How is buying a condo a good investment?

[Lacessit]

Time is a factor in the decision.

If you are a 50 yo farang retiree here, buying a condo could be a good decision if you have free cash available. While there are booms and busts in property, it always rises - eventually. That 50 yo retiree would be saving rent equivalent to a 6-8% return on investment.

On the other hand, buying for someone in their 70's would be dumb - no capital appreciation, an inheritance your heirs can't get rid of except at a fire sale price.

[PerkinsCuthbert]

8 hours ago, GinBoy2 said:

This is one of those almost impossible questions to answer.

 

Everything depends on location in real estate.

 

I would never never ever recommend farangs to buy anything outside of the central area of Suk.

 

The Thai condo property market is so overbuilt in general, you really need to be awfully cautious.

 

I owned 4 units in Noble Remix Bangkok, mainly because I researched it was a prefered destination for Japanese expats, and indeed all of my tenants over the years were Japanese. They pay the rent on time, and not that needy, and I could always get new tenants when one moved out.

 

That scenario I don't think applies to Pattaya, Phuket or Nakorn Wherever, and equity loss is probably more likely

 

Now on equity, I broke even after finally selling and taxes and fees etc.

 

My rental income made it all positive, but honestly I'm glad I'm out

Good post - and that from a man who did his DD; most punters just like the idea of ownership while understanding very little indeed of the intricacies of the Thai - and especially farang-centric - real estate market.

[Jingthing]

5 minutes ago, Lacessit said:

..
While there are booms and busts in property, it always rises - eventually.

...

No it doesn't. That's a myth. 

[Mavideol]

it's a matter of investment preferences. like getting married, one can get married (own) a lady that keeps screwing (figurative language) him over and over, (taking everything from him) or one can rent a girl use it now and then and change (residence 5555) as often as he desires.... do the calculations which one it's cheaper/less expensive/less headaches????

[Mavideol]

4 minutes ago, Jingthing said:

it always rises - eventually.

it all depends on the touch or the type of pills

[GinBoy2]

So, I just ran the math again of my BKK rentals and my US rentals.

 

With common fees etc, I made around an average of 4.6% rental yield on equity.

 

On my US rentals, with property taxes, Property Mgt and HOA fees (I'm lazy not into building insurance, landscaping etc) I make 4.9% yield.

 

Then you come down to risk, which is a bit more intangible.

 

I would have to say I had more sleepless nights worrying about if I could sell by BKK condo's than I ever have with my US units.

 

That being said, I did sell everything in BKK fairly easily, but I think the location was almost everything in that piece of luck

[Mavideol]

1 minute ago, GinBoy2 said:

So, I just ran the math again of my BKK rentals and my US rentals.

 

With common fees etc, I made around an average of 4.6% rental yield on equity.

 

On my US rentals, with property taxes, Property Mgt and HOA fees (I'm lazy not into building insurance, landscaping etc) I make 4.9% yield.

 

Then you come down to risk, which is a bit more intangible.

 

I would have to say I had more sleepless nights worrying about if I could sell by BKK condo's than I ever have with my US units.

 

That being said, I did sell everything in BKK fairly easily, but I think the location was almost everything in that piece of luck

I am sure you know  3 golden rules while investing in property..... location, location and location

[Lacessit]

7 minutes ago, Jingthing said:

No it doesn't. That's a myth. 

Well, it's a myth that has worked for me in Australia for 45 years.

First house bought for $14,000 in 1969, sold 1978 for $40,000.

Second house $42,000 1979. Valued at divorce settlement 1995 $200,000

Holiday house, $6000. Sold for $13,000 about 3 years later.

Townhouse, bought in 1998 for $80,000. Sold 2003 $130,000.

Last house I will own, bought 2006 for $275,000. Sold 2015 for $535,000.

Do you have some evidence of your own to support your assertion?

