“7% guaranteed return”

“🔥 7% per annum, guaranteed by the developer, for 5 years.”

This line in a presentation looks like ready-made passive income. But this is exactly where buyers often make a mistake — they take the advertised figure for a confirmed cash flow.

In this article, I’ll break down, using a concrete example, what may lie behind the “guaranteed return,” and what terms must be spelled out in the contract for the word “guarantee” to actually carry weight.

A calculation that seems simple

Let’s imagine: an apartment in Phuket costs ฿10 million, and the presentation states:

🔥 7% per annum for 5 years.

At first glance, it’s all obvious:

฿10 million × 7% = ฿700,000 per year;

฿3.5 million over 5 years.

But behind the same “7%” from different developers, there may be completely different amounts landing in your pocket.

What may be hidden behind “7%”

The percentage may be calculated:

• not on the full price of the apartment, but only on its base component;
• excluding furniture and additional payments;
• before deduction of taxes and bank fees;
• only after the handover of the unit — not from the moment of payment;
• subject to mandatory transfer of the apartment to a management company;
• with restrictions on the owner’s personal use for part of the year.

The same rate, with different calculation bases, yields different sums. Therefore, it’s not just the figure in the ad that matters — the calculation base is crucial: exactly what the percentage is applied to.

When the income is truly guaranteed

Only when the signed contract specifies:

• the exact amount or a clear calculation formula;
• the start date of the program;
• the period and payment schedule;
• the currency of payments;
• the company obligated to pay — a specific legal entity;
• terms for early termination;
• liability for delay or non-payment.

❗ A phrase in a brochure or a manager’s promise is a marketing statement. An obligation arises only in a contract signed with a specific legal entity.

Where the money for payments comes from

Another important question: what funds the “guarantee”?

Different models are possible:

🏨 The income comes from the actual operation of a hotel operator — in this case, the program’s sustainability depends on occupancy rates;

🏗 The payments are funded by the developer itself — then their reputation and financial stability matter;

💵 Future income is partially included in the apartment price — you’re effectively getting part of your own money back.

The last option is especially important to check: compare the apartment’s price with similar properties in the same area that don’t offer a rental program. If the “guaranteed” option is noticeably more expensive, you’ve already paid part of your future income at the time of purchase.

Conclusion

We distinguish three things:

Fact: a specific payout may be fixed in the contract — then it has legal force.

Forecast: future occupancy, rental rates, and apartment price growth — no one can promise these.

Marketing: a percentage in a presentation without detailed terms is just an advertisement.

Before buying, you need to assess not only the attractive rate but also the payer’s reliability, the real price of the property, and the full text of the contract.