.321 Baht

Property Management 10%: 123.321 Baht (2)

Electric & Water: 129.000 Baht (3)

Cleaning & Laundary:  37.000 Baht (4)

Additional Cost of Owner: 25.000 Baht (5)

Nett Income: 795.568 Baht.

Nett Income per month: 66.297 Baht.

Note: This 6.666 Baht a night rate is included all additional services.

(1) Commonly the high season is fully booked with occupancy rate of above 20 days a month, while September the slowest month of the year the occupancy rate will most likely drop to around 10 days.

(2) The cost of Full Property Management will be between 5-15% depending on type of services offered.

(3) Electric & Water 700 Baht a day for 185 days.

(4) Cleaning & Laundary twice a week at 500 baht a time.

(5) Security Fees / Pool Maintenance

Expected occupancy level a year: 9 months (1)

Gross income: 450.000 Baht.

Rental agency fee 10% : 45.000 Baht.

Additional Cost of Owner: 25.000 Baht (2)

Nett Income: 380.000 Baht.

Nett Income per month: 31.666 Baht.

Note: This 50.000 Baht a month rate is without any additional services like Electric, Water,  Cable TV, and cleaning.  Even linens & towels are common not included in this rate.

(1) it will take 3 months to find a tenant.

(2) Security Fees / Pool Maintenance

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Advantages and Disadvantages of short term rentals:

-More Money in the pocket !

-Ability to block in rental time for your own holiday or holiday's of friends & family.

-Slightly more control over the property.

-More work involved, but this can be taken way by a Property Management Service we provide.

-Most likely you will save extra money when you choose property management service to take over the work as we can oversee better availability of your home.

                              ***YOU HAVE A PROPERTY FOR THE RENTAL MARKET ?***
 

If you have a property and like to discuss the short (or long) term rental market prospects, give us an email or call and we will evaluate pricing & give suggestions.

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