Phuket’s property perks and pitfalls
Almost every owner will ask their rental agent during the early stages of their investigations into rental opportunities, "What can I expect my rental returns to be?" An answer of, "What would you like them to be?" would not be flippant but provides the basis when choosing the best path for the owner to follow in purchasing and setting up their home for rental operations.
Development of on the West Coast has always been the preferred area for both Owners and visitors alike. Early investors on the East Coast have had to play second fiddle to the more popular West but development has been steady and more long term orientated. Owners can expect a similar sort of person as themselves, looking for something different, with relative peace and quiet and the opportunity to interact on a local basis, to find their home of interest.
North, South or Patong all have their influences and tendencies which; favor a particular kind of tenant and rental opportunity for consideration when buying.
Most European homes are designed for colder climates. This means that the home is accessed through one entrance and under one roof. Modern Asian designs embrace the open “sala” style which; whilst providing open plan outdoor living with individual rooms opening onto a central courtyard with pool, can have drawbacks. Design of exterior walkways can make the home impractical during rainy season and reduce the chances of satisfied long-term tenants. Many families, either on long or holiday tenancies have reservations about having children sleeping in rooms with direct, unfenced access to pools. Not to mention personal security relating to intruders, something that cannot be ignored in our fast developing Phuket.
The choices between residential orientated developments versus lifestyle resort homes are now even more sophisticated. Residential properties have always meant more freedom for the owner and lower management costs due to the lower levels of service offered. Since the introduction of resort property ownership by Laguna, there have been a stream of international and regional resort home ownership options come online. These are having a major impact on the market. Outrigger, an international operator from Hawaii, caused ripples last year when they were appointed to the Laguna Village rental operations thereby putting pressure on long standing homes to revisit their rates structure. What the return on investment to owners will be remains to be seen. Considering the low rates on offer and a significant marketing machine to back it up, rental owners will need to sit up and pay attention if they wish to remain competitive.
Then there is the question of why did you buy. If it was for investment and rental return, then your primary decision is made easier inasmuch as you need to find the operator providing the biggest guaranteed rental return and the lowest management fees. Leave it up to the rental agent and watch the money flow in. Just bear in mind that a guaranteed rental return is not necessarily an indication of the robust nature of Phuket’s rental market as much as a handy sales and marketing tool. Any developer worth his trowel and plumb line will have hedged his bets knowing the ups and downs that have affected Phuket’s rental industry in the past.
If you are based in the region and intend to use your home as a getaway every couple of weeks, then the occupation limits in place at resorts are not for you. You need an agent that can service holiday rentals, normally between 4 and 14 days. This allows flexibility to block the house off for your own use at relatively short notice. Of course, this eliminates long-term rentals covering many months of steady income.
Similarly, if you intend to occupy your home over the high season then you are willing to forego the Golden Fleece that is high season rentals and be satisfied with a long-term tenancy or two during the low season.
Once you have identified the major criteria above, you will need to look at how best to furnish, set up and service your home. All rather time consuming but with the advice and assistance of a good rental agent, you could be spending a lot more time on the beach.
