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Posted on 13 Apr 2025
65872
Apartment / dormitory business
How’s the situation right now?
Is it still attractive? Can it still move forward?
Come!!! Stop scrolling and sit closer.
I’ll break it down for you.
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About 30 years ago,
the apartment/dormitory business was seen as a stable monthly cash cow —
many viewed it as a “sleeping tiger” collecting rent effortlessly.
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But is it really like that?
Can we still call it that today?
If so… why do we see so many dorm owners selling off their properties now?
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What happened?
And what will this business look like in the future?
Let’s dive into the details from different angles.
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About 20-30 years ago,
running a dormitory was one of the top models for creating passive income.
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If someone owned a dormitory back then,
they were seen as quite wealthy.
At that time, there wasn’t much public knowledge shared,
so it was an insider business with few competitors.
This allowed operators to earn handsomely.
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About 15 years later,
real estate developers started turning land into condos,
which replaced traditional dorm living.
Condos generated more profit and turned over faster.
We can say condos “disrupted” dorms.
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Even though condos had clear advantages —
better living quality,
higher security standards,
more luxurious shared facilities every year —
most people still couldn’t afford them.
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In the past, dorm rent was 2,000–4,000 THB/month,
while condos started at 7,000–8,000 THB/month.
There was still a wide gap.
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Today, new dorms sometimes start at 6,000 THB/month.
Even with better services and facilities,
many tenants think:
“With a bit more, I can live in a condo.”
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One key factor: utility costs.
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Dormitory water and electricity rates
are higher than state-regulated rates.
That’s because dorm profits don’t actually come from rent alone
but from utility markups,
which help them survive.
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The breakeven point for dorm businesses is 6–10 years,
even though the rent is a main income source.
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But if you deduct labor costs —
housekeepers, security guards, lobby staff,
and repairs for rooms after tenants move out —
the margin becomes very thin,
making it hard to breathe easily.
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Raising rent is difficult,
because the tenant group is highly price sensitive.
Even a 500 THB/month increase
can make them leave immediately.
There is no “brand loyalty” with this group.
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Tenant life quality,
their personal financial or life problems,
all affect rent payment.
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Today, tenants’ monthly income often isn’t enough.
Household debt issues lead to missed payments.
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If violent incidents or tragic news occur,
it can severely damage the business.
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I know a dorm owner whose property had two tenant suicides by jumping,
which became notorious at the time.
They lost huge business income (super unlucky).
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They had to renovate,
change colors, change the facade,
erase the old image completely
so they could continue.
But this required heavy personal investment.
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So,
dorm/apartment business,
which many think is easy,
like a “sleeping tiger” collecting rent monthly,
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In reality, it’s not that simple.
Even if you used to achieve a 10% yield,
it came with “rat pedaling a bike” levels of active management.
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Operations, system design, marketing,
staff management, service,
and constant maintenance —
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You must oversee these closely.
If you let staff run it alone,
errors can easily occur.
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So many stressful details
might not be worth the mental health cost.
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Some people like to build,
then sell after completion.
They don’t enjoy operating.
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Some prefer operating,
but not building.
They like “ready-to-go” assets.
That’s why we see these properties change hands often.
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Many current owners (mostly Baby Boomers)
are aging, can’t manage, and want to rest,
so they want to pass it on.
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But the new generation, from Gen X onward,
doesn’t feel drawn to this business.
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Those who grew up seeing parents run it,
often aren’t interested in taking over —
a very common scenario.
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For outsiders with no dorm business background,
current returns may seem unexciting compared to other businesses,
so they’re not interested.
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Meanwhile, condos —
some projects now offer more accessible prices.
If you look only at rent, condos may be more expensive.
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But consider location, utilities (water/electricity/internet),
parking, security,
and social status image —
condos clearly have an edge.
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Because this business
is no longer as attractive or exciting in returns.
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If someone argues that dorms offer better yields,
they might not see the full picture.
If both dorms and condos give an 8% yield,
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Compare 8% from condos with only a few tenants
versus 8% from dorms managing a whole building plus staff,
and the liquidity of selling the asset —
you’ll quickly see which is more worthwhile.
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But will dorm businesses disappear?
Definitely not.
They will continue for a long time.
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Dorms still serve as essential housing for low-income earners,
and are popular in certain areas.
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For example, near schools, universities,
government offices, workplaces,
and factories in provincial areas.
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These tenants tend to stay long-term,
as long as they work or study nearby.
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If lucky to be in tourist or prime economic zones,
near BTS or airports,
you can convert to a hostel or Airbnb.
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This can mix regular tenants and transient guests.
Revenue from hostels or Airbnb
can average 3x more than monthly dorm rent.
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But converting requires capital to renovate and upgrade,
to justify higher prices.
Many operators don’t have this cash flow,
as monthly profits are minimal.
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Bank loans may feel too risky.
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Hostel/Airbnb guests are also very different.
If you don’t already have a customer base,
it’s risky.
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Even then, maintenance needs are constant.
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These guests believe:
“I paid, so I’ll use everything fully.”
They don’t take care of the place —
some leave air-con on all day and night.
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If your dorm isn’t in such areas,
what can you do?
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I’d ask:
When you built your dorm,
did you consider your target customer?
Where are they from — workplaces, tourist zones?
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Can you expand your customer base now?
If yes, you still have a way out.
Renovate, improve the look,
market harder to attract new tenants.
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If not?
Then sell at a fair price.
All the profits you’ve earned so far —
consider them your gains.
Don’t overthink.
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Sometimes letting go is better than holding on and losing more later.
You know your dorm’s limits best.
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Sell
But sell to someone who can continue.
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Old owners must accept that prices can’t be marked up much,
or they may even have to sell at a loss.
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If you peg to current land or construction prices,
new owners won’t be able to make it work.
Who would buy?
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Your breakeven point might be 10 years,
but new buyers might face 20–30 years.
Who wants to tie up money that long?
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Now you see the dorm business more clearly.
It’s a business where insiders want out, outsiders want in.
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For those looking to enter this business,
this article might serve as a reality check.
#GoodLuck
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Parinwatch Knapakvorn (X)
CEO of Matching Property Co., Ltd.
Veteran in all real estate segments,
sharing real field experience for over 8+ years.
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