How to Estimate Rental Performance in Phuket Before You Buy: Step-by-Step Method?
If you cannot produce that spreadsheet, you are not investing, you are hoping. This guide walks through the conservative method serious investors use, with worked examples, sensitivity tables, buyer scenarios, and red flags that expose brochure math.
Step 1: Pull five comparable units (not “nearby island” comps)
| Comp quality | What breaks the model |
|---|---|
| Strong | Same building, similar floor, similar view |
| OK | Adjacent building with equivalent walk time |
| Weak | ”Same area” but different guest segment |
Bang Tao from around $265K and Rawai from around $96K can both yield well, but not on the same comp set. Cross-check area benchmarks in our Phuket rental yield guide before you mix districts.
Step 2: Read calendars like an analyst (occupancy is visible)
- Long blocks unavailable in peak season suggest strong demand or owner blocking
- Wide open calendars in peak season suggest weak pricing, bad reviews, or listing issues
Rule of thumb: assume you are not smarter than the market. If comps struggle to fill, your unit will not magically outperform without a concrete reason, renovation, better management, or superior view.
For deeper context on seasonal swings, read seasonal occupancy in Phuket.
Step 3: Derive realistic ADR (nightly rate)
| Season bucket | What to capture |
|---|---|
| Peak (Nov-Apr) | Highest sustainable nightly rate with good reviews |
| Shoulder | Discounted but still profitable |
| Low (Jun-Sep) | Promotional rates that still cover cleaning and wear |
Step 4: Apply conservative occupancy
| Management quality | Conservative annual occupancy |
|---|---|
| Strong operator + good reviews | 70-80% |
| Average | 60-70% |
| Weak / self-managed | 50-60% (unless proven) |
Kamala often supports 8-10% gross conversations in optimised stock; Patong can reach 8-12% gross when operations match the nightlife guest profile. 7-9% gross remains a common anchor when the model is honest; see what affects occupancy for the operational levers.
Step 5: Gross revenue formula
If you owner-block eight weeks for personal use, remove those nights explicitly. Many buyers underestimate how much “free holidays” cost in lost peak-season revenue.
Step 6: Subtract the fee stack (where gross yield dies)
OTA commissions (15-20% on platform bookings)
If most bookings arrive via Airbnb or Booking.com, assume 15-20% of those bookings goes to the platform. Direct bookings improve net, but you must earn them over time.
CAM fees ($1,000-2,500/year typical range)
$1,200/year is a useful placeholder; premium projects can exceed $2,000/year. Verify in the developer’s schedule, CAM rises with facility tier.
Withholding tax (often modelled at ~15% of gross: verify)
Investors often use 15% as a rough planning placeholder in simplified spreadsheets. This is not tax advice, company versus personal structure changes outcomes. Use a Thai accountant before you buy.
| Deduction | Typical planning range |
|---|---|
| Management | 15-20% of gross revenue |
| OTA commissions | 15-20% of OTA bookings |
| CAM | $1,000-2,500/year |
| Withholding tax (placeholder) | ~15% of gross rental revenue (verify) |
Step 7: Net yield and cash-on-cash clarity
Cash-on-cash differs if you use a mortgage, debt service must be layered separately. Compare growth versus income strategies in capital growth vs cash flow.
Worked example: $200,000 purchase (illustrative)
| Line item | Value |
|---|---|
| Purchase price | $200,000 |
| Modelled ADR | $130 |
| Modelled occupancy | 75% |
| Booked nights | 274 |
| Gross revenue | $35,620 |
| Management (18%) | −$6,412 |
| OTA commissions (70% of bookings at 18%) | −$4,490 |
| CAM (planning) | −$1,200 |
| Withholding tax placeholder (15% of gross) | −$5,343 |
| Net (before major repairs and insurance) | ~$18,175 |
Net yield ≈ 9.1% in this illustrative spreadsheet. Change occupancy to 60% and net revenue collapses, showing why sensitivity analysis matters.
Buyer scenarios: which model fits your plan?
Scenario A: Lifestyle buyer with rental offset: You block six peak weeks personally, model 65% occupancy on remaining nights, and accept lower net in exchange for owner use. You read building bylaws on minimum rental periods first.
