- Think location. There’s an old real estate saying the three most important things to look for in real estate are location, location, location. Look for rental investments in areas convenient to major employers, schools, shopping and public facilities, and transportation.
- Consider the price carefully, and the amount of rent you can justifiably charge. If you hope to charge more than the cost of the monthly mortgage, insurance and taxes on the home, you should be careful to invest no more per month than the local rental market can bear. If your goal for rental income to “break even” or perhaps less as the property increases in resell value, price becomes somewhat less important.
- Think about future resale value. Properties in growth areas can rapidly increase in value, turning your rental property into a prime resale opportunity. Investing in low growth areas can provide a steady stream of renters, without a major growth in equity.
- Consider the neighboring homes, and how well they are maintained. Even one home on the block that is poorly cared for can drive down potential rental income
- Look for properties with solid construction. Even the best tenant will be more likely to put wear and tear on a home than a home owner. Try to find low-maintenance properties that will stand up to the wear and tear of renting.

You should also consider how active you can or want to be in the oversight and upkeep of your rental investment properties. If you live nearby, it can be relatively simple to stay in touch with tenants, and to keep an eye on your investment. If you lack the time, or your property is some distance away, you may wish to work with a property management firm.

Property Management, The management of a development varies in scope from the maintenance of the site and common areas, to the servicing of each unit, depending on what the developers and owners want. The property managers will also be responsible for security and administration of the estate. The management of a development can be handled by either the developer, an entity attached to the development, or an independent property management company.

You should be comfortable that the appointed party will deliver the quality and scope of services you expect, and be aware of costs incurred. Financing Generally, Thai banks do not lend to foreigners for land or property purchases. However, some institutions such as Bangkok Bank’s Singapore branch and the Thai affiliate of Singapore’s United Overseas Bank are now starting to offer mortgages of up to 70% of the price of the property to foreigners. Some developers also offer funding assistance, but you need to be aware that the vast majority of purchases are on a 100% equity basis.

Tax
At present, there is no tax in Thailand on the occupation of property or ownership. There is a proposal to bring in a property tax on ownership at the rate 0.1 of 1% of the government assessed value of the property, which is historically below current market value. On the rental or the sale of the property, depending on the status of the owner an individual, resident or non-resident in Thailand, or a corporation various taxes on the actual sale proceeds or on the assumed income based on assessable value may be levied. This is a specialist area, on which you should seek legal advice. As a guide, these may include:

- Transfer fee: 2% of the official appraisal price
- Special business tax (SBT): 3.3% of the higher price between the official appraisal price and the sale price (although this is exempt if the individual seller has owned the property for more than 5 years)
- Withholding tax (corporate): 1% of the higher price between the official appraisal price and the sale price
- Withholding tax (individual): Specific calculation based on the appraisal price
- Stamp duty: 0.5% of the higher price between the official appraisal price and the sale price (but exempt if SBT has been paid)

LEGAL CONSIDERATIONS

1. Condominium title:
49% of the registered title may be owned outright by foreign nationals with freehold condominium title: the condominium must be registered with the Land Office and, as the purchaser, you need to be sure you are buying within the foreigner quota.

In order to be able to realize any subsequent sale proceeds you must also remit 100% of the purchase price in foreign currency from abroad, and obtain the correct Bank certificates.

The owner of a condominium unit will be named on the title deed of the unit, which will also show the common elements of the condominium located outside the unit, e.g. parking space, private garden area.

2. Leasehold:
A foreigner may register ownership of a 30-year lease with the Land Office. This may be a lease of a condominium or freehold land provided the title against which the lease is registered is freehold or “Nor Sor 3 Gor” which is a form of good quality title just below that of chanote. By this structure, a foreigner can effectively
own land.

There are no restrictions on foreigners owning a building outright. Therefore, the foreigner may own the building erected on the land over which they have a 30-year lease.

By contract with the developer or a special purpose company, the buyer can have a series of options for further terms of 30 years, but these options cannot be registered against the land title. This structure is transparent and is fully in accordance with the Thai law.

