How is buying a condo a good investment?

[Mavideol]

Can't figure out why so many negative comments about investing in a condo. Any and all investments are risky doesn't matter where/when or what we invest on, investing means speculating means gambling, like going to the casino, sometimes we loose and sometimes we win.... that's as simple as that, no mysteries, no good or bad luck involved

I have money at the bank bringing in 2.5% year/return, have it there for the past 3 years. Also have a condo, (paid cash, no credit) it's a 2 bed/2 bath paid 3,1 million bath and for the past 3 years it brings an annual gross income of 345,000 baht/ a net income around 297,000 baht, is it a bad investment??

[jackdd]

2 hours ago, Mavideol said:

Also have a condo, (paid cash, no credit) it's a 2 bed/2 bath paid 3,1 million bath and for the past 3 years it brings an annual gross income of 345,000 baht/ a net income around 297,000 baht, is it a bad investment?? 

Something is wrong with your numbers.

In Thailand the buying price is usually somewhere in the region of 20 years rent (so we are talking about 5% of the investment as rent, after deducting all costs the ROI is somewhere at 4-4.5%)

So either you were very lucky and bought a 7 mio condo for just 3 mio or the rent that you told us is wrong

Edited January 13, 2019 by jackdd

[Jingthing]

37 minutes ago, jackdd said:

Something is wrong with your numbers.

In Thailand the buying price is usually somewhere in the region of 20 years rent (so we are talking about 5% of the investment as rent, after deducting all costs the ROI is somewhere at 4-4.5%)

So either you were very lucky and bought a 7 mio condo for just 3 mio or the rent that you told us is wrong

I bought my condo for approximately 10 years rent based on the rental market that I think I'm knowledgeable about so even though I live in it, I suppose that was a good deal. 

[Fairynuff]

On 1/12/2019 at 11:10 AM, KittenKong said:

The only people I personally know in Thailand who ever showed a profit on a condo either bought at well below the advertised price or bought decades ago or sold to a pigeon who didnt know the real value of what he was buying. The sales taxes and agency costs alone make it very hard to show a profit, as both are very high here compared to some other countries.

 

I estimate that my own condo would probably show a 20+% loss if I sold it, and that takes account of the cost of improvements I have made. Thankfully my own condo was bought for me to live in and not as a rental "investment". The value of knowing that no one can force me to move out, or increase my rent unreasonably, or stop me from decorating/modifying it as I wish, easily compensates for the cost of ownership as far as I'm concerned. That said, if there were many other condos similar to mine available for rental then I probably wouldn't care so much, but in all the hundreds of condos I have seen in Pattaya/Jomtien there has only been a tiny handful that I would want to live in, and I do live in one of them.

 

 

Of all the condos I’ve bought and sold here I’ve made a good profit on all but one. In that case I broke even plus a bit. I don’t believe in buying for investment here, it’s mot a good idea but I’ve always bought for my own use and sold when I wanted to rather than needed too.

[Fairynuff]

On 1/12/2019 at 5:16 PM, Caine said:

Yes but in U.K. property worth big money after 25yrs Thailand not worth a carrot and falling apart after 10yrs. That’s the difference.

My condo is over 10 years old, building is excellently maintained and after a few years of being here is likely to sell at a good profit due to various local factors. I have no intention of selling tho

[Mavideol]

3 hours ago, jackdd said:

Something is wrong with your numbers.

In Thailand the buying price is usually somewhere in the region of 20 years rent (so we are talking about 5% of the investment as rent, after deducting all costs the ROI is somewhere at 4-4.5%)

So either you were very lucky and bought a 7 mio condo for just 3 mio or the rent that you told us is wrong

Condo price is normal in the area I purchased, 1 bed/1 bath 1,56 mio 2 bed/2 bad 3,2 mio. Rent is 30k month. maintenance fees are 32k year, electricity and water 28-29k year (tenant pays half thus 14k-15K) where are my  calculations wrong

[jackdd]

7 minutes ago, Mavideol said:

Condo price is normal in the area I purchased, 1 bed/1 bath 1,56 mio 2 bed/2 bad 3,2 mio. Rent is 30k month. maintenance fees are 32k year, electricity and water 28-29k year (tenant pays half thus 14k-15K) where are my  calculations wrong 

I didn't say your calculations are wrong, i said the rent that you tell us is not correct.

