Freehold Condo investment at 7-10% x 10-15 years, is it real?

[IamRoach]

20 minutes ago, Oxx said:

 

Just curious, but can you or anyone else name a condo building in Thailand that's 30 or 50 years old that is still attractive?

Somkid Gardens in Chitlom is from 1991? Not really a good comparison as it was probably the most expensive condo you could find back then and even now it's probably massively expensive.

[moontang]

some of the oldies would be worth more without the building....2 ra I of prime land in the CBD...could be with a billion THB.

[Boris79]

7 hours ago, xylophone said:

A friend just sold (after 5 years of trying) his 64 sq m apt for 4.9 mil baht and it did have the "extras" you have mentioned (sea view, pool, gym etc) and was a well kept as was the building.

 

I have seen condos for 2-3 million, but around 29-32 sq mtrs only and not in great locations.

 

I take it that you are looking at this from an investment viewpoint as the one you mention in your post is not for the owner to live in, but an investment (such as it is). So investment or to live in?

I'm looking for something to leave as main objective. But many agents told me about the "big" opportunities for investment.

I would like to make clear if is a scam or not. Honestly 10% for 15 year guaranteed, sounds strange.. They will give more then the value?

If is real I don't exclude both of the options, but I don't think so... That's why I would like to hear from someone already experienced this cand of investment. 

[lkn]

13 hours ago, Peterw42 said:

I have a condo that I bought for 1m baht and its rented for 8,000 a month, condo fees 10,000 a year. Works out to be around 7-8% net return. As I said its at the bottom end. Its not always best in the expat areas, most of the time its better returns in Thai areas.

You are definitely netting 7-8%, I can’t believe the other replies trying to disprove this simple fact.

 

What stands out to me is that you have been able to find a condo for (only) a million, and one that can be rented out for 8,000 baht.

 

Would you care to share with us how big the condo is, how old it is, and where it is located?

 

I’ve considered buying an extra condo in Bangkok (I already have one in Chiang Mai), but I have not been able to find anything this cheap that does not require a complete renovation.

[bkkandy1308]

Two things ....

 

If it seems to good to be true then it probably is.

 

As part of your due diligence you should look to see what company is actually providing the guarantees. Almost every time it is a separate, newly-formed company with no assets and no accounts to verify. If any developer was confident in delivering its promised returns, and if they have a decent track record of delivering on their previous promises, why don't they offer the guarantees themselves?

 

Just ask and you might be surprised by the answer because I've only seen one "guaranteed returns/buy-back" deal where the established developer is offering the guarantee.

 

Also ask what to expect once the guarantee period has ended. More often than not yields will drop to between 3% - 4% - nowhere near the 8% or more that you were initially hooked by.

 

For the record I'm a journalist focusing on the Thailand property sector.

[KittenKong]

5 hours ago, Boris79 said:

But many agents told me about the "big" opportunities for investment.

Well, they would: they are trying to sell you something.

 

These people lie constantly and are only interested in getting commission. Dont believe a single word they say.

[JAZZDOG]

5 hours ago, lkn said:

You are definitely netting 7-8%, I can’t believe the other replies trying to disprove this simple fact.

 

What stands out to me is that you have been able to find a condo for (only) a million, and one that can be rented out for 8,000 baht.

 

Would you care to share with us how big the condo is, how old it is, and where it is located?

 

I’ve considered buying an extra condo in Bangkok (I already have one in Chiang Mai), but I have not been able to find anything this cheap that does not require a complete renovation.

Not remotely true. He is omitting vacancy, reserves for R&R. At best he is getting 5-6% based on monthly rent far in excess of what a US$ 32,000 condo would demand. It also is not passive income. It has all the "joys" that come with being the landlord of a very cheap rental. If he pays himself honestly for putting up with renters, advertising, screening tenants and repairs ten how much of that whopping US$ 175/month does he have left over as passive income? Over ten years he will be lucky to make 2% in true passive yield with little or no appreciation. 

[kannot]

NO!

[kannot]

5 hours ago, lkn said:

You are definitely netting 7-8%, I can’t believe the other replies trying to disprove this simple fact.