[melvinmelvin]

17 hours ago, Jingthing said:

As a condo owner I would advise most people to RENT. 

agree

 

don't think it is a good investment to buy a condo in BKK, Hua Hin Patong or Pattaya

 

if you have the cash and absolutely fall in joy of the condo and plan to live there until you perish,

no problem - likely a good idea

 

but as an investment? I am very very sceptical

 

 

[Jingthing]

3 minutes ago, Lacessit said:

Well, it's a myth that has worked for me in Australia for 45 years.

First house bought for $14,000 in 1969, sold 1978 for $40,000.

Second house $42,000 1979. Valued at divorce settlement 1995 $200,000

Holiday house, $6000. Sold for $13,000 about 3 years later.

Townhouse, bought in 1998 for $80,000. Sold 2003 $130,000.

Last house I will own, bought 2006 for $275,000. Sold 2015 for $535,000.

Do you have some evidence of your own to support your assertion?

 

[GinBoy2]

4 minutes ago, Mavideol said:

I am sure you know  3 golden rules while investing in property..... location, location and location

In as much as that is a cliche, it is so absolutely true

[Lacessit]

24 minutes ago, Jingthing said:

 

Have you been paying attention? I said there were booms and busts in real estate. There were several in Australia over the time frame of 45 years. From memory, including the recession we had to have, when interest rates were 18%.

I've cited 5 examples where the property I owned increased in value. I have never lost money on any property I owned. Lost plenty when it was developers who owned it.

Is one scare video the best you can do? That's about America, not Australia, geddit?

 

[GinBoy2]

11 minutes ago, Lacessit said:

Have you been paying attention? I said there were booms and busts in real estate. There were several in Australia over the time frame of 45 years. From memory, including the recession we had to have, when interest rates were 18%.

I've cited 5 examples where the property I owned increased in value. I have never lost money on any property I owned. Lost plenty when it was developers who owned it.

Is one scare video the best you can do?

 

It's all supply and demand at the end of the day.

 

In most developed countries real estate construction is regulated which in many ways reduces the long term risk, without understating short term bubbles.

 

Thailand in general is totally unregulated, so building goes on regardless of the demand, that's the danger 

[Lacessit]

4 minutes ago, GinBoy2 said:

It's all supply and demand at the end of the day.

 

In most developed countries real estate construction is regulated which in many ways reduces the long term risk, without understating short term bubbles.

 

Thailand in general is totally unregulated, so building goes on regardless of the demand, that's the danger 

Agree. The other danger is many of the buildings are constructed from frog excrement and duct tape.

[Stevemercer]

54 minutes ago, Lacessit said:

Well, it's a myth that has worked for me in Australia for 45 years.

First house bought for $14,000 in 1969, sold 1978 for $40,000.

Second house $42,000 1979. Valued at divorce settlement 1995 $200,000

Holiday house, $6000. Sold for $13,000 about 3 years later.

Townhouse, bought in 1998 for $80,000. Sold 2003 $130,000.

Last house I will own, bought 2006 for $275,000. Sold 2015 for $535,000.

Do you have some evidence of your own to support your assertion?

 

I agree that in Australia (and many western countries), housing keeps appreciating. But it is risky to apply the same thought processes to property in Thailand. The poorer build quality limits the life span (meaning there is less time for appreciation) and supply will continue to outstrip demand for at least the next 10 years. 

[bender92]

I live in mine about 3 years and then sell for a profit, plus i save 3 years of rent. Ive done it twice.

[Lacessit]

4 minutes ago, bender92 said:

I live in mine about 3 years and then sell for a profit, plus i save 3 years of rent. Ive done it twice.

You would have to be a pretty good negotiator of the buying price to do that.

[newnative]

3 minutes ago, Jingthing said:

No it doesn't. That's a myth. 

     The correct answer is it depends.  The condo project where I am living in Pattaya is over 30 years old.  Units originally sold for a million baht.  Currently, they are selling for 9 to 14 million baht, depending on view, size, and condition.  And, by the way, that belief that condos only last 30 years and then they, apparently, go crashing to the ground is also not true.

