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Branded Residence and Rental Pool in Bangkok

Posted by BKK.CONDOS on 17/02/2020
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In another article, we talked about when you are planning to buy a condo in Bangkok, one option may be to buy a “branded condo”. That is, a condominium in a block which has the name and services of a well-known hotel or even a serviced apartment chain associated to it.
 
Apart from the issues discussed previously, another feature of branded condos is that some operators set up and manage a so-called “rental pool”.
 
A typical situation may be as follows:
 
▪ adjacent to the main hotel is a block of condos which is set up as possibly mainly studio units (single bays), similar in size and amenities to the rooms in the hotel. Or there may be some 1-bed or 2-bed units in the condo block, as well as the studios, also in the same interior decoration style as the adjacent hotel rooms;
 
▪ the developer sells off the condo units either for self-occupation but more likely to investors. The property itself will be used as an “overflow” for the hotel when it is running at high occupancy and needs more room or when guests are looking for an alternative room type, perhaps with a kitchen or longer stays. This is one reason that the style and interior design needs to be similar to the hotel rooms;
 
These types of condo hotels are sometimes called “condotels”, with one key difference being that the rooms are owned by individual investors not one single entity.
 
▪ so, the buyer of or investor in such condos often has two choices. Either live there as one would in a regular condo, or agree to join the hotel rental pool. If the latter then the unit will be rented for guests of the hotel by the hotel on a daily basis, with the revenue shared between the hotel and the condo owner on a pre-agreed basis.
 
▪ there will be contract between the hotel and condo owner which sets out the basis of such revenue split, responsibility for repairs and maintenance, building and operational insurance etc. This contract will also include important items such as how many days per year the condo owner can occupy the unit, and which days he/she cannot;
 
▪ some condotels provided a guaranteed annual return to the condo owner and it is important to check if this is available and, if so, is the guarantee on a “gross” or “net” bass owner. Also, it should be clarified if the revenue share only applies when the subject condo is occupied or is the rental from all units “pooled” and the revenue then shared.
 
Rental pools are more common than previously and, if you are buying a condo in Bangkok, it’s worth spending some time to fully understand the key terms and conditions of such an arrangement.

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