Owning a Vacation Rental Property as an Investment on Koh Samui
Vacation rentals on Koh Samui are one of the most searched topics when it comes to real estate in Thailand. In 2019, over 80% of Koh Samui property buyers purchased properties for use as tropical vacation rental homes.
Those who buy vacation rentals in Koh Samui tend to use the property themselves when they come to holiday. But during the rest of the year, they view it as an investment in their future and possibly somewhere that they will retire to one day. In the meantime, to offset some or all of the costs of ownership, they rent their Koh Samui property while they continue to live and work in their home country. Return on investment for vacation rentals on Koh Samui appears to be so good that word is spreading to more annual property hunters from around the world.
If you are beginning your own 5 year plan to retirement, or if you are looking to invest your money into something that you can also enjoy, it is worth considering purchasing the property of your dreams now, during the pandemic, while real estate prices are still affordable in this burgeoning region of Thailand. Many expats on Koh Samui are choosing to put their savings to work while they also enjoy the fruits of their labor once or twice a year in the comfort and convenience of their own home away from home.
But before you take the leap and invest in a new market, we want to fill you in on some details about Koh Samui real estate that you may be curious to know. Below are some common questions that previous investors have asked us about the Koh Samui rental market and our answers that we hope will help you make the decision on whether investing in a rental home in Koh Samui is right for you.
What can I expect as a return on my real estate investment on Koh Samui?
As a basic rule of thumb for Koh Samui vacation rental properties in recent years, (pre-covid of course) you can expect an annual net return of 4 – 6% on your investment. According to local property managers, on average, a good rental property will rent for about 65% of the year. But these figures can climb as high as a netting an 8 – 10% on investment if you build or buy the right kind of rental for the growing premium rentals market.
Depending on the features of the property, the average rental home on Koh Samui can expect occupancy rates of:
75 – 100% occupancy rate December - April,
25 – 50% May - July
60 – 90% August
20 – 40% September - October
0 – 10% November
What should I look for when purchasing a potential rental property?
Purchasing a property within walking distance to the beach or one with great ocean views will typically see a better return than homes with a jungle view or one that’s far from tourist destinations. This is not always the case ion Koh Samui where the peace and tranquility of a beautiful jungle property can be a big draw for nature lovers who come here for relaxing vibes.
Still, there is nothing like a jaw-dropping ocean view from the hillsides of Koh Samui. The mountainous region in the southern part of the island - where Hin Fah is located - faces the Gulf of Thailand and is fast becoming world-renowned for its powerful views of vivid green jungle leading out to the azure coastal waters.
Ideal qualities for a vacation rental property on Koh Samui:
Close proximity to the beach
Close proximity to amenities
Security and/or gated community
Clean and comfortable
To be a great income property on Koh Samui, property managers will advise that you have some or all the following features:
At least 3 bedrooms for families; or a small, separate, private villa on your property for couples
En suite bathrooms in the main bedrooms
What are the best months to rent out my vacation home on Koh Samui and when is the best time for me to use my vacation rental?
Peak times for Koh Samui are as follows:
Songkran Festival in April
At peak times, vacation rental homes can expect to earn double the normal rental income. Don’t plan your private stay during these periods if you are focused on rental income and don’t forget to increase your rental prices to your premium rates for these times of year. This is also the time to avoid maintenance breaks unless absolutely necessary so plan ahead and do your biggest jobs in the low season.
There are three distinct weather seasons on the tropical island of Koh Samui: the dry season (December until February), the hot season (March until August) and the rainy season (September until November).
August is traditionally the time of year that Europeans prefer to travel to Koh Samui due to the school holidays and it’s when we see the second biggest swell of tourism in stores, restaurants, hotels, and in our office.
From June to October is the green season when the weather is still warm and nice but the heat is tempered by a refreshing rain that typically comes in the afternoons/evenings. This time of year is generally less popular with tourists although it holds its own appeals for those who prefer milder temperatures, lots of fresh fruit in season, and magnificant sunsets.
Are there local property managers who can help market my Koh Samui property?
There are many local property management companies that can market, rent and manage your property and clients. They promote locally and internationally and manage questions and concerns, taking care of clients before and while they are renting. They handle billing and taking records for you and generally take a 20-30% commission for all of the above work. Contact our office for a qualified recommendation of local property managers who will meet your rental needs on Koh Samui.
Often, rental properties on Koh Samui will be featured on VRBO, AirBNB and Booking.com as these are the top sources for acquiring vacation rental bookings worldwide. Positive reviews on any of the online rental platforms are the most helpful tool for positioning your property as a great rental on Koh Samui and to receiving more bookings. Professional photos with great hospitality staging are common tools used by some of the most frequented property rentals in our area. If you want to manage your own rental property, especially if you live locally, it is easy enough to do when using the right tools for the job. Contact the MAKERS for your villa marketing package on Koh Samui.
Should I buy a vacation rental on Koh Samui?
Anyone can be talked into or out of anything. In this scenario, the best thing that we can recommend is for interested buyers to come and stay on Koh Samui to really get a feel for the quality of life. We have a dynamic international community of expats from around the world blending with the locals in a beautiful, “Sabai Sabai” way that seems, time and again, to inspire many people to want more. Things like property taxes, maintenance fees, and utilities are technically minuses on a ledger; however, the pluses are on a slightly less tangible scale that needs to be felt to understand its power.
So, to recap:
A vacation property can provide another source of supplemental income to offset homeownership and vacation expenses
Properties that are successful vacation rentals are valued by the real estate market when you want to sell your investment in the future
You can enjoy your vacation rental on Koh Samui, too
Living here and renting a part of your property can help ease financial stress and maintain a peaceful lifestyle
If you have questions and want to know more about the options at Hin Fah, let’s connect today so you can feel confident making a decision about your vacation rental property investment on Koh Samui.