     Why did condos increase in value at my project and not lose value?  First, the tried and true location, location, location.  The project sits on one of the finest oceanfront plots of land in Pattaya.  Not that many of those left in close-in locations.  Second, the plot itself is in one of the most desirable areas of Pattaya, and is only getting more desirable as other luxury condos have been built nearby, as well as Terminal 21.  Third, the condos are mostly all large 3 bedroom/3 bath.  How many oceanfront condos offer 3 bedroom/3 bath units?  Answer, not many.  Supply and demand kicking in--which also factors in some condos not gaining in value.

      I've sold every one of my Pattaya condos at a profit--but all were oceanview and none was at a 'theme park', no view, out of the way condo project.  My partner and I just bought a small getaway Bangkok condo.  We bought off-plan at a good price from a large, well-known builder and now that it's done it has already gone up in value.  It should continue to do well as it is in an excellent location.  Someone might say that these are not the norm but that is what you should be looking for if appreciation is your main concern.  (For us, though, appreciation has never been the main concern.  Appreciation happened because we bought desirable condos in desirable locations and then made them even more desirable.)

     Somewhat lost in the debate, at least so far, is the joy of condo ownership.  And, it is a real joy for a lot of people, my partner and I included.  We would be condo owners even if we didn't make money.  Not for us living in a landlord's condo, looking at landlord art on bland, landlord painted walls, and sitting on cheap, often no-style, landlord furniture, having to be SO careful not to break any of it--even if it is cheap and awful.  No thanks.  Life's too short and I don't want to spend my senior wonder years in a 7000 baht a month rental.  But, that's just me.  Whatever floats your boat...

     

[Hanuman2547]

20 hours ago, Jingthing said:

As a condo owner I would advise most people to RENT. 

I pretty much agree with this statement.  I am a condo owner as well.  I paid cash for it so no loans or anything.  I own it outright.  I bought my 3 year old condo in Jomtien in 2006 and still have it.  I have never lived in it.  Over the span of 12.5 years I have owned it I have spent the grand total of maybe 4 nights in it and that was back when I first bought it.  Although it has nice furnishings and fittings, it's too small for my liking.  It hasn't really appreciated much and I think it would be hard to sell although I have never put it on the market.  Currently I have had the same tenant for the past 4 years.  As I don't live in Thailand anymore, but visit yearly, I have a property management company take care of it.  Now when I visit Thailand I use the baht in the bank from the rent collected to finance my holiday.  The one nice thing is that means I'm a little more protected from the currency changes in the baht.

[MyFriend You]

35 minutes ago, Hanuman2547 said:

I pretty much agree with this statement.  I am a condo owner as well.  I paid cash for it so no loans or anything.  I own it outright.  I bought my 3 year old condo in Jomtien in 2006 and still have it.  I have never lived in it.  Over the span of 12.5 years I have owned it I have spent the grand total of maybe 4 nights in it and that was back when I first bought it.  Although it has nice furnishings and fittings, it's too small for my liking.  It hasn't really appreciated much and I think it would be hard to sell although I have never put it on the market.  Currently I have had the same tenant for the past 4 years.  As I don't live in Thailand anymore, but visit yearly, I have a property management company take care of it.  Now when I visit Thailand I use the baht in the bank from the rent collected to finance my holiday.  The one nice thing is that means I'm a little more protected from the currency changes in the baht.

Same here, I bought my Jom Tien Condo from a friend, he lived in it for 3 years, and I bought at what he paid for it 1.3Mil.........he got his money back, I have a place to live - believe me, before that I was paying $8-$10,000  a year for Hotels - I don't live cheap..........$80-$100 a day was common, so for me it was setting some roots and saving some money to play with - I have been here little over 2 years, figure I have my investment back in another year or so.  But who's counting - I only stay about four months a year, and I don't rent it out.........it's mine, not a Hotel, or a 15,000 baht a month rental.  Oh, BTW I won a sizeable prize 8 years ago in the Thai Lottery, 6 Million baht, it has been in the bank, 'cept what I have spent, so the money I used to buy this place came from the US bank, but has been replaced with Thai Govt Money  -  just lucky is all...................

