Behind the word "yield" in a project's brochure or a listing, two different numbers can hide: gross, before costs, and net — what the owner actually keeps. The gap between them usually runs 2–4 percentage points: the common area fee, the booking platform commission, the property management commission, income tax. It's always worth asking exactly how a quoted yield figure was calculated.
Undersun Estate always quotes net yield in its own calculations, with every cost accounted for. Here's the method step by step — what the yield is calculated from and what gets deducted — so you can check any quoted number yourself.
Annual Rental Income — What It Accounts For
The ROI calculation starts with a forecast figure: how much the property can earn in a year. What matters here is which rental model will be used.
For long-term contracts — six-month or annual — a flat monthly rate is usually set and simply multiplied by 12.
For short-term rentals, the calculation depends on the daily rate, which varies by season, and on forecast occupancy, which also depends heavily on the season. In Phuket, high season runs November to March and low season May to October. For this model, Undersun Estate builds occupancy month by month: up to 80–90% in high season, down to 40–50% in low season, with a different daily rate for each period. Gross annual rental income is the sum across all months, each with its own rate and occupancy.
How Net Rental Income Is Calculated
Gross annual rental income has the following deducted, in order:
- Booking platform commission — if the yield forecast was built on daily rates from Booking, Airbnb, Agoda and similar platforms, their commission comes out of the flow too, around 10%.
- Common area fee — for the building's shared areas, around ฿80 ($2.40) per square metre per month, usually billed once a year.
- Property management commission — for letting the unit, guest service and coordination with the owner, a Phuket market benchmark of around 30%.
What's left after these three deductions is cash flow before tax (net operating income).
Tax Is Calculated Separately
The tax base is gross rental income minus allowable expenses. Royal Decree No. 11, under Section 40(5) of Thailand's Revenue Code, allows a standard deduction of 30% of income from renting out buildings, houses and other structures, without supporting documents. Actual expenses can be deducted instead, if they're higher and documented. Progressive personal income tax applies to the resulting base, from 5% to 35% depending on annual income, set by the Revenue Department of Thailand (the deduction itself comes from Royal Decree No. 11). The final burden also depends on residency status. Check your own situation with a licensed Thai specialist.
Total Entry Cost — the Denominator
Yield is calculated on the total entry cost: the price plus one-off costs that arise once, at purchase.
- Sinking fund — a contribution to the building's juristic person for capital repairs: roof, lifts, façade, building systems. The Condominium Act B.E. 2522 requires condominiums to maintain this fund. Phuket developer price lists put it at around ฿800 ($24) per square metre.
- Electricity and water meter installation — up to ฿20,000 (around $605).
- Transfer registration tax — around 3–3.3% of the price for freehold on the primary market, around 1.1% for leasehold. It's calculated on the property's government appraised value, set by the Land Department, but the buyer pays a fixed amount under the contract.
- Freehold quota premium — if the unit is bought freehold with an extra payment for quota, around ฿10,000 ($303) per square metre. This only applies when that payment is required.
Worked example on a hypothetical 30 m² unit (figures rounded, not a calculation for a specific property; tax taken at 5% — the entry step of the progressive scale for income of this size):
| Step | Amount |
|---|---|
| Gross annual rental income | ฿780,000 (≈$23,600) |
| − Booking platform commission (10%) | −฿78,000 (≈$2,360) |
| − Common area fee | −฿28,800 (≈$870) |
| − Property management commission (30%) | −฿201,960 (≈$6,120) |
| = Cash flow before tax | ฿471,240 (≈$14,280) |
| − Income tax (5%) | −฿27,300 (≈$830) |
| = Cash flow after tax | ฿443,940 (≈$13,450) |
| Total entry cost (see above) | ฿4,686,000 (≈$142,000) |
| Net yield after tax | ≈9.5% |
Full formula: Net yield = (Cash flow before tax − Income tax) / Total entry cost × 100.
Why the Entry Price Moves Yield So Much
The same unit in the same project gives a different yield at pre-sale stage than closer to handover — at the same daily rate, occupancy and costs. It comes down to the denominator: yield is calculated on the price you paid, and pre-sale prices are lower than prices closer to completion. Alongside location and a unit's own rental potential, entry price is one of the factors that shapes the final number, and how much it weighs varies by property.
The published Kamala case is an example of this gap between the entry price and the exit price: three units bought as a package at completion stage, at a 15% package discount, delivered 9.2% net in under a year on one unit and 8.1% projected net yield across the package, while the project's price rose by almost 30% over two years — full case study in a separate article. The step-by-step net yield method above is worked through in a separate example — ROI calculation for City Gate, Kamala.
What to Ask Before Trusting a Quoted Yield
Before accepting a yield figure from a developer or agent, it's worth checking:
- whether the figure is gross or net;
- what occupancy the calculation assumes, and whether it accounts for the season;
- whether the booking platform commission is deducted separately from the property management commission.
Each of these can shift the final number by several percentage points.
What to Look For When Choosing a Condo for Short-Term Rental
A unit's yield is most affected by distance to a popular beach, the volume of new supply nearby — more of it means more competition for tenants — and entry price: buyers who come in at pre-sale prices get a higher yield, other things equal, than those who buy closer to handover.
Among projects currently under construction, a few stand out on these criteria. Rhea by Sansiri sits near two popular beaches at once, Bang Tao and Surin, which widens the pool of potential tenants. Vibe Residence is near Karon beach, surrounded mostly by older hotels, with no new competing developments planned within walking distance. Sales are also expected to launch on a project in Patong from a major Thai developer: rental demand in Patong holds steady year-round, and entering at the pre-sale price there offers the strongest potential of the three.
What Actually Determines a Realistic Number
A realistic net yield is determined by specific things about the unit itself: its location in an area with strong rental demand, how attractive the development and the unit are to tenants, the rental rate, the terms of the management company contract, the rental model, and the entry price. Checking this whole set for a specific unit before signing turns yield from a marketing figure into a working calculation you can rely on when comparing options.
Undersun Estate is a Phuket real estate agency, co-founder of the Phuket Property Association and a partner of the Phuket Real Estate Association (P-REA). If you're choosing property in Phuket for rental income, we're ready to calculate its realistic net yield and support the deal from selecting the property through to the paperwork.
Frequently Asked Questions
Can you calculate rental yield for a specific property in Phuket in advance?
Yes, Undersun Estate does this calculation as part of transaction support: monthly occupancy, daily rate, total entry cost, property management and booking platform commissions, tax — and the resulting net yield.
What rental yield on a Phuket condo counts as realistic?
By Undersun Estate's own calculations — 6–8% net a year for long-term rentals and 7–12% net for short-term, with the market averaging 6–10%. The exact figure for a specific property depends on location, floor, construction stage at purchase and the management company's terms.
Is the sinking fund in a Phuket condominium paid every year?
No, it's a one-off contribution at purchase, usually around ฿800 per square metre, part of the total entry cost. The annual charge is a separate item, the common area fee, around ฿80 per square metre per month.
Are the booking platform commission and the property management commission the same thing?
No, they're two separate deductions from the rental flow. The platform commission (Booking, Airbnb, Agoda) is around 10%, the property management commission for letting and servicing the unit is around 30%. Both come out before the owner sees any income.
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