But i did of course forget option three: The person who is renting this from you simply pays too much rent when looking at it objectively (assuming he is renting this with a yearly contract and common furniture)

 

A condo which rents out for 30k a usually costs way more than 3mio to buy.

Here an example for a random condo where 2 bedroom units are offered for 3 mio: https://www.hipflat.co.th/en/projects/the-parkland-srinakarin-zvfpme

As you can see the price to rent these units is about 15-17k, this is about a "normal" buy-to-rent ratio.

 

At which condo complex is your condo?

[Mavideol]

Just now, jackdd said:

I didn't say your calculations are wrong, i said the rent that you tell us is not correct.

But i did of course forget option three: The person who is renting this from you simply pays too much rent when looking at it objectively (assuming he is renting this with a yearly contract and common furniture)

 

A condo which rents out for 30k a usually costs way more than 3mio to buy.

Here an example for a random condo where 2 bedroom units are offered for 3 mio: https://www.hipflat.co.th/en/projects/the-parkland-srinakarin-zvfpme

As you can see the price to rent these units is about 15-17k, this is about a "normal" buy-to-rent ratio.

 

At which condo complex is your condo?

maybe my tenants like to pay too high rent, who am I to complain? property is at the beach but that's irrelevant, this is what I collect and happy with it for the past 3 years, arriving Sept will see if they renew or not

[Mavideol]

5 minutes ago, jackdd said:

I didn't say your calculations are wrong, i said the rent that you tell us is not correct.

But i did of course forget option three: The person who is renting this from you simply pays too much rent when looking at it objectively (assuming he is renting this with a yearly contract and common furniture)

 

A condo which rents out for 30k a usually costs way more than 3mio to buy.

Here an example for a random condo where 2 bedroom units are offered for 3 mio: https://www.hipflat.co.th/en/projects/the-parkland-srinakarin-zvfpme

As you can see the price to rent these units is about 15-17k, this is about a "normal" buy-to-rent ratio.

 

At which condo complex is your condo?

just FYI my neighbor is renting 1 bed/1 bath for 18k month, you should not generalize when it comes to properties.... but who are we to complain????

[smutcakes]

59 minutes ago, Mavideol said:

Condo price is normal in the area I purchased, 1 bed/1 bath 1,56 mio 2 bed/2 bad 3,2 mio. Rent is 30k month. maintenance fees are 32k year, electricity and water 28-29k year (tenant pays half thus 14k-15K) where are my  calculations wrong

I dont believe you, no one is renting a 3.2 million baht 2 bed condo for 30K per month.....

 

Which condo is this, or which city? Certainly not BKK.

[5633572526]

On 1/12/2019 at 12:19 AM, NCC1701A said:

here is the story with Thailand as number 7:

https://www.businessinsider.com/best-countries-to-buy-rental-property-earn-passive-income-2018-5#1-philippines-25

 

this article is thin on real information and full of beautiful photoshop.

 

some people who own condos here say they are happy breaking even after selling and they think of it as living rent free for 10 or 15 years.

 

 

A friend of mine was forced to sell his condo at a significant loss due to the land the building was on being sold. Bangkok near Sukhumvit road so very expensive and in demand land area. Not sure about all the legalities of this but this is Thailand. He now lives in Phuket so at least he has better air to breathe.

[BritManToo]

15 hours ago, smutcakes said:

I dont believe you, no one is renting a 3.2 million baht 2 bed condo for 30K per month.....

I was renting a 1.5MBht house for 6k/month, I assume condos are a similar price (4k) per million.

