Rental guaranteed from condo investments

[Doronazl]

thinking of making my first investment , asking for inputs from the experienced in this matter.

the terms sounds rather good , 7-10% a year for 10-20 years.

I know there are risks to every investments, in this case , that the developer will declare bankrupt or simply run some sort of scam and run away with the money.

my question is i guess, would u recommend those investment in general ? 

what should i becareful from ?

[Kasane]

Be careful of scam artists. Do your due diligence. Talk to other investors that have experience with this developer.

Edited June 20, 2019 by Kasane

[Mavideol]

if it's a condo can not do daily/weekly rent thus  better check with developer if they have hotel license and it would be suspicious to have 7-10% guaranteed income for 10-20 years... if it sounds to good to be true it probably is... also check with the foreign quota, is it freehold or leasehold, be careful of the developer and/or construction company, at the beginning they are the ones running the show as the management but sooner or later a new management will be in place and things can or will change... good luck

[Doronazl]

10 minutes ago, Mavideol said:

if it's a condo can not do daily/weekly rent thus  better check with developer if they have hotel license and it would be suspicious to have 7-10% guaranteed income for 10-20 years... if it sounds to good to be true it probably is... also check with the foreign quota, is it freehold or leasehold, be careful of the developer and/or construction company, at the beginning they are the ones running the show as the management but sooner or later a new management will be in place and things can or will change... good luck

i do not plan on renting it out, only going for it for the rental payments

and yes im only referring to freehold

 

 

what can change if they change management later ?

 

[KittenKong]

12 hours ago, Doronazl said:

my question is i guess, would u recommend those investment in general ? 

Never.

 

12 hours ago, Doronazl said:

what can change if they change management later ?

Not if, when. At some point co-owners will appoint an elected committee and a proper management company. Between them (and based on the building by-laws which are also decided on by co-owners at an initial meeting) they decide how the building will be run. If you dont understand how condos work then you should probably not be buying one.

[Doronazl]

10 hours ago, KittenKong said:

Never.

 

Not if, when. At some point co-owners will appoint an elected committee and a proper management company. Between them (and based on the building by-laws which are also decided on by co-owners at an initial meeting) they decide how the building will be run. If you dont understand how condos work then you should probably not be buying one.

what i mean is , what terms can change that would affect me whenever the management company changes?

 

"If you dont understand how condos work then you should probably not be buying one"  - that doesnt help m8.

[KittenKong]

1 minute ago, Doronazl said:

what i mean is , what terms can change that would affect me whenever the management company changes?

Anything and everything. New management could even go so far as to ban rentals entirely (unlikely, I admit).

 

2 minutes ago, Doronazl said:

"If you dont understand how condos work then you should probably not be buying one"  - that doesnt help m8.

Up to you. Any mistakes you make certainly wont cost me anything.

[Doronazl]

1 minute ago, KittenKong said:

Anything and everything. New management could even go so far as to ban rentals entirely (unlikely, I admit).

 

Up to you. Any mistakes you make certainly wont cost me anything.

but if i go with their rental payments plan, that contract is binding isnt it ? even if they wont rent it out for any reason, thats not my problem

or im understanding this incorrectly ?

[Mavideol]

23 hours ago, Doronazl said:

i do not plan on renting it out, only going for it for the rental payments

and yes im only referring to freehold

 

 

what can change if they change management later ?

 

kitten kong give you the perfect answer

[xylophone]

23 hours ago, Doronazl said:

the terms sounds rather good , 7-10% a year for 10-20 years.

I know there are risks to every investments, in this case , that the developer will declare bankrupt or simply run some sort of scam and run away with the money.

my question is i guess, would u recommend those investment in general

Firstly there are more risks to an investment like this here than almost anywhere else in the world IMO and where I live, the empty shells of the investment condos and apartments sit like a constant reminder of the type of environment you are investing in.

 

I will add that as corruption is endemic here that adds to your risk.

 

Condo developers here have done "runners" with the investors funds, as well as going bust for one reason or another with absolutely no recourse for the investors or action by the police.

 

Not only that, what guarantee does one have that the investment return and investment time period will be adhered to, because a signature on a piece of paper can easily become worthless in this country, again with no recourse.

 

One of many other things, but which has affected a couple of friends here, is the fact that no matter where your condo/apartment is, if there is vacant land next to it, then that can easily be built out, with little or no respect to the amount of room needed between your block and the new block, so living in a constant shadow, with constant noise can be very annoying, and nothing can be done about it.

 

As you can see I am not a fan of this type of investment because there are too many horror stories in a land which resembles the wild West as far as property investment is concerned.

[Mavideol]

4 minutes ago, Doronazl said:

but if i go with their rental payments plan, that contract is binding isnt it ? even if they wont rent it out for any reason, thats not my problem

or im understanding this incorrectly ?

we are talking about Thailand... binding contracts from a construction company, humm!!! good luck

[Destiny1990]

I think It is guaranteed that a 100% rental guarantee doesn’t always mean its guaranteed.

