When buying a condominium in Thailand, investors often look for the opportunity to earn a stable rental income. There are two main rental programs available on the market: guaranteed income and Rental Pool. The former provides a fixed percentage of return specified in the contract, which ensures predictability of income, while the latter is based on actual rental income after deducting management expenses. In this article, we will take a detailed look at the features, benefits, and potential risks of each option, as well as provide a comparison table to help you make an informed choice according to your investment profile.
What is a guaranteed income program
A guaranteed income program is an investment scheme under which the investor receives a fixed annual income expressed as a percentage of the value of the property. Typically, the guaranteed yield varies from 5 to 10% per annum, which allows for a stable cash flow regardless of seasonal fluctuations in rental demand.
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One of the options for implementing the program is a short-term scheme designed for a couple of years . In this case, it acts more like a time-extended discount on the purchase of a property. Such projects may have low rental yields, since they are primarily aimed at stimulating sales. For an investor, this may be an interesting option if the property is planned to be resold in order to profit from an increase in its market value, or if the property is considered as a personal residence. However, short-term programs are usually accompanied by an increased degree of uncertainty after the guaranteed period has expired, since further yields are no longer fixed.
Another option is long-term programs for a period of 10-15 years . At the end of this period, the developer, as a rule, offers to buy the property at the original price or with a slight increase (10-15%). This approach allows us to consider the investment essentially as a long-term bank deposit with a higher yield (approximately 5-7% per annum) and minimal risks. The main advantage of this option is stability and the absence of additional expenses for the maintenance of the property, since responsibility for management and operation is transferred to the developer or management company. For the investor, this guarantees predictability of income and no need to participate in operational management.
Thus, guaranteed income can be considered a conservative investment strategy. Here you get a predictable cash flow, but you also cannot count on above-average returns.
Rental Pool
The Rental Pool program is a collective rental management scheme, whereby a group of similar condominiums are combined into one pool to increase occupancy rates and optimize profitability (for example, apartments of a certain size with a sea view). Unlike a guaranteed income, where the investor receives a fixed percentage regardless of market fluctuations, the income under the Rental Pool program depends on the actual rental income. Here, the key role is played by the management company, whose professionalism and experience directly affects the efficiency of the entire pool.
There are two main models of Rental Pool operation:
Profit Sharing
Under this scheme, the management company first sums up the pool's total rental income, then subtracts all marketing, maintenance and management costs. The remaining profit is distributed among the owners: typically the management operator keeps 20-30%, and the remaining 70-80% is paid to investors. This approach may seem attractive, but in the face of increasing competition and declining service quality, the management company may be forced to increase marketing costs to maintain occupancy.
If the contract does not set a limit on such expenses, then after a few years the real profit for the owners may decrease significantly. Therefore, when choosing the Profit Sharing scheme, it is necessary to carefully study the contractual terms and evaluate the experience of the management company in order to avoid a situation where a high share of expenses devalues the investor's income.
Revenue Sharing
In the Revenue Sharing model, the hotel operator shares the total rental income with the owners immediately, without first deducting marketing and management costs. All operating costs are covered by the manager’s share, which typically receives 30-40% of the revenue, and the remaining 60-70% goes to investors. This approach ensures a more transparent distribution of income and avoids the risk of expenses reducing net profit. Revenue Sharing is more often used by professional operators working in prime locations, where they can ensure stable occupancy of properties and a high level of service, which has a positive effect on the final profitability for owners.
In both cases, the success of the Rental Pool program directly depends on the qualifications of the management company. It is its ability to effectively organize the rental of properties, control expenses and maintain a high level of service that determines whether the income will be significantly higher than with a guaranteed scheme or will be lower than expected. The investor should carefully study the terms of the contract, evaluate the experience and reputation of the operator, and conduct a comprehensive market analysis before making a final decision.
Comparison table
| The key point | Rental Guarantee | Rental Pool |
|---|---|---|
| Income stability | A fixed payment set out in a contract, regardless of market conditions | Income depends on actual occupancy and rental performance |
| Profitability | Typically 5-10% per annum - predictable but with limited growth potential | Potentially higher if complex is consistently occupied, but revenues vary |
| Risk level | Low risk – stable payments, even with low occupancy | Higher risk – income directly depends on management efficiency and market conditions |
| The role of the management company | Minimum – the developer or management company provides fixed payments | Key – the operator’s experience and professionalism significantly affect profitability; management errors can reduce income |
| Duration of the program | It can be short-term (for example, 2 years, disguised as a discount) or long-term (10-15 years) | Typically used after the warranty period has expired or as a basic rental scheme, without a fixed term |
| Distribution method | Fixed percentage of the property value | Dividing actual profit or revenue: Profit Sharing: Distribution of net profit after deducting expenses (20-30% for the operator, 70-80% for investors) Revenue Sharing: Sharing of total revenue, with the operator covering expenses (usually 30-40% for the operator, 60-70% for investors) |
| Cost control | Expenses are specified in advance in the contract and do not affect the fixed income | Marketing and management costs directly impact your bottom line; it is important to have limits and be transparent about the terms in your contract |
Combined program
The combined program is a flexible investment tool offered by major hotel brands with extensive experience in the market. The essence of this scheme is that in the first stages - usually for 3-5 years - the investor receives a guaranteed income, which ensures stability and predictability of payments regardless of the occupancy rate of the property. This is especially relevant for new locations, where the client base is still being formed, and demand is gradually growing.
This approach allows avoiding the risk of low occupancy in the initial period, when marketing efforts and infrastructure development are actively increasing. Guaranteed profitability at the start gives the investor confidence that the investment is profitable, even if the property has not yet reached its maximum market attractiveness.
After the initial period, when the location begins to steadily attract customers and rental activity gains momentum, the program switches to Rental Pool mode. In this mode, the investor's income directly depends on the actual occupancy of the property, which allows for a potentially higher return under favorable market conditions. This transition makes it possible to take advantage of all the benefits of a successful hotel operator who pools properties and distributes income, optimizing the rental process.
The combined program thus represents the golden mean between the stability of a fixed income and the opportunity to receive additional profit from the dynamic growth of the market . The investor is protected from fluctuations in demand at an early stage, and later has the chance to increase profitability by participating in a system that depends on real rental income.
This option may be especially attractive to those who value the balance between minimal risks at the beginning of the investment cycle and the prospect of increasing profitability as the property and the market develop. When choosing a combined program, it is important to carefully study the conditions for the transition between stages and evaluate the experience of the management company, since the success of the entire scheme will depend on its professionalism.