[smutcakes]

9 minutes ago, BritManToo said:

I was renting a 1.5MBht house for 6k/month, I assume condos are a similar price (4k) per million.

So yours is giving the owner a gross return of 5%, whereas this poster is claiming the landlord is making 12%.

No one is renting a 3.2 millon THB for 30K per month, unless there is a very very specific reason for it...

The poster can clear up by posting where it is?

The very top end condos in BKK are renting out at about 800-1,000 THB per sqm, but you sure as hell are not buying one for 3.2 million THB or even 6.4 million THB.

Edited January 14, 2019 by smutcakes

[AtoZ]

On 1/12/2019 at 5:45 PM, 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?

Australia is quite different.

 

Population brain washed about the "Australian dream" ehm, a fibro shack for $1M an hour commute from work.

 

"You got to get on the property ladder mate" sounded from parents and peers.

 

Importing 300,000 new people a year to a country of 20 million.

Having <deleted> ton of empty land, but everyone want to be in Sydney or Melbourne while the local government limits new available land for builds.

 

But I have feeling the party is over for skippies and we will see spectacular drop - think Ireland or Iceland type of destruction.

[KittenKong]

1 hour ago, smutcakes said:

No one is renting a 3.2 millon THB for 30K per month, unless there is a very very specific reason for it...

I agree that it would be very hard to find someone daft enough to pay so much in Pattaya on a yearly basis. Maybe for very short term rentals it would be possible, but generally I would say that 20,000 or less would be much nearer the mark.

The figures quoted dont make sense to me.

[dreaming]

27 minutes ago, AtoZ said:

Australia is quite different.

 

Population brain washed about the "Australian dream" ehm, a fibro shack for $1M an hour commute from work.

 

"You got to get on the property ladder mate" sounded from parents and peers.

 

Importing 300,000 new people a year to a country of 20 million.

Having <deleted> ton of empty land, but everyone want to be in Sydney or Melbourne while the local government limits new available land for builds.

 

But I have feeling the party is over for skippies and we will see spectacular drop - think Ireland or Iceland type of destruction.

Once you are in the property merry go round prices are irrelevant. 

 

It is only relevant if you are entering for the first time, or exiting.

 

Prices will always be high because as you say, it is the australian dream to own your own home. Units are a different story, I can definately see them coming off the boil.

[SheungWan]

18 hours ago, smutcakes said:

I dont believe you, no one is renting a 3.2 million baht 2 bed condo for 30K per month.....

 

Which condo is this, or which city? Certainly not BKK.

and not Pattaya either.

[smutcakes]

2 hours ago, 5633572526 said:

A friend of mine was forced to sell his condo at a significant loss due to the land the building was on being sold. Bangkok near Sukhumvit road so very expensive and in demand land area. Not sure about all the legalities of this but this is Thailand. He now lives in Phuket so at least he has better air to breathe.

Your friend did not have a condominium. Maybe an apartment, serviced apartment but still very unlikely. No one can force you to sell your condo unit or sell the land and building. The Condo as a whole owns the land, so unless there was a unanimous decision to dissolve the Condominium then it cannot happen. And that cannot of happened because your friend seemingly did not give permission so they could not dissolve. In addition how could he sell it on if the whole building and land was being sold.

 

Your comment has so many holes in it, its almost as if you have made it up, or heard this 'story' 5th hand.

[JimmyJ]

Re: the debate over whether purchasing housing is a good investment or not -

 

An acquaintance wrote the following to me 8.5 years ago re: investing/purchasing housing (all in this discussion were living in the US) - I have permission to post it -

 

he had just landed a big job in the financial/investment world -

 

the message was mind boggling to me as I had always heard that housing is a great investment and always goes up, as some in this thread have stated, and had never questioned it because I hadn't had a desire to purchase up till then:

 

"Claiming the house was worth 25% more than a comparable resale value is a bit of an exaggeration, and it also isn't something to brag about that you could have sold the house for almost twice as much as its current resale value. Accounting for inflation, the house isn't worth much more than you paid for it, if at all.

