Most dormitory owners know their "monthly rental income" figure. Very few know their actual net profit — because the number they carry in their head leaves out building depreciation, the major-repair reserve, and tax. That is how a building that "makes money every month" turns out to have no cash when the repainting cycle comes around or the water pump dies.
This article has two parts. Part 1 is a three-minute summary for owners who just want the benchmarks and the formula. Part 2 is the full detail, for anyone deciding whether to invest, adjusting rents, or building a real budget.
Part 1: The short version — three minutes
The numbers every dormitory owner should know
- Average net return: 5–6% per year on invested capital
- Payback period: 16.5–20 years (depending on occupancy and how much you borrowed)
- Minimum capital: you should have cash for at least 50% of project value, because Thai banks typically lend no more than 50–60%
- Acceptable vacancy rate: no more than 10–15%
The profit formula (simple version)
The two terms people get wrong most often are the last two — depreciation and the reserve — because neither leaves your bank account this month, so they quietly drop out of the equation and reappear as a large problem five to seven years later.
7 hidden costs owners overlook
| # | Cost | Approx. / year | Why it gets overlooked |
|---|---|---|---|
| 1 | Miscellaneous repairs | ฿100,000+ | Feels like "a little at a time" — the annual total is large |
| 2 | Cost of vacancy | Varies | An empty unit earns nothing, but common-area utilities stay the same |
| 3 | Building depreciation | Per asset value | No cash leaves, but the building loses value every year |
| 4 | Repainting / refurbishment | ฿50,000–200,000 | Needed every 5–7 years or tenants leave |
| 5 | Land tax + income tax | ฿60,000+ | People count the income and forget the tax |
| 6 | Building insurance | ฿10,000–30,000 | Many skip it → severe exposure if something happens |
| 7 | Caretaker / cleaning staff | ฿120,000–180,000 | You do it yourself at first, then can't keep up as you grow |
Worked example: a 30-unit dormitory at ฿4,000 rent
| Item | Per month (THB) |
|---|---|
| Rental income (90% occupancy) | 108,000 |
| − Loan repayment | −40,000 |
| − Common-area water & electricity | −8,000 |
| − Staff / housekeeping | −12,000 |
| − Repair reserve (8%) | −8,640 |
| − Tax (estimate) | −5,000 |
| − Insurance / miscellaneous | −2,000 |
| = Net profit | ≈ 32,360 |
That is roughly 30% of revenue, about ฿32,000 per month — which looks good, except that this figure still excludes building depreciation and the major refurbishment cycle every 5–7 years. Add depreciation and accounting profit falls a great deal further (see section 2.5).
Part 2: The full detail — for owners who want to go deeper
2.1 Where dormitory revenue comes from
There are three main sources:
a) Rent — 80–85% of total revenue
- Your main line. It is units × rent × occupancy rate
- 10% vacancy is an immediate 10% revenue loss → target occupancy ≥ 85%
b) Water and electricity — 10–15% of billings (but not profit)
- Under OCPB regulation B.E. 2568 (2025), markups are prohibited → this is no longer a revenue source. You collect at cost and pass it on to the electricity and water authorities
- Watch out: common-area water and electricity (lifts, corridor lighting, water pumps) are the owner's cost. You cannot push them onto tenants as a separate charge without disclosing it in advance
This has meaningfully changed the economics of Thai dormitories, because the electricity spread used to be the income that covered common-area costs. With that gone, the cost has to be built into the rent from the start — the legal detail is in Thailand Dormitory Laws, and the per-unit calculation is in our Thai-language guide to calculating water and electricity charges.
c) Ancillary income — about 5%
- Coin laundry, drinking water vending, parking, advertising space
- Small, but it genuinely offsets common-area costs, especially in a densely occupied building
2.2 The cost structure — three categories
a) Fixed costs — payable whether units are occupied or not
| Item | Approx. / month (30 units) | Notes |
|---|---|---|
| Loan repayment | ฿30,000–50,000 | Depends on loan size and interest rate |
| Staff wages | ฿10,000–15,000 | Housekeeper, handyman (if any) |
| Common-area utilities | ฿5,000–10,000 | Lift, water pump, corridor lighting |
| Building insurance | ฿1,000–2,500 | Fire + natural disaster cover |
| Land and building tax | Per assessment | Paid annually — set aside monthly |
This category is exactly why vacancy is more dangerous than it looks — revenue falls with every empty unit, but the loan repayment and the wages do not fall with it.
