Tips about the Phuket Real Estate Market
What is a Guaranteed Return?
When searching for property in Phuket you’ll keep coming across “Guaranteed Returns” offered to you time and time again but what does that actually mean? The “Guaranteed Return” is a great gimmick that allures buyers into a sense of safety but the returns offered are always a lot better than what you can get from any bank, so what are the pros and cons, and why are most developers so eager to give them?
Pro’s about Guaranteed returns
It’s definitely a two sided coin, with both parties gaining something. For any investor a “Guaranteed Return” is rarity, however don’t think that it’s a massive gift in the sense that they are doing you a favour by doing this. Any first time buyer in a foreign property market will have some issues of investing in a different market so a “Guaranteed Return” of 7% for example is a soothing comfort for the first 3 to 5 years but any longer and you might start to lose out. The simple fact is, if you’re buying in the right location as your property agent should be advising you to, then stop to think, is 7% enough? If so, for how long?
Everyone is naturally sceptical about parting with their money but my advise is this. For the first few years of any business, it takes time to get the word out. What makes you special, attain good reviews and to gain repeat customers? Why would this rule be any different for a new condominium? Taking a “Guaranteed Return” for the first few years is a great idea in terms of limiting your risk and understanding the value of your new market.
Peace of mind: Guaranteed return
There is a big BUT, any business will never run at a loss, it doesn’t make sense, this is the gimmick. If you have an offer for a “Guaranteed Return” then understand that the developer is usually making more money than the return offered. They believe that this condominium will do better than the “Guaranteed Return”. That’s why they offer it, very simple and in some cases it’s a fair tradeoff for peace of mind.
If you’re a first time buyer trying to minimise risk, then take the “Guaranteed Return”. However make sure you don’t take this option for too long as obviously the property value will go up over the years but the “Guaranteed Return” will be based on your purchase price. If you’re confident with your new investment then go with a recommended rental management company. We at Easy Living Phuket can help you with the guaranteed return and rental pools.