3. Thai Companies:
July 2007 – In the light of the proposed amendments to the Foreign Business Act, we do not recommend foreign purchasers to acquire freehold Thai properties through the establishment of a Thai company at this time.

The establishment of a Thai company and the law relating to foreign ownership of landed property is a specialist area and it is recommended that purchasers consult legal professionals who are well experienced in this area.

The purchase of either a foreign quota condominium unit or a 30-year lease with options to renew from a reputable developer with pre-committed professional property management of the development on completion remain the preferred route. This complies with existing and proposed Thai law and offers the best chances of capital appreciation.

Land Registration

Thailand has a sound system of land registration, and an effective land office network throughout the country. Land registration is done by a combination of aerial mapping, site surveys and historic investigation into ownership. This Torrens land registration system has been operating since the Second World War, with the support of the
Australian Government, which advised Thailand on the setting up of the current system of land registration.

Areas of prime activity such as Bangkok and luxury resort areas such as Phuket and Koh Samui are priority areas for accurately mapping and registering all title deeds.

- Land Title – There are different grades of land title in Thailand and buyers must ensure that the development in which they intend to buy owns the property through effective title, and that the land they wish to acquire may be developed. There are various levels of title in Thailand enjoying differing levels of security.

- Chanote title – equates to freehold title. This means that the land has been surveyed by the authorities and physical boundaries are clearly defined. It is the ultimate certification of land ownership. Holders of this type of title deed, i.e.
people whose names appear on the title deed, have full rights to transfer the property. The title deed must be registered at the Land Department in the province in which the land is located.

- Nor Sor 3 Gor title is often treated as virtual freehold. The owner of the land can apply to upgrade the title to Chanote. An official aerial photograph has been taken and the land positioned in it. There only remains for the land department to attend the land and physically delineate the boundaries. Nor Sor 3 title is similar to Nor Sor 3 Gor, but there has been no official survey of the land, hence no established boundaries and measurements. The obvious weakness of this title is that there could ultimately be variations to the boundaries. Land bearing Chanote, Nor Sor 3 Gor or Nor Sor 3 titles may be used by Thai entities as loan collateral, and can be developed, sold or leased. There are several grades of lower title that might form part of a development site such as Sor Gor 1, a notice of possession, or Por Bor Tor 5. Typically these are poor quality rights for use, and cannot be sold or leased. As amenity land to a development, this lesser title may be acceptable but you should be aware that this is a poor form of title?? merely a tax receipt acknowledging use of the land. The weakness to this title is the very real danger of 3rd party claims to adverse possession.

Why invest in Phuket ?

Because its at the hub of South East Asia – the melting pot of nationalities from around the world.

It’s also very accessible for holiday makers from major desitnations like:?? Bangkok, Singapore, KL, Hong Kong and Taipei. Being internationally accessible enhances tourism growth and this coupled with the vast sums the Tourism Authority of Thailand (TAT) spends on promoting Phuket, means wealth opportunites for property buyers looking to diversify their portfolio into holiday rentals.

Property Management

Phuket Property Sales has joined a partnership with Phuket Island Property Services ( PIPS) to provide property owners professional property management and rental services. Most property owners if not resident in Phuket will want some form of management service if the have bought property which is not part of an estate or if their estate managers do not provide property management and rental service.

Here is some information about the services offered and how the market for rental services in Phuket is becoming increasingly popular.

Phuket Island Property Services (PIPS) have been providing rental services to Phuket homeowners since 2000. Their flexible approach has become known across the Island to be one that provides the maximum benefit to the owner and catering to the owner’s individual rental requirements.

Marketing:

PIPS provide comprehensive marketing strategies that include print, Internet, and inter-agency campaigns.

PIPS build into their rental service the opportunity to have an owner’s property made available to all the agents on the island and beyond. Although PIPS do not require exclusivity on a property, secondary agent marketing can only be done on this basis. This facility is only available to certain property types, which can only be finalized upon inspection of the relevant home. Commissions paid to secondary agents are covered as part of PIPS commission.

