It is no secret that Phuket is not only a place to relax, but also an opportunity to earn money on real estate. Real chances to earn grow daily. In this article we will talk about three possible ways to make income from Phuket real estate.

1. Sell Real Estate

The low entry threshold is what drives the fast-growing trend in real estate sales. The low threshold concerns both finance and knowledge in this area. The emergence of new agencies and employees among Russian expatriates in Phuket is associated with the following factors:

• growing demand from Russian speakers (Russia, Kazakhstan) for the purchase of real estate;
• increase in the number of facilities under construction;
• relatively large commission on sale (up to 12%).

Today to become an agent it is enough to come in the office of the developer and introduce yourself as such. For the conclusion of the contract usually requires a Thai company. But you can agree on signing with a physical person or a foreign (Russian) company, discuss the commission and bring or register clients with the developer.

The developer will provide a package of documents about the project. Unfortunately many agents are limited to this information only. And this directly affects the quality of services provided. Because of the low preparedness of the agents, everyone suffers. Developers receive unprepared buyers, buyers receive distorted information about projects. As a result customer frustration pushes new customers away from the real estate market as a whole.

To earn on the sale of real estate is necessary:

• register a Thai company (2 thousand dollars);
• select and study the objects offered in the market;
• engage in attracting customers (website, social network).

Alternatively you can collaborate with one of the existing agents on the island and share a commission with him. Such a partner could be Phuket9 Company. We have information about all the projects on the island. Therefore we select the most reliable based on our personal experience. We also offer our projects with the most favorable commission terms.

2. Buying and Renting

To make money on owning a property in Phuket you must select a liquid project and consider the conditions for rental income. Property developers on the island offer fixed income rental programs. For example 6-7% per annum for 5-10 years. There are also profitability programs with profit sharing in different proportions from 50/50 to 70/30 in favor of the owners.

The Three Primary Ways to Make Money from Real Estate Investments

Profitability is provided by renting

Short-term lease is possible for projects that have received a hotel license. Apartments in properties without a hotel license are rented for a period of at least 30 days.

Earnings on capitalization is a rather abstract component at the moment

The price of land in Phuket is growing for about 5-10% YoY. However the number of offers is increasing, more and more condos and hotels are entering the market. This is reflected in the rental housing offer. It is possible to talk about capitalization in the period of 10-15 years.

It is likely that the cost of housing will increase since the following factors contribute to this:

• increase tourist flow to Phuket;
• limited land for development;
• development of the island’s infrastructure.

How exactly these factors will affect the negative components of the market will be seen in perspective.

Property Management

Another way to earn income from real estate is also associated with agency activities. Some agencies provide management services. Conditions may be different. This is a sublet with the division of profits, or cases where the agent also offers a fixed fee on an annual contract and rents an apartment for rent.

3. Real Estate Development

To earn on the real estate development in Phuket you need a starting capital. The first thing that needs to be done is to study the market, find out about the demand and target audience, plan sales. It should be understood that high competition among developers has led the market to high commissions for agency services. It means that the marginality of the developers has decreased. Do not count on a margin of more than 30% of the cost. This income can be obtained only with the successful implementation of the project. The implementation time depends on the initial capital. Construction of the village of villas – 12-14 months. Condominium construction – 18+ months. 

Some developers begin sales long before the start of construction, for example a year. In order to reduce the start-up capital you can reserve a plot of land and agree on the redemption of a payment for the land for a period of 1-2 years. Thus opening pre-sales before construction begins, it will turn out to raise capital to pay off the land payment. If the first payment before construction starts is 30-40% of the total cost of the project, this means that the developer minimizes the initial investment and puts it on the shoulders of buyers. From the first payment, the developer also pays commissions and marketing expenses (10-12%).

Also for the start of sales a show room is usually built (20-30 thousand dollars) – an exact copy of the future apartment in the project. If the developer does not have his own office, a temporary one is being built, or a room is being leased directly at the place of future construction or in any other convenient place. Promotional materials are prepared: booklets, photo and video content, price lists, contracts.

Besides the fact that the project must compete with the location and infrastructure with the current offers on the market it is also necessary to understand and plan the number of sales.

As a result by the end of construction unsold apartments may remain in the project. They will remain on the balance sheet of the company, that is you can not get a profit immediately.

The main risks that await the developer – cash gap in the absence of their own money. It is followed by a halt or delay in construction and a drop in sales. The market is very sensitive to delays and agents quickly switch to other objects that show positive dynamics. Lack of construction experience in Phuket can lead to incorrect time management, difficulties in obtaining permits, misunderstanding with contractors, architects and the Thai mentality as a whole.

The delay in construction also occurs most often due to errors in planning time for the approval of permits in government structures. With proper planning and proper submission of a package of documents the process takes 6 months, but it may take a year. And in the case of the purchase of land without a purpose or other unaccounted factors, permission can not be obtained.

As a result it is less risky and more profitable to make money on real estate in a professional light as an agent. Minimum risks, lack of legal liability in case of unfinished business (reputation losses), minimum professional knowledge (marketing, customer base), minimum start-up capital (no need for office or low-cost rent, as well as working with employees on the basis of a split commission and no rates).