Scenario B: Long-stay pivot: You model 5-7% gross on a 12-month tenant in low season plus short-stay in peak, two spreadsheets, not one blended fantasy number.
Scenario C: Off-plan buyer trusting developer yield sheet: You rebuild the model from five resale comps in completed sister projects and apply a 15-20% haircut to developer ADR unless audited operator data exists.
Red flags in rental performance claims
- Peak ADR applied to all 365 nights without seasonal discounting
- 90%+ occupancy with no comp calendar evidence
- “We will go direct” assumed from day one with zero OTA commission
- CAM omitted or quoted at half the juristic office schedule
- No management fee because “my friend will help”, untested operations
- Guaranteed return programmes; see operator track record, not brochure IRR
- Developer comps from a different district, Patong ADR does not apply to Rawai
If three or more appear in one sales conversation, demand independent verification or walk away.
Insurance, repairs, and furnishing reserves (often forgotten)
- Insurance appropriate for rental use
- AC service and periodic replacements, humidity is relentless
- Furniture refresh every few years, mattresses, sofas, linens
- Minor repairs after guest damage
| Reserve idea | Planning approach |
|---|---|
| Maintenance | 1-3% of property value per year (rule of thumb) |
| Furnishing refresh | Set aside a percentage of gross revenue annually |
This is why 7-9% gross yields are not 7-9% spendable, net cash flow is lower after real life.
Sanity-check questions before you wire funds
- What would have to be true for this model to work?
- What evidence supports that ADR and occupancy?
- What happens in low season if ADR drops 35%?
- What is net yield after every fee line: not gross?
If you cannot answer with data, do not buy. MORE Group prefers conservative underwriting that survives stress tests, Phuket rewards disciplined buyers who model net cash, not brochure headlines.
Building rules: the hidden variable in every rental model
| Bylaw outcome | Impact on model |
|---|---|
| Short-stay allowed | Proceed with OTA-based underwriting |
| Long-stay only | Rebuild at 5-7% gross long-term |
| Ambiguous | Red flag, get legal clarity in writing |
Month-by-month ADR grid (planning template)
| Month | Planning ADR (USD) | Occupancy % | Gross direction (30 nights) |
|---|---|---|---|
| January | 165 | 90 | Strong |
| July | 95 | 55 | Soft |
| Annual blend | ~130 | ~72 | ~$34K gross illustrative |
Connect July rows to seasonal occupancy patterns. Comps define the cells, the grid structure defines discipline.
When to walk away from a “great yield” unit
- Fewer than three viable comps in the same building
- Manager refuses monthly occupancy history
- CAM and sinking fund omitted from quote
- Yield requires capital growth to work
Rental modelling is a purchase gate, not post-hoc rationalisation. Yield-first buyers cross-check area tables in Phuket rental yield guide after the unit-level model works.
Comp scraping workflow (30-minute desk audit)
- Filter OTA listings to same building or within 300 metres
- Screenshot calendar blocks for peak and low weeks
- Record nightly rate for identical bedroom count
- Read last 20 reviews for recurring complaints
- Note management brand if disclosed in listing
| Desk audit output | Pass threshold |
|---|---|
| Comp ADR blend | Within 15% of seller claim |
| Peak calendar density | Majority comps show blocks in Jan |
| Review themes | Cleanliness and AC neutral or positive |
| Low-season openness | Expected, not universal emptiness |
Desk audit does not replace inspection, it eliminates obvious fiction before you spend time on a broken thesis. Pair results with on-site verification of juristic rental rules and exact view tier before deposit.
Frequently Asked Questions
Start with evidence from comps. Many well-managed units are modelled around 70-80% annually; weaker operations should use 50-60% until proven otherwise.
It can be a reasonable placeholder for quick modelling, but luxury projects can exceed $2,000/year. Always verify the developer schedule for your exact unit.
No. It is a common planning placeholder, but tax outcomes depend on structure and rules. Always confirm with a Thai accountant before purchase.
Assume a high OTA share early (60-80% of bookings) with 15-20% commission rates, then improve net as direct repeat grows.
Treat them as marketing until verified. Cross-check against independent comps and apply haircuts to ADR and occupancy.
Olga
Head of Rentals, MORE Group
Runs the rental side at MORE Group: occupancy and rate data from managed Phuket units, management-company selection, and what an owner actually nets after costs.
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