The biggest problem with what he said (and why I initially jumped in) was that he claimed real estate was a good investment or something along those lines. Of course you can say whatever you want about your own situation and plug in random numbers on a microscopic level to make it look good, but it's such a mistake to look at real estate or justify buying over renting because it's 'an investment'.

Almost without fail people who believe this are suffering from recency bias or 'This Time is Different' syndrome and looking at only home price data from the last 20 years. For the last 120 years, home prices have risen by less than 1% per year. Factor in transaction costs and that's probably 0% annualized return on real estate as an investment. There was a good article in the Journal of Wealth Management a few months ago on real estate risk and return that has this data and research, in addition to Shiller (of "Irrational Exuberance" one of the top 5 books I've read probably) and his weekly articles.

In the long run, a house is just a really expensive possession like a nice car or TV. None of these things should be viewed as investments because historically, they don't yield any return. They are for your enjoyment which is fine, but don't pretend like it's anything else.

Additionally, the myth that real estate is 'a good investment' usually means diverting money that would otherwise be used for retirement accounts. With what hopefully will be slashes to Social Security and Medicare, building robust retirement accounts is the hallmark of financial security, not a house even if it's mortgage is mostly paid off."
 
 

 

 

[xylophone]

On 1/12/2019 at 12:05 AM, Jingthing said:

You hit the most risky part. Owning an expensive asset with no residence security. It's hard enough to sell a "used" condo here. Try it if you're forced to leave for a number of possible reasons including issues with getting your next extension. People, often older people, can be financially ruined for life in such instances. 

no residence security. It's hard enough to sell a "used" condo here. Try it if you're forced to leave for a number of possible reasons........

 

Such as someone building a high rise right outside of your window.........and you can do nothing about it!

[KittenKong]

1 hour ago, smutcakes said:

Your friend did not have a condominium. Maybe an apartment, serviced apartment but still very unlikely. No one can force you to sell your condo unit or sell the land and building. The Condo as a whole owns the land, so unless there was a unanimous decision to dissolve the Condominium then it cannot happen.

Are you sure that applies everywhere? As far as I know there are a few older condo buildings in Bangkok that are built on leased land, or where the entire building is leased. It's hard to imagine anyone buying such a condo even at a large discount, unless perhaps they are unaware of it and think they are getting a bargain. So maybe the person in question is just confusing the loss that was inevitably made on selling a lease that was a lot shorter than when it was bought. Clearly if you buy a 10 year lease and sell it after 5 years you are unlikely to get more than 50% back at most and will probably get less than that.

Leasehold units, or leased land under buildings, seem to be common in Phuket also. One more good reason never to buy there as far as I can see.

 

As a farang the person could never buy an apartment anyway, except perhaps in company name.

[smutcakes]

2 minutes ago, KittenKong said:

Are you sure that applies everywhere? As far as I know there are a few older condo buildings in Bangkok that are built on leased land, or where the entire building is leased. It's hard to imagine anyone buying such a condo even at a large discount, unless perhaps they are unaware of it and think they are getting a bargain. So maybe the person in question is just confusing the loss that was inevitably made on selling a lease that was a lot shorter than when it was bought. Clearly if you buy a 10 year lease and sell it after 5 years you are unlikely to get more than 50% back at most and will probably get less than that.

Leasehold units, or leased land under buildings, seem to be common in Phuket also. One more good reason never to buy there as far as I can see.

 

As a farang the person could never buy an apartment anyway, except perhaps in company name.

For me anyway, there is no such thing as a leasehold condominium, it completely runs against everything regarding what a condominium is. Being on leasehold land alone completely negates its ability to be a condominium.

 

If you look in any of the SPA, Lease agreements of these projects marketed as Leasehold Condominiums, you will notice not once does it say the word 'Condominium'. It always says 'unit', 'premises' etc.

