How to Calculate ROI for Overseas Property Rental? A Comprehensive Guide

ROI (Return on Investment) = (Annual Net Income + Asset Appreciation) ÷ Total Investment Cost

It measures the true efficiency of real estate investment returns. Common three indicators:

1. Gross Rental Yield = Annual Rent ÷ Property Price;
2. Net Rental Yield = (Rent - Annual Costs) ÷ Property Price;
3. Total ROI (including capital appreciation) = (Net Rental Income + Property Price Increase) ÷ Total Investment Amount.

- Developers usually report the Gross Rental Yield (excluding taxes and management fees);
- The actual net return rate is often 30%–50% lower than the advertised value;
- If factors such as exchange rates, taxes, vacancy periods, and depreciation are not included, the data can be severely distorted.

- Property tax and holding tax;
- Property management fees, management fees, insurance;
- Leasing agent fees, maintenance fees;
- Losses during vacancy periods;
- Income tax and currency exchange fees;
- Gains or losses from exchange rate fluctuations;

Recommendation: Calculate in a unified currency, typically based on the investor's home currency (CNY/USD).

Basic Conditions:
- Property Price: 5 million THB (approximately 1 million CNY)
- Monthly Rent: 25,000 THB
- Annual Rent: 300,000 THB
- Management Fee + Maintenance: 30,000 THB
- Tax: 10% of rent
- Vacancy Rate: 10%

Calculation:
- Actual Rental Income: 300,000 × (1−10%) = 270,000 THB;
- Annual Net Income: 270,000 − 30,000 − (270,000×10%) = 213,000 THB;
- Net Return Rate = 213,000 ÷ 5,000,000 = 4.26%.

- Taxes have a significant impact: Income tax and property tax vary greatly between countries;
- Thailand's rental tax is about 10%; Japan's rental income requires a 20% withholding tax; the U.S. withholds 30% for non-resident rental income.
- Holding costs are often underestimated: Property management, renovation depreciation, and vacancy losses often reduce the gross return rate by 30%–40%.
- Taxable base often depends on the declaration method (gross income system vs. net profit system).

- Choose areas with strong rental demand: university districts, CBDs, transportation hubs;
- Use professional property management companies to reduce vacancy periods;
- Combine short-term and long-term rentals to balance returns and stability;
- Utilize depreciation tax deductions over the long term (e.g., in the US, Japan);
- Plan tax residency reasonably to avoid double taxation.