[GinBoy2]

2 hours ago, Stevemercer said:

 

I agree that in Australia (and many western countries), housing keeps appreciating. But it is risky to apply the same thought processes to property in Thailand. The poorer build quality limits the life span (meaning there is less time for appreciation) and supply will continue to outstrip demand for at least the next 10 years. 

That's all very true, and it's a real issue. 

 

Poor construction quality makes properties deteriorate, must faster than most Westerners would expect, couple that with lots of new build, it's is a recipe for declining equity value for existing property.

 

To use a US analogy, although the build quality doesn't apply.

 

Phoenix AZ, which in the middle of the desert, had infinite build capacity, as new build came on line it depressed the price of existing housing stock.

[peterb17]

I do not think you should ever look at your home as an investment- it’s a reasonably recent concept . 

 

It’s somewhere to live and make your own place. 

 

If you were lucky enough to live in the property price madness of many capital cities and lucky enough to choose the right area / property - then wow! 

 

My first place bought for £34000 sold for £900,000 - but then I lived there for 35 years - loved that house . 

 

Here we have a pleasant condo in one of the older developments 110 sqm - cost 4.5 million - totally renovated+ furniture another  2 million at least - sits empty - I won’t rent it out - if anyone visits - they can stay . If I want to sell- there will be just ridiculous offers .  

 

But another condo 220sqm  - bought for 8 million - 5 million spent on renovations- to the highest spec - it’s wonderful- could sell tomorrow for at least  20 million . 

 

If you are prepared to do your homework- spend months trawling around finding the best fittings, kitchens , bathrooms, furniture-then knocking down and moving walls , new ceilings, wiring , plumbing etc  and have a great project manager - you can still make money . It’s hard work. I would not sell- it’s a stunning space and home . 

 

 

 

But to buy  a typical condo in one of the new developments - you will never make money - which I presume you wish from an ‘investment ‘ - just treat it as a home , relax and enjoy life . 

 

 

[Jingthing]

I'll address buying a condo in Thailand to LIVE in here rather than investors in rental properties.

 

It is not the same thing as buying in your home country. 

 

There is no assurance of profit on real estate even in your home country.

 

Of course it depends.

 

Foreigners in Thailand generally buy condos with full cash purchases.

 

So that cash is locked in Thailand in an illiquid asset. 

 

That cash could have been used in other ways, that would either gain or lose money in another investment class.

 

As has been said before, in Thai culture resale condos are seen as "used" and depreciation is expected more than appreciation.

 

Of course location matters.

 

Of course condition and age matters.

 

But back to the harsh reality. Foreigners in Thailand generally have no long term residence rights. Owning the condo (except in rare exceptions of it being tied to investment visa) adds nothing to your residence security.

 

Things change. Your visa situation. Your personal situation. Even risk of political change as happened in Nicaragua that had expats fleeing and leaving their owned homes. What I'm getting at is that you have too a high chance of being FORCED to sell quickly at "fire sale" prices here (if you can sell it all). You're much more likely to lose your entire investment here than in your home country. I can't give you percentages but it's definitely much higher. Then there is the matter of the difficulties many people have repatriating large amounts of money outside Thailand. Perhaps DeeMoney is helping some people with that though. 

 

A member mentioned prices go up and down. True. Thailand isn't a western market though and it's quite hard to know what the actual market is at a given time. Also increased chances here of being forced to sell at a time when the market is lower. That can happen in home countries too, but more likely here due to visa situations, etc.

 

Of course lots of people make lots of money owning and then selling real estate globally. I have done that in the USA. It won't happen here for me (but that's not why I originally bought here anyway). I'm not saying people can't and don't make profits here on real estate. Just that it's my considered opinion that for most foreigners here the potential rewards are simply not worth the risks.

 

Of course buying a modest home to live in just as a commodity like a car is fine especially if you end up living in it for life and don't rely on it for future large profits, which are very much not certain. But again, people with such plans often CHANGE those plans, either by choice or outside pressure.

 

Cheers.