[Mavideol]

3 minutes ago, Destiny1990 said:

I think It is guaranteed that a 100% rental guarantee doesn’t always mean its guaranteed.

100% correct 555

[Destiny1990]

Just now, Mavideol said:

100% correct 555

But on a positive note that Norway group in Pratumnak been giving rental guarantees for over 10 years now haven’t seen much complaints from unit buyers about them but it’s mostly on their thai company units..

 

 

[Mavideol]

4 minutes ago, Destiny1990 said:

But on a positive note that Norway group in Pratumnak been giving rental guarantees for over 10 years now haven’t seen much complaints from unit buyers about them but it’s mostly on their thai company units..

 

 

it will happen, wait and see...

[Skallywag]

23 hours ago, Doronazl said:

i do not plan on renting it out, only going for it for the rental payments

and yes im only referring to freehold

 

 

what can change if they change management later ?

 

There are other posts on the TVF from earlier years, just search "rental guarantee condo" Be careful, look at the going rate of condos per square meter in your area.  Second road by the Base they are just starting a condo project wanting $160,000 baht per square meter which is about 1/3 more than I have ever heard of in Pattaya.  Average in Pattaya is around 85,000 per square meter depending on location and age.  Think View talay 6 next to Central Festival still selling around 100,000 baht per square meter, 12 years old I think now - but many consider the best location....Good luck

Here is what one guy wrote in 2016:  

Doing the math, let’s say the condo is worth 2,000,000 baht and it can be rented out for 6,500 baht/month.

The developer sell it at 2,500,000 baht and gives you a two year 10% ROI guarantee.

So rent for the first two years is 500,000 baht, i.e. what you overpaid, but say the developer rents it out for 6,500 baht/month, their cost is only 343,992, and they’ll probably also charge you a 10-20% “management fee”, limiting their cost to about 250,000 baht. I.e. they made an extra 250,000 baht on this condo by giving you this subsidised rental guarantee.

Furthermore, once the two years are up, you have a renter that paid 6,500 baht because of developer subsidies, so good luck telling them they must now pay 15,000 baht/month for the same unit, especially if the developer is still subsidising other units (those sold later than when you bought).

So you are stuck charging 6,500 baht/month which is rental income of 3.1%, but then you have management costs, annual maintenance fee, insurance, wear & tear, etc.

 

 

Edited June 21, 2019 by Skallywag

[scubascuba3]

Those ads always make me laugh. Sound too good to be true?

[RJRS1301]

Is this a rent to buy scheme?

If so, take your money and run as far away as possible

Offering a 7%-20% return is irresponsible to say the least, or the work of a scammer, especially in the current economic climate

[Destiny1990]

17 minutes ago, Skallywag said:

There are other posts on the TVF from earlier years, just search "rental guarantee condo" Be careful, look at the going rate of condos per square meter in your area.  Second road by the Base they are just starting a condo project wanting $160,000 baht per square meter which is about 1/3 more than I have ever heard of in Pattaya.  Average in Pattaya is around 85,000 per square meter depending on location and age.  Think View talay 6 next to Central Festival still selling around 100,000 baht per square meter, 12 years old I think now - but many consider the best location....Good luck

Here is what one guy wrote in 2016:  

Doing the math, let’s say the condo is worth 2,000,000 baht and it can be rented out for 6,500 baht/month.

The developer sell it at 2,500,000 baht and gives you a two year 10% ROI guarantee.

So rent for the first two years is 500,000 baht, i.e. what you overpaid, but say the developer rents it out for 6,500 baht/month, their cost is only 343,992, and they’ll probably also charge you a 10-20% “management fee”, limiting their cost to about 250,000 baht. I.e. they made an extra 250,000 baht on this condo by giving you this subsidised rental guarantee.

Furthermore, once the two years are up, you have a renter that paid 6,500 baht because of developer subsidies, so good luck telling them they must now pay 15,000 baht/month for the same unit, especially if the developer is still subsidising other units (those sold later than when you bought).

So you are stuck charging 6,500 baht/month which is rental income of 3.1%, but then you have management costs, annual maintenance fee, insurance, wear & tear, etc.

 

 

View talay 6 will be mostly blocked sooner or later on the left hand side.

and on the other side its already been blocked by Central Mall and Hilton Hotel.

[bluesky3000]

The way i look at rental guarantees are that they normally mean we are buying at heavily marked up prices today. 

I'm not sure i'm 100% correct as it is true some developers who give high GRR (Guaranteed rental returns), are actually saving as the interest they are charged on borrowing is higher than what they are paying out to investors hence, a nett savings still makes sense for them to do so.... 

 

But my suspicions are that most are heavily marked up and the GRR is just a carrot to give investors the illusion of safety for the next few years with the hope that the market does grow substantially to give them a possible exit when the time comes. 

 

Liked some points highlighted in this article from the middle down.. have a read. Important Entry Signals For Property Investors

[NCC1701A]

On 6/20/2019 at 5:55 PM, Doronazl said:

7-10% a year for 10-20 years.

it is all completely impossible and a total scam.

 

don't do it.