PIPS also advertise on over two dozen villa and apartment rental web sites where the properties listed are carefully selected to reflect the style of the site and the profile of the people who may visit this site.

Print advertising is done selectively both locally and internationally. Advertising is also done at the major property trade shows around the region.

Serviced Rentals:

PIPS provide to many of their clients a range of services that are included in thee price to the tenant. These are mostly associated with holiday tenancies.

As standard, PIPS provide daily maid cleaning service and twice weekly linen changes. Additional cleaning and linens can be provided to thee client at a nominal fee. PIPS also place printed material into the homes such as guest directories and other information to help guests orientate themselves with that Phuket has to offer.

A welcome pack of basic beverages and groceries are provided on arrival as well as guest amenities such as soaps, shampoo, flowers and other guest supplies that one would expect in a home of thee caliber. All of these services would be covered as part of PIPS commission.

Full Rental Service: (Holiday Rentals)

PIPS full rental service includes the following items that are included in the fees charged by PIPS unless otherwise stated
- Rental home setup advisory
- Photography and marketing materials
- Inclusion on PIPS web sites
- Provision of rates and details to secondary agents where possible
- Inclusion into PIPS marketing strategies
- Payment of secondary agent commissions
- Effective Tax planning for income received
- Provision of all documentation for legislated requirements **
- Client selection and vetting
- Availability management
- Inquiry management
- Payment and deposit processing
- Pre check in inventory
- Pre check in inspection of the home to ensure guest satisfaction.
- Advising the owner and effect any repairs required to ensure guest safety and satisfaction**
- Provision of complimentary supplies and printed material
- Guest check in
- Securing deposits for extras, damage and telephones
- Daily maid cleaning and linen service
- Guest satisfaction management
- Per checkout inventory / damage check
- Collection of renal monies and refunding deposits as applicable.
- Processing of legislated VAT @ 7%

PIPS standard commission on holiday rentals is 30% +7 %VAT

Agency Referral Service:

For homes that have their own staff and for which the owners will be handling their own availability and service, PIPS will list their property to gain added exposure and enhance their occupancies. The services that PIPS include in this service are as follows
- Photography and marketing materials
- Inclusion on PIPS web sites
- Provision of rates and details to secondary agents where possible
- Inclusion into PIPS marketing strategies
- Payment of secondary agent commissions
- Client selection and vetting
- Inquiry management
- Payment and deposit processing

PIPS standard commission for referrals is 10% +7%VAT

Long term rentals:

PIPS provide to Owners services to take care of long-term tenancies. These are handled in very much the same way as rentals anywhere else in the world. The tenant would in most cases pay rent on the home and be expected to pay for any scheduled service such as pools, gardens, satellite TV subscriptions and utilities (water and electricity). Management fees, pest control and insurance costs would normally be born by the Owner

Services include:
- Rental home setup advisory
- Photography and marketing materials
- Inclusion on PIPS web sites
- Provision of rates and details to secondary agents where possible
- Inclusion into PIPS marketing strategies
- Payment of secondary agent commissions
- Effective Tax planning for income received
- Provision of all documentation for legislated requirements **
- Client selection and vetting
- Availability management
- Inquiry management
- Payment and deposit processing
- Pre check in inventory
- Pre check in inspection of the home to ensure guest satisfaction.
- Advising the owner and effect any repairs required to ensure guest safety and satisfaction**
- Guest check in
- Securing deposits for extras, damage and telephones
- Guest satisfaction management
- Per checkout inventory / damage check
- Collection of renal monies and refunding deposits as applicable.
- Processing of legislated VAT @ 7%

Rental requirements:
Before commencing with the rental of a property PIPS will require the owner to provide the following
- Inspection of the home
- Full information on location and facilities
- Access to the home for photos or provision of photos of a suitable standard
- Advance notice on periods of intended owner occupation *
- Inventory of items that would need to be checked *
- Full instructions on the house should the owner not be available in times of emergency *
- 1 Full set of keys with one set spare for tenants. *
- Completion and signing of the PIPS Letting services agreement.