b) Variable costs — scale with the number of tenants
| Item | Approx. / month | Notes |
|---|---|---|
| Water & electricity billed to tenants | ≈ at cost | Markups prohibited under OCPB rules |
| Consumables | ฿2,000–5,000 | Light bulbs, cleaning chemicals |
| Minor repairs | ฿3,000–8,000 | Taps, damaged wiring, ceiling panels |
c) Capital expenditure (CapEx) — not monthly, but you must save for it
| Item | Cost (THB) | Frequency |
|---|---|---|
| Repainting the building | 50,000–200,000 | Every 5–7 years |
| Roof replacement / repair | 30,000–100,000 | Every 10–15 years |
| Plumbing / electrical system replacement | 50,000–150,000 | Every 15–20 years |
| Unit refurbishment on turnover | 5,000–15,000 per unit | Every tenant change |
| Major equipment (water heaters, pumps) | 5,000–20,000 each | Every 5–10 years |
2.3 Calculating break-even
A worked example — say you build a 30-unit dormitory:
- Land: ฿3,000,000
- Construction: ฿6,000,000
- Fit-out and furniture: ฿1,000,000
- Total: ฿10,000,000
Net profit of ฿32,000 per month = ฿384,000 per year
Notice this is considerably longer than the 16.5–20 year benchmark in Part 1. The reason is that this example includes ฿3M of land in the investment and assumes 90% occupancy. If you already own the land, break-even drops to roughly 18 years. This is precisely why everyone's "how many years to pay back" number is so different — and why you must always run the calculation on your own building's figures rather than trusting an average you read online.
What makes payback faster or slower:
| Factor | Faster payback | Slower payback |
|---|---|---|
| Location | Near a university or factory | Deep in a soi, no public transport |
| Occupancy | ≥ 90% | < 80% |
| Rent level | Competitive, with a differentiator | Priced too low out of fear of vacancy |
| Loan proportion | Borrowed < 40% | Borrowed > 60% |
| Maintenance | Fixed immediately, nothing accumulates | Neglected → becomes one large repair |
2.4 Setting the rent — competitive but still profitable
Rent pricing has to weigh four factors at once:
- Real cost — total expenses ÷ number of units = the floor you must not go below
- Market price — survey competitors within 1–2 km and price within the same band
- Amenities — air conditioning, full furniture, and WiFi justify a higher price
- Target tenant — students and working adults have different willingness to pay
Asking rent = minimum rent + margin (20–30%) → then compare against the market
If your minimum rent comes out above the market price in your area, your cost structure has a problem (usually the loan proportion). Forcing your price down to market level in that situation is choosing to lose money every month with your eyes open.
2.5 Depreciation — no cash leaves, but profit is real
Depreciation is an accounting expense that is tax-deductible:
- Building: 5% per year (20-year useful life)
- Furniture and equipment: 20% per year (5-year life)
- Electrical / plumbing systems: 10% per year (10-year life)
Example: a building worth ฿6M → ฿300,000 of depreciation per year = ฿25,000 per month, deductible as a tax expense, which genuinely reduces your income tax bill.
Feed that back into the 30-unit example, and the ฿32,360 monthly cash profit becomes an accounting profit of roughly ฿7,000 per month. That is the more realistic picture for deciding "should I invest more?" — even though the bank balance still looks healthy.
2.6 What actually makes a dormitory lose money
- Vacancy above 20% — revenue drops while fixed costs stay put
- High interest plus a large loan — the repayment eats the entire profit
- No repair reserve — when a big repair comes, there's no money, so you borrow again at a worse rate
- Rent set below cost — fear of vacancy leads to underpricing, and a quiet monthly loss
- Accumulating arrears — no early follow-up, until it becomes bad debt
- Forgetting tax — rental income is subject to income tax and land tax, and may require VAT registration above ฿1.8M per year
Item 5 is the fastest to fix without spending anything — with reminders and a live per-unit arrears view, you catch the problem in month one rather than finding out at month three. See the early warning signals in our Thai-language article on tenants about to default, and how to filter at intake in How to Screen Tenants.
Sources: Financial planning for dormitories — Horganice (Thai) · Setting rent profitably — Horganice (Thai) · How to price rent — Horganice (Thai) · Where to start when building an apartment — GH Bank (Thai) · Starting a dormitory investment — Horganice (Thai) · Dormitory taxes explained — RentHub (Thai)
Conclusion: three things to do this week
- Calculate last month's real net profit, this time including depreciation and the CapEx reserve — the result may look very different from what you assumed
- Open a separate account for the repair reserve and move 8–10% of collected rent into it every month, before anything else gets spent
- Check your vacancy rate over the last 6 months — if it is above 15%, the problem is your price or your units' condition, not the market
All three together take under half a day, and they move you from running the building on instinct to running it on real numbers.
How RoomNaHub helps
- Income and expense dashboard — monthly and annual figures at a glance, no spreadsheet needed
- Arrears tracking — automatic LINE notifications to both owner and tenant
- Vacancy rate — see how many units are empty and which way the trend is going
- Tax reports — rental income summaries ready for your income tax filing
Want your real profit figures without building the spreadsheet?
RoomNaHub summarises income, expenses, arrears, and vacancy automatically. Plans start at ฿199/month.
This article is general information for educational purposes. All figures are estimates provided to illustrate the calculations; real results depend on location, project size, cost of borrowing, and management. This is not financial or investment advice — consult an accountant or financial adviser before making an investment decision.