{"id":157045,"date":"2024-05-16T17:42:04","date_gmt":"2024-05-16T10:42:04","guid":{"rendered":"https:\/\/www.franco-media.com\/?p=157045"},"modified":"2025-11-26T20:20:03","modified_gmt":"2025-11-26T13:20:03","slug":"lexicon-terms-rental-real-estate","status":"publish","type":"post","link":"https:\/\/www.franco-media.com\/en\/lexicon-terms-rental-real-estate\/","title":{"rendered":"The lexicon of terms used in rental real estate"},"content":{"rendered":"
[vc_row][vc_column][vc_custom_heading text=”The lexicon of terms used” font_container=”tag:h1|text_align:left” use_theme_fonts=”yes” css=””][vc_custom_heading text=”The lexicon of terms used in rental real estate” use_theme_fonts=”yes” css=””][vc_column_text css=””]You have probably already seen billboards along the road offering “rental guarantees,” “cashback,” and “profit sharing.” In the rental business, these terms are widely used without always being clearly explained.<\/p>\n

Here is a small glossary of technical terms to know in order to master your investment in rental real estate in Thailand.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”1. Construction Remuneration (Cashback)” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” css=””][vc_column_text css=””]\"ImmobilierIn Phuket real estate and in Thailand in general, it is common to invest in off-plan new rental property programs that are not yet completed (similar to Sale before Completion – VEFA in France). However, this means waiting for the delivery, sometimes 1 or 2 years before receiving the first rents.<\/p>\n

To address this issue, several developers offer “cashback”: if the buyer chooses to pay 100% for the property upon signing the contract (without waiting for the end of construction), they are then entitled to remuneration during the construction period, starting the month after payment. The cashback varies by developer but can go up to 10% of the invested amount.<\/p>\n

This system is beneficial for both parties: the buyer does not have to wait for the end of construction for a first return on investment, and the developer can finance the construction without having to borrow at high interest rates from a Thai bank.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”2. Rental Guarantee” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” css=””][vc_column_text css=””]\"Garantie<\/p>\n

This term is widely used in Phuket real estate. After the property is delivered, fixed and guaranteed rents are received, arising from tourist rentals by the night. The system is widespread in tourist resort areas, with an occupancy rate of around 70% and high nightly prices. Most properties with rental guarantees are apartments, but a few villas also exist.<\/p>\n

The “guarantee” means that the developer contractually commits to the investor to pay a fixed annual percentage of the purchase price, regardless of the actual performance of the property, whether it is occupied or not. The guarantee provisions and amount are established in the sales contract. Rental guarantees in Phuket are often between 7% and 9% net annually of the property purchase price, over 3 to 15 years.<\/p>\n

du prix d\u2019achat du bien, sur 3 \u00e0 15 ans.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”3. Hotel Management” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” css=””][vc_column_text css=””]Programs with rental guarantees are often managed by a hotel organization chosen by the developer. They take care of the rental, maintenance, and various services of the residence. In other words, the investor does not have to worry about maintenance or rental: after purchase and delivery, the property is fully managed until the end of the rental guarantee contract.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”4. Buy-Back Guarantee” font_container=”tag:h3|text_align:left” google_fonts=”font_family:Montserrat%3Aregular%2C700|font_style:700%20bold%20regular%3A700%3Anormal” css=””][vc_column_text css=””]\"Francais
\nIn Thailand, when the rental guarantee contract expires, it is common for the developer to offer to buy back the property from the buyer, at the initial purchase price or with a capital gain. This makes such real estate a true investment product: the property generates a return for 3 to 15 years, and then, once this period is over, the investor recovers their initial capital. Just like the rental guarantee, the buy-back is established in the initial sales contract but is not an obligation: the buyer can also choose to keep their property.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”5. Rental Investment with Personal Occupation” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” css=””][vc_column_text css=””]This type of investment combines the rental guarantee with the right to stay a few days in the property. Typically, hotel management does not allow the buyer to occupy their property. However, in some programs, developers allow up to one month of free stay per year for the investor. However, this implies a weaker rental guarantee, between 6% and 7% per year.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading text=”5. Rental Investment with Personal Occupation” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” css=””][vc_column_text css=””]\"InvestissementThis type of investment is an alternative to the rental guarantee system. Instead of guaranteeing a fixed return calculated on the purchase price, the developer offers the buyer a share of the profits made. Often if there is complete hotel management of the property, the buyer receives 60% to 70% of the annual profit from rents (percentage established by contract).<\/p>\n

This means that the annual return is variable depending on the profits made, and not guaranteed: it may be higher or lower than a rental guarantee, depending on seasons and occupancy rates.<\/p>\n

Such a system is fair only if the profit sharing is calculated on the revenues of the entire building, and not on the individual property purchased. This indeed prevents an investor from being penalized if their property is rented out less often than others.<\/p>\n

Regardless of the offer, it is important to be guided by professionals and legal services to check and explain the terms of cashback, rental guarantee, profit sharing, and buy-back, to avoid any unpleasant surprises or doubts about your rights as a buyer.<\/p>\n

The Thai Property Group real estate agency network is available to answer any questions about rental property in Phuket and Thailand. Do not hesitate to contact them or visit their agency in Patong.”[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_separator][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]\tYou are here :\nHome<\/a><\/span><\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][highlight_box style=”fade2″ url=”url:https%3A%2F%2Fwww.franco-media.com%2Fimmobilier-a-phuket-agences-immobilieres-maison-a-louer-et-a-vendre%2Fthai-property-group%2F|title:Thai%20Property%20Group||” textsize=”22″ use_theme_fonts=”yes” text=”The real estate agency network Thai Property Group is available to answer any questions about renting property in Phuket and Thailand.” text2=”Click here ! ” clr=”#ffffff” bgclr=”#1e73be” hoverbg=”#01878c” caption_urls=””][\/vc_column][\/vc_row]\n<\/div>","protected":false},"excerpt":{"rendered":"

In Phuket real estate and in Thailand in general, it is common to invest in off-plan new rental property programs that are not yet completed (similar to Sale before Completion – VEFA in France). However, this means waiting for the delivery, sometimes 1 or 2 years before receiving the first rents. To address this issue, several developers offer “cashback”: if the buyer chooses to pay 100% for the property upon signing the…<\/p>\n","protected":false},"author":1,"featured_media":29213,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1870,1868],"tags":[1444],"class_list":["post-157045","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal","category-real-estate","tag-phuket-en"],"_links":{"self":[{"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/posts\/157045","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/comments?post=157045"}],"version-history":[{"count":1,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/posts\/157045\/revisions"}],"predecessor-version":[{"id":277679,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/posts\/157045\/revisions\/277679"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/media\/29213"}],"wp:attachment":[{"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/media?parent=157045"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/categories?post=157045"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.franco-media.com\/en\/wp-json\/wp\/v2\/tags?post=157045"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}