A 2 million baht condo let at 10,000 a month. Is it worth it?
That is a gross yield of 6 per cent a year, which looks good. After real costs it lands around 3.5 to 4 per cent, and if there is still a mortgage on it the cash flow is usually negative, because Thai home loan rates currently sit above the net yield.
The short version: the number people advertise is the gross yield, the number that reaches your pocket is a different one, and the two are nearly half apart.
How gross yield is calculated, and why it misleads
Gross yield is a year of rent divided by the purchase price, times one hundred.
Rent of 10,000 baht a month is 120,000 a year. Divided by a purchase price of 2,000,000 baht, that is 6.0 per cent a year.
The figure is not wrong. It just assumes three things that are never true: the unit is tenanted all twelve months every year, there are no costs of any kind, and you paid cash.
What comes out before anything reaches you
The example below states its assumptions. Substitute your own figures.
| Item | Assumption | Per year |
|---|---|---|
| Full year rent | 10,000 baht a month | +120,000 |
| Void between tenants | One month empty per year | -10,000 |
| Common area fee | 30 sqm unit at 50 baht per sqm per month | -18,000 |
| Maintenance and breakages | 5 per cent of rent | -6,000 |
| Letting agent | About one month of rent, spread over the year | -10,000 |
| Land and building tax | At the residential rate | -400 |
| Left before income tax | 75,600 |
That is a net yield of 3.78 per cent against a gross of 6.0. Nearly thirty seven per cent of the advertised figure has gone, and income tax has not been deducted yet.
Rent is income that goes into your personal income tax computation, with allowable deductions, taxed at your own top bracket. Someone already on a salary pays at their existing marginal rate rather than starting from zero. All four taxes that attach to letting are set out in letting brings four taxes, not one.
Now add the loan, and the numbers turn over
Say you borrow 70 per cent, 1,400,000 baht, and put in 600,000 of your own.
MRR at the major Thai banks in early 2026 sits at roughly 6.6 to 6.95 per cent a year. Home loans are usually priced as MRR less a margin, which puts the post-promotional rate near six per cent. First year interest on 1,400,000 baht at about six per cent is therefore around 84,000 baht.
| Item | Per year |
|---|---|
| Net rent after costs | +75,600 |
| First year loan interest | -84,000 |
| Cash flow before tax and before principal | -8,400 |
That negative figure still excludes the principal repayment every month, which is not a cost because it becomes your asset, but is cash that genuinely leaves your account.
Put plainly: the unit does not pay for itself. You top it up every month to hold it, and what you are actually buying is not cash flow. It is a bet that the price will rise.
What about a 5 per cent yield with a mortgage?
Worse. A gross of 5 per cent, after the same cost set, leaves a net in the low threes, against interest of about six.
The rule that applies immediately: if the net yield is below the loan rate, you are paying to hold the asset rather than being paid by it.
That does not make it forbidden. Plenty of investors accept negative cash flow because they believe price growth will more than cover it. But it should be called by its right name, which is speculating on price rather than investing for rental return, and it requires enough liquidity to top it up every month for years without strain.
The numbers to watch instead of gross yield
- Net yield, rent after all costs divided by total capital invested, which includes transfer costs and furnishing, not just the purchase price.
- Cash on cash return, annual net cash flow divided by the money you actually put in. This tells you how hard your own capital is working.
- How many empty months you can absorb. How long can you cover the mortgage with no tenant at all? Under six months means the risk is too high.
What actually improves the numbers
- Cutting voids moves the needle more than any other variable, because one empty month is about eight per cent of a year's income.
- Renewing the existing tenant always beats finding a new one, because there is no agent fee and no empty month.
- Choosing a building whose common fee is not needlessly high, since that cost is a large share and does not fall when rents do.
- Buying well in the first place, because yield is calculated on what you paid, not on market value. Negotiating five per cent off at purchase is worth more than raising the rent five per cent.
If you are looking for a unit to let, see our condominiums and houses for sale, and if you would like us to find and screen the tenant, see the letting service.
Frequently asked questions
What does a 2 million baht condo let at 10,000 a month actually return?
A gross yield of 6.0 per cent, but after voids, common fees, maintenance, agent fees and land tax, a net of about 3.78 per cent before income tax.
What is the difference between gross and net yield?
Gross is a year of rent divided by the purchase price with nothing deducted. Net is what remains after all real costs. In this example the gap is nearly thirty seven per cent of the advertised figure.
Is a 5 per cent yield worth it with a mortgage?
Generally not on cash flow. A 5 per cent gross leaves a net in the low threes, against home loan rates near six per cent, so the cash flow is negative and you are betting on price growth.
What are Thai home loan rates now?
MRR at the major banks in early 2026 is roughly 6.6 to 6.95 per cent. Home loans are typically priced as MRR less a margin, putting the post-promotional rate near six per cent.
How many void months should I budget for?
At least one for an easily let unit, because there is almost always a gap between one tenant leaving and the next arriving. Secondary locations should allow for more.
Which numbers should I watch instead?
Net yield divided by total capital invested including transfer costs and furnishing, and cash on cash return divided by the money you actually put in.
What improves returns most?
Cutting voids, because an empty month costs about eight per cent of the year's income, followed by negotiating the purchase price, because yield is calculated on what you actually paid.
Does negative cash flow mean never buy?
No, but call it what it is: speculating on price rather than investing for rental return. It requires enough liquidity to top it up monthly for years without strain.
Key takeaways
- A 2 million baht condo at 10,000 a month is a 6.0 per cent gross yield but about 3.78 per cent net before income tax.
- Voids and common fees consume more of the return than maintenance does.
- MRR at the major Thai banks in early 2026 is roughly 6.6 to 6.95 per cent, putting post-promotional loan rates near six.
- Borrowing 70 per cent at six per cent costs about 84,000 baht of interest against 75,600 of net rent, so cash flow is negative.
- If the net yield is below the loan rate, you are paying to hold the asset rather than being paid by it.
- Negative cash flow is not wrong, but it is speculation on price rather than investment for rental return.
- The most effective levers are cutting voids and negotiating harder at purchase.