 

What stands out to me is that you have been able to find a condo for (only) a million, and one that can be rented out for 8,000 baht.

 

Would you care to share with us how big the condo is, how old it is, and where it is located?

 

I’ve considered buying an extra condo in Bangkok (I already have one in Chiang Mai), but I have not been able to find anything this cheap that does not require a complete renovation.

I Bought a  condo for 800k (July  last year) off someone who needed to sell fast its only 7  years  old, rent is 8500 a  month, in Phrakanong close to BTS Bangchak , normally sell for about 1.3-4 million and I mean "sell" not asking price.

You can do it but the  opportunities are VERY limited and normally you will get nothing even mildly close to this if you are  buying now.

The Phuket condo talk is total BS, seen similar ads in BKK

I bought  all my rooms off someone who was getting out of the condo market (had 80+rooms to sell  none more than 7  years  old) and got them all well below market  value ie 30%+ below.

This really was a  once in a lifetime opportunity.

The market is saturated and you will not find anything  any good IMO as prices now are ridiculous especially for new  builds even in crap locations.

I would not have invested if it hadnt  been for this  opportunity

My Condos are all next to the BTS range from 68m2 to 30m2

Even so I still renovate all my rooms personally ie I d o it no one else no workmen etc so have no costs except my time and materials which are generally cheap anyway.

[kannot]

19 hours ago, Oxx said:

Thailand become almost worthless in most cases

I dont see that anymore, maybe 10 years ago but  not  now, even maintenance IS being done, recently had a condo I bought a few years back painted, just finished doing it  now at Condo One sukhumvit 52, the painting is not included in the  monthly service charge each owner had to cough up an additional amount for this. things have changed with the newer buildings ie 10 years old and up

[kannot]

20 hours ago, JAZZDOG said:

You can put lipstick on a pig but at the end of the day it's still a pig. Condos in LOS are terrible investments. Over supply, shrinking demand, pipeline of new units, cheap rents. If you have investments elsewhere yielding 6-8% you can rent the same condo for half of what you are making each month. Buying a condo here is as good an idea as buying a horse or pig with red lips.

depends on the price, everything at the right price can be good.

[KittenKong]

19 hours ago, Oxx said:

That really is a nonsense calculation.  It assumes the property is occupied 100% of the time.  It ignores tax.  It ignores insurance costs.  It ignores maintenance/refurbishment costs.  It ignores the impact if somebody dies in the property.  It ignores the value of your time in managing the property.  And, perhaps most significant of all, it ignores depreciation - condos in older buildings in Thailand become almost worthless in most cases.

 

Occupation rates? 100% certainly is possible, though it may not happen in all cases. I rented my own condo for two years straight before buying it, and I personally know many people here who have been renting the same unit for more than a decade.

 

Tax? I suspect that many landlords in Thailand dont declare rental income. This may change if the revenue department ever do their job properly.

 

Insurance? Many condo owners dont bother with this.

 

Maintenance/refurbishment? Many cheap rental condos contain furniture that is virtually worthless. And in many cases the rental deposit is used to replace items that have simply worn out, though of course it should not be.

 

Death? Who's to know unless you put a sign up on the front door? I neither know nor care how many previous occupants have died in my condo, and it would have no impact at all on the price I would be prepared to pay for it.

 

Depreciation could indeed be an issue, but even in the worst buildings it seems to be fairly limited, and seems to be more a case of failing to appreciate to match inflation rather than actual depreciation. And I dont believe that any condo anywhere here could ever be nearly worthless. In my experience just about any condo here, even the nastiest, will sell if it is offered at 50% off the original purchase price. So the downside is there, certainly, but it is limited.

 

All that said, would I spend 1MB on a condo here in order to rent it out for a 7% return? Never. It's far too much work and hassle for such a tiny amount of income. But I can understand that there are some people who seem to enjoy dealing with Thai tradesmen and tenants and agents and building managements etc. Personally I would hate every second of it, and I would rather just buy some index tracking ETF and get half that return (plus likely capital appreciation) for doing nothing at all.