[KittenKong]

42 minutes ago, JimmyJ said:

Almost without fail people who believe this are suffering from recency bias or 'This Time is Different' syndrome and looking at only home price data from the last 20 years. For the last 120 years, home prices have risen by less than 1% per year.

I bought a house off-plan in the UK for £11,000 in the mid-seventies. It had gone up by £3,000 before I even moved in and is now worth £200,000. The house I grew up in was bought in the early 60s for £4,500 and was sold a couple of years ago for nearly £1million. And my house in Europe was bought for EUR150,000 (equiv) in 1990 and was sold for EUR620,000 about 20 years later.

 

The price appreciation during that time was fairly steady (though less until the mid-70s).

 

I do understand that prices in the USA are very different, notably due to the vast amounts of land available in much of the country.

[bbi1]

"How is buying a condo a good investment?" - It isn't a good investment. We can now close this thread ????

[lkn]

6 hours ago, smutcakes said:

The very top end condos in BKK are renting out at about 800-1,000 THB per sqm

Would love to know which “very top end condos” I can rent in Bangkok for only 800-1,000 baht per sq. m. ????

 

[Mavideol]

22 hours ago, smutcakes said:

I dont believe you, no one is renting a 3.2 million baht 2 bed condo for 30K per month.....

 

Which condo is this, or which city? Certainly not BKK.

did I say BKK???? nobody is forcing you to believe anything, I am doing well and hope it will keep going as it is

[puukao]

the headaches alone should be reason never to buy here.  i'm sure there are 100 headaches that were not in your mind before you bought a condo.  if you rent and there are crazy neighbors or dogs or smoke or something just wrong (maybe the smell of trash blows into your condo every sunday and tuesday) ....  it's easy to just get move to another hotel or rent somewhere else.  

 

sounds bad, but home really is your home country.  that's where you buy, if you ever do buy.  

 

be smart about your money or it will be gone.  

 

 

[puukao]

2 hours ago, KittenKong said:

I bought a house off-plan in the UK for £11,000 in the mid-seventies. It had gone up by £3,000 before I even moved in and is now worth £200,000. The house I grew up in was bought in the early 60s for £4,500 and was sold a couple of years ago for nearly £1million. And my house in Europe was bought for EUR150,000 (equiv) in 1990 and was sold for EUR620,000 about 20 years later.

 

The price appreciation during that time was fairly steady (though less until the mid-70s).

 

I do understand that prices in the USA are very different, notably due to the vast amounts of land available in much of the country.

the vast amount of land in Montana has nothing to do with the price of a condo in NYC.  LOL

 

houses in america have gone from 40,000 to one million, of course.  and recently a TON have gone from 300,000 to 400,000 in just the last few years  

 

the 70's were when most of our parent's were buying

 

just buy bitcoin for 100 and cash out at 19,000 and retire a billionaire.  easy.  

[seancbk]

On 1/12/2019 at 8:48 AM, BritManToo said:

On 1/11/2019 at 11:19 PM, sikishrory said:

I pay 7000 baht a month rent.

Simple maths...

1000000÷7000= 142 

142÷12= 11.8

So it would take 11.8 years to pay it off and start making a measly 7000 a month out of it.

This is not taking into account all the fees you pay as an owner.

What about the 6% compound interest on the loan?

That makes it about 24 years to pay off.

 

Most people buying a condo worth only 1 million baht don't take out loans.   I wish I had bought my place 7 years ago when it was 1.5 million baht, now units like mine are going for 2.2 million.   

 

[seancbk]

27 minutes ago, lkn said:

Would love to know which “very top end condos” I can rent in Bangkok for only 800-1,000 baht per sq. m. ????

 

 

Loads of places.   At 1000 baht per sq/m a 60 sqm place would be 60,000 baht.   My 150 sq/m place was only 40k, my friends 80 sqm place in Rajadamri was only 22K.