[Rod the Sod]

To even begin to think there is a simple answer here is stupid. There are to many variables:

 

1. Is it for you to live in, or to rent out?

2. Is it bought for cash, or is there a mortgage?

3. Is it in a key location where new or old, people will in future years value greatly the location?

4. Is it close to a BTS/MTR or will it be in the future?

 

and more, but in so far as I read the comments before giving up, have many forgotten that you never buy property as an investment without factoring some upside in the value over the life of the property (until you sell, die or it falls down). Of course values can go down so where you buy is vital. Among all the doom and gloom here, I bought 3 years ago at TB155k a SqM and they are retailing at TB190k a SqM now, and selling. There are only 3 things that are important about buying property - location, location and location.

 

Finally, to those that keep pushing the fact you never actually own your property in Thailand, you have rights to the property (if not the land) if 51% of the apartments are owned by Thais (at time of purchase). In my case, I bought to live in, close to a BTS in the CBD where I own the Apartment outright and where prices are going up. If you want to buy in the middle of nowhere special and borrow etc. etc. you are not a good property investor and probably better to invest in shares, which when the almighty crash happens one day, means you can wipe your ars* with some very expensive paper. The property owners meanwhile have keys, bricks and mortar.

[Jingthing]

Most foreigners here buy with cash and that's a fact. 

[GinBoy2]

9 hours ago, Jingthing said:

Most foreigners here buy with cash and that's a fact. 

I'd love to be able to put some real numbers to that, but you have to think that farangs who have any access to Thai mortgage funding must be infinitesimally small

[LomSak27]

14 hours ago, Lacessit said:

Well, it's a myth that has worked for me in Australia for 45 years.

First house bought for $14,000 in 1969, sold 1978 for $40,000.

Second house $42,000 1979. Valued at divorce settlement 1995 $200,000

Holiday house, $6000. Sold for $13,000 about 3 years later.

Townhouse, bought in 1998 for $80,000. Sold 2003 $130,000.

Last house I will own, bought 2006 for $275,000. Sold 2015 for $535,000.

Do you have some evidence of your own to support your assertion?

So where in Thailand did you buy at in 1969 and 1979 

 

You are talking about Thailand right? Oh sorry my mistake, we switched to Australia. I made great money, and half of my retirement mutual fund, off a condo in Seattle, but how that would apply to investing in Thailand .... I would not have a clue.

 

[newnative]

13 hours ago, Lacessit said:

You would have to be a pretty good negotiator of the buying price to do that.

     Negotiating a good price helps but more important is where and what you buy and how you improve.  One poster has said that you will never make any money buying a typical condo in a new development.  I disagree--I've made money on every condo I have bought in new developments, although perhaps the projects were not 'typical' and the condos certainly were not after we did our thing.  I would imagine owners of Cetus, The Base, Centric Sea, Zire, Northpoint, and select other projects would also disagree.  I could kick myself for only buying one condo at The Base and two at Centric Sea.  

[Peterw42]

I still think condos "can" be a great investment in Thailand but unfortunately many pay to much in the first place. People literally pay double what a condo is worth then spend the next 5 years telling everyone how bad the condo market is. 

 

There appears to be two markets in Thailand, the actual realistic price where condos change hands, get a reasonable return and appreciate over time, and the overinflated market where there is always someone asking a stupid price and someone willing to pay it.

 

Its often hard to find any real data in Thailand, past sales, sales volume, real rental return etc. There appears to be a supply of "fresh off the plane" guys that pay the stupid asking prices.

 

I have a condo in Jomtien, average cookie cutter condo block etc. The price for a condo in this block is 1.2-1.5 Mil baht and condos regularly change hands at this price and they get a 6-8% net rental return, even go up 50-100k every couple of years. 90% of sales are in this price range. The thing is, in the same block there are people trying to sell the same condos for 3 Mil baht "and" every now and then somebody pays the 3 Mil baht.

 

At 3 Mil baht the rental return is very bad, and the owner would need to take a 50% hit to resell the condo. Its this vocal 10% that are on the forums bitching about the condo market.

 

For the other 90% who bought at the right price, it can be a good investment.

[sead]

Usually people buying condos dont have 1. Its yours after 10 years. Ofcourse there's benefits.