[moontang]

IGR is 7.60 per share..for that you get a five cent dividend, every month, and appreciation..so 7000 shares would get you 350 us per month, compared to your net on a 1.6 million thb condo...easy choice, but I hate renters, being a renter, and paying rent..so I? bough my own to live in, and have an inverter frig, and a smart sony and a 20 SEER Carrier self cleaning air-con are on the way.  Do you get that when you rent?

[JAZZDOG]

7 minutes ago, KittenKong said:

 

Occupation rates? 100% certainly is possible, though it may not happen in all cases. I rented my own condo for two years straight before buying it, and I personally know many people here who have been renting the same unit for more than a decade.

 

Tax? I suspect that many landlords in Thailand dont declare rental income. This may change if the revenue department ever do their job properly.

 

Insurance? Many condo owners dont bother with this.

 

Maintenance/refurbishment? Many cheap rental condos contain furniture that is virtually worthless. And in many cases the rental deposit is used to replace items that have simply worn out, though of course it should not be.

 

Death? Who's to know unless you put a sign up on the front door? I neither know nor care how many previous occupants have died in my condo, and it would have no impact at all on the price I would be prepared to pay for it.

 

Depreciation could indeed be an issue, but even in the worst buildings it seems to be fairly limited, and seems to be more a case of failing to appreciate to match inflation rather than actual depreciation. And I dont believe that any condo anywhere here could ever be nearly worthless. In my experience just about any condo here, even the nastiest, will sell if it is offered at 50% off the original purchase price. So the downside is there, certainly, but it is limited.

 

All that said, would I spend 1MB on a condo here in order to rent it out for a 7% return? Never. It's far too much work and hassle for such a tiny amount of income. But I can understand that there are some people who seem to enjoy dealing with Thai tradesmen and tenants and agents and building managements etc. Personally I would hate every second of it, and I would rather just buy some index tracking ETF and get half that return (plus likely capital appreciation) for doing nothing at all.

Agree with most except vacancy is huge, take a look at hipflat. Thousands of condos vacant. Point is why not invest where you can make more, be liquid and take advantage of cheap rents in twice the condo you would have bought.

[JAZZDOG]

4 minutes ago, moontang said:

IGR is 7.60 per share..for that you get a five cent dividend, every month, and appreciation..so 7000 shares would get you 350 us per month, compared to your net on a 1.6 million thb condo...easy choice, but I hate renters, being a renter, and paying rent..so I? bough my own to live in, and have an inverter frig, and a smart sony and a 20 SEER Carrier self cleaning air-con are on the way.  Do you get that when you rent?

Of course because leaving my money working elsewhere I can rent twice as nice a condo as if I would have invested the same amount. I live in Reflection Jomtien, very nice 65m/2 upper floor, brand new. The owner paid 7.5M and I rent for 25K/month. My investments average 10%. For that same 7.5M locked up in that condo I can rent and pocket 37,500 / month on top of the 25K rent. There really isn't much room for discussion.

[xylophone]

10 hours ago, Boris79 said:

But many agents told me about the "big" opportunities for investment.

I would like to make clear if is a scam or not.

Okay, I have lived here for 11 years, visited for 14 and have bought and sold two houses and helped friends sell condos/apartments, so I believe I have some knowledge of the "opportunities" here.

 

Things you should consider.................

 

– Whatever promises are made, can be broken with little regard to the law, because this is Thailand and this has happened here in Patong. Those people with contacts and money are very often seen as being above the law, as has been witnessed on many occasions in Thailand.

 

– Buying off the plan is also fraught with danger because the developer can walk away with the money, go bust or whatever and this has happened with apartment/condo blocks here and they are still standing there rotting away. Furthermore despite the police knowing exactly who these people are, nothing has been done about it.

 

– Later on, if you were to buy one of these "investments", who is to say that the company who made the promises with regards to the returns is still in existence. The chances of the "guarantees" being kept if such a thing happens or if the company is sold, can be minimal.

 

– It is a huge risk here, hoping that promises made at this particular time will still be honoured 15 years down the track.

 

– I'm sure you can see where I'm coming from here.

 

I have seen the offers advertised by a developer here for a 7% return over 15 years and have seen mention of a 10% return, but can't remember the timespan. 

