Annual Rent:

Total Cost:

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Net Rental Yield

Net Rental Yield gives you a more realistic picture of your returns as it accounts for additional costs such as maintenance, vacancies, property management fees, and insurance. Here's how you calculate it:

The net rental yield requires a more comprehensive computation:

• Determine the total annual expenses associated with property ownership.
• Calculate the total annual rental income from your property.
• Subtract the total expenses from the annual rental income.
• Divide this net income by the property value.
• Multiply the result by 100 to find your yield as a percentage.

Your expenses may include costs such as:

• Property repairs and maintenance
• Homeowner association dues
• Local taxes
• Property management and advertising fees
• Insurance premiums
• Depreciation

However, interest on your investment loan is typically not included in this calculation. This is because it's linked more closely to your personal financial circumstances rather than the inherent costs of the property.

Net Rental Yield = (Annual rental income – Annual expenses) / Property value * 100%

Assume that the total annual expenses for the property (including costs such as management fees, maintenance, and insurance) amount to 100,000 THB.

Step 1: Determine the net income by subtracting the annual expenses from the annual rental income: 1,020,000 THB (annual rental income) - 100,000 THB (annual expenses) = 920,000 THB.

Step 2: Calculate the Net Rental Yield by dividing this net income by the property value, and then multiplying the result by 100.

Applying these calculations reveals a Gross Rental Yield of 5.1% for your condo in The Ritz-Carlton Residences, Bangkok, while the Net Rental Yield (after accounting for property-related expenses) stands at 4.6%. These yield percentages provide insight into your investment return, facilitating a more accurate comparison of diverse investment prospects.

What is a Good Rental Yield?

Determining a "good" rental yield can be quite subjective, largely dependent on market conditions, the specific property, and an individual investor's expectations. Generally, a rental yield between 4-6% is considered decent, especially in cities with high property values such as Bangkok and Phuket.

Let's consider the case of condos in Bangkok and Phuket. The property markets in these two popular Thai cities are significantly influenced by their respective tourism sectors and economic conditions.

Phuket, known for its idyllic beaches and luxury resorts, draws a mix of short-term holidaymakers and longer-term visitors. The condos here might have higher vacancy rates due to the seasonal nature of tourism but can command higher rents during peak tourist seasons.

On the other hand, Bangkok, as a bustling metropolis, is rapidly developing into a hub for Meetings, Incentives, Conferences, and Exhibitions (MICE) as well as a digital economy center. This transformation has increased the demand for longer-term accommodation, particularly among tech workers and highly educated professionals. These demographics typically seek quality condos in convenient locations, contributing to steady rental demand.

Rental Yields Comparison in Bangkok Condos

In Bangkok, let's compare condos in Phra Khanong and Asoke, two of the most popular locations, focusing specifically on 1-bedroom units in each area.

A property in Phra Khanong could provide an investor the opportunity to tap into an up-and-coming area, offering the potential for capital appreciation. A one-bedroom unit here might appeal to young professionals and expatriates who are attracted by the area's unique mix of local charm and modern lifestyle.

Meanwhile, a 1-bedroom unit in Asoke could appeal to city dwellers who prioritize convenience and accessibility. Despite higher purchase prices in this prime area, the potential for strong, steady rental demand could result in attractive rental yields.

Rental Yields Comparison in Phuket

Meanwhile, condos located in popular areas of Phuket, such as Kamala and Patong, also yield promising returns. Let's proceed by comparing the potential rental yields from 1-bedroom and 2-bedroom units in these respective locations.

Patong, known as Phuket's party capital, is famed for its vibrant nightlife and attractive beach. One-bedroom condos here are appealing to short-term tourists looking for fun and convenience. The high turnover of visitors could mean a steady stream of rental income, although it might come with increased maintenance costs.

Kamala, on the other hand, is a more serene and family-friendly area, known for its beautiful beach and the Phuket Fantasea theme park. A one-bedroom unit here might appeal to longer-term renters seeking tranquility, resulting in fewer tenant turnovers and potentially lower maintenance costs.