 

And I can say quite categorically that I would not touch either of them under any circumstances.

 

[moontang]

Neither would I, and I have bought a house and two condos here....no easy money, no guarantees..just common sense diligence and jnvesting.  And to add..I wouldn't buy any more houses here, even with a good attorney.

Edited July 7, 2018 by moontang

[Lacessit]

18 hours ago, Oxx said:

 

Just curious, but can you or anyone else name a condo building in Thailand that's 30 or 50 years old that is still attractive?

The one I live in. Swimming pool, wide corridors, big studios ( 47 sqm ). At least 30 years old. I won't name it because I like it the way it is.

[JAZZDOG]

11 minutes ago, Lacessit said:

The one I live in. Swimming pool, wide corridors, big studios ( 47 sqm ). At least 30 years old. I won't name it because I like it the way it is.

VT#6?

Edited July 7, 2018 by JAZZDOG
typo

[Patong2]

1 hour ago, xylophone said:

 

 

– Buying off the plan is also fraught with danger because the developer can walk away with the money, go bust or whatever and this has happened with apartment/condo blocks here and they are still standing there rotting away. Furthermore despite the police knowing exactly who these people are, nothing has been done about it.

 

 

 

 

If you doubt what Xylophone said, let me know, I can photograph 5 multi story apartment buildings all derelict and unworked on for several years, out my back window.

They have started building new ones in front of one now.

 

These have been built with someone's money, don't let it be yours.

 

Patong especially is for the expert investor who can afford to lose the money.

 

[xylophone]

22 minutes ago, Patong2 said:

They have started building new ones in front of one now

Is that the work going on alongside "Kellys" and just along from the Phanason debacle"?

[moontang]

Andrew-Drummond has covered these schemes a few times, and given valuable insight into who is running them.  Google it, and use a VPN and read it.

[Patong2]

6 minutes ago, xylophone said:

Is that the work going on alongside "Kellys" and just along from the Phanason debacle"?

Yes

In Nanai Rd just opposite of where Zabb restaurant was, and others further south. (Zabb is still serving great food down towards Makro)

 

Had some friends who have properties in NZ and took them around the island to show them the unfinished abandoned buildings and they were aghast. They now do not ask us why we rent here instead of buying

[lkn]

4 hours ago, JAZZDOG said:

Of course because leaving my money working elsewhere I can rent twice as nice a condo as if I would have invested the same amount. I live in Reflection Jomtien, very nice 65m/2 upper floor, brand new. The owner paid 7.5M and I rent for 25K/month. My investments average 10%. For that same 7.5M locked up in that condo I can rent and pocket 37,500 / month on top of the 25K rent. There really isn't much room for discussion.

I am sure the numbers hold for you, but on average, historical returns are less than 10% p.a., they are taxable in most jurisdictions, and attractive condos rent for more than 4% of the purchase price.

 

Below is the S&P 500, the value in July 1998 was actually higher than August 2011, so that is negative return after 13 years! People have a tendency to only look at the last 7 years when they talk about investment gains, and then think that it will continue forever.

 

Of course you could also have bought a condo in 1998 and the price may have gone through similar ups and downs, but if you buy there to live, your monthly expenses would be unaffected, so if you pay a premium for owning, that is basically insurance to eliminate risk.

 

[moontang]

might as well mention the golden blue chip investors...KODAK, GE, BETHLEHAM STEEL, World Com....bwahahaha....the backbone of America.

[KittenKong]

2 hours ago, JAZZDOG said:

VT#6?

View Talay 6 is about 10 years old.

[xylophone]

4 hours ago, moontang said:

Andrew-Drummond has covered these schemes a few times, and given valuable insight into who is running them.  Google it, and use a VPN and read it.

Searched and many sites not available (taken down?) but this one should serve as a reminder to others as to how "lawless" Thailand can be and money paid out behind the scenes means that foreign investors will get nowhere.

 

And although this is about Pattaya, similar has happened here in Patong……….

https://www.youtube.com/watch?v=_gTIRFuuXXg

 

[Lacessit]

6 hours ago, JAZZDOG said:

VT#6?

No