buying villa as pure investment in Phuket, good or bad idea ?

[ozy72]

Hi all, we have the plan to buy really nice villa for 22 million baht in a good location in Phuket, it is an off-plan project but it is a very good developer as I made all checking on previous projects. I have questions are there any people which are doing rentals (short / therm) just to share their impressions? 

What we can get in reality based on short-term and long-term rentals, and in the end is this profitable business at all? 

 

 

 

[VinnieK]

Dude.. I'm not trolling you, I just give you my opinion.

I assume you have the 22 mil in the pocket.

..and probably more than that.

Why on earth do you have to make your life difficult?

Just sit back and enjoy.

There's a zillion of things you can do to keep yourself occupied and 'happy'

You don't need the aggro and misery of tenants..and the constant repairs.

 

As an aside...if you anticipate a financial 'collapse' and want to put your cash in a tangible asset, go ahead.

A whole another game.

[scubascuba3]

In Pattaya the yield on higher priced condos seems lower than lower priced condos, Phuket probably the same.  They don't seem to be good investments, back home yes property usually is, due to limited supply and high demand. Off plan is also high risk to be avoided, possible exception if it's a stock market quoted company

[jts-khorat]

If I would have half a million Euros just laying around, I sure would look for better investments than real estate of doubtable build quality in a third world country with shaky jurisdiction and instable politics.

 

The situation would be very different if I would want to live in the place myself, at least part of the year.

 

Mind you, if I would have bought a place, any place, 25 years ago as I first came to Phuket to live, I would have made a huge profit. But the hassle, and the immense risk, even in hindsight I would not think it a good idea.

[save the frogs]

44 minutes ago, VinnieK said:

As an aside...if you anticipate a financial 'collapse' and want to put your cash in a tangible asset, go ahead.

A whole another game.

yep, i was thinking that ...

with current banking situation ... might be a good investment. 

 

[OneMoreFarang]

3 hours ago, ozy72 said:

What we can get in reality based on short-term and long-term rentals, and in the end is this profitable business at all? 

Why would you even think about investing 22 million THB if you don't know the answer to these questions?

And I don't mean answers from random people in a farang Thailand forum but researched answers from experts.

It's like: Should I invest big money in oil? A friend told me lots of people use that. Yeah, sure, ...

[nigelforbes]

A number of risks you should think about:

 

Currency exchange rate risk over the longer term.

Taxation and reporting of income to home government.

Management fees vs void periods risk.

Durability and sustainability vs quality of construction

Government legislation risk.

Controlling maintenance and replacement costs.

 

[strikingsunset]

too late -prices have sky rocketed

[Olmate]

I live in Pratumnak, the number of vacant high value properties is incedible.

[ozy72]

15 hours ago, OneMoreFarang said:

Why would you even think about investing 22 million THB if you don't know the answer to these questions?

And I don't mean answers from random people in a farang Thailand forum but researched answers from experts.

It's like: Should I invest big money in oil? A friend told me lots of people use that. Yeah, sure, ...

Why not ?. Is this forum for this purpose or not ?. I asked landlord (if there any here) who already have villas to give me answer not comments like this. 

 

 

 

[likerdup1]

Have you ever invested in property before? There are some easy calculations to run which will give you an idea if the "investment" will yield a decent return.

 

There are other considerations. What do you expect to get in rent per month? Do you want to airbnb it?

 

I have a feeling in a higher end house/villa like that there will be way fewer tentants willing to pay high prices.

 

You might be better off buying 5 to 8 smaller condos and renting them out if you are interested in earning money on your money... but that comes with it's own set of challenges.. like dealing with a Thai property managment company.

 

If you are getting below 5% annual return (or yield as some call it) then you are better off leave the money in a high yield savings account these days. If you are hoping for the property to increase in value I have seen over the years that Thailand may not necessarily follow the realestate growth of western countries.

 

For instance in the last 10 years I think condo prices have remained flat in areas like Pattaya.

Edited April 13, 2023 by likerdup1

[OneMoreFarang]

51 minutes ago, ozy72 said:

Why not ?. Is this forum for this purpose or not ?. I asked landlord (if there any here) who already have villas to give me answer not comments like this. 

Maybe next go to the bitcoin forum and ask if you should put all your money in it.

I am sure you will get some enthusiastic answers. Go for it! What could possibly go wrong? After all, you got the advice in an expert forum. ???? 

[HuskerDo2]

"buying villa as pure investment in Phuket, good or bad idea ?"......

 

If you have to ask others and aren't confident otherwise then it's a poor decision.

[LogicThai]

I cannot answer the question for Phuket, but we have been owning a villa in Koh Samui, that we built off-plan 11 years ago, primarily as an investment. The first few years brought very good returns (about 8% YoY in the first 5 years), with short-term rentals. Then there were all sorts of issues about Thailand (Rd Shirts, etc.), so we switched to long-term rental, accepting lower but steadier rental income. Then COVID happened. 
Even though tourists have been back in Samui, we decided not to put the villa on the market again, because of the hassle, maintenance, rehabilitation etc. Houses take a beating under tropical climates, and tenants, especially longer-term ones, are quite careless and do not treat the house well, which means repairs etc. It is a mid-market villa (3 bedrooms, private pool), nice but not a millionaire house on top of the hill with a killer view. It is a good product, with monthly rentals on Airbnb at about 70k. Long-term rental would be much lower (I was quoted 30k last week).
Had I known then what I know now, I would not have bought the villa. Now, we simply keep the villa for ourselves. It is a great place, we enjoy spending time there, and now that there is this night ferry service from Sattahip, it makes it a lot easier to go to Samui for a week or two.
But if really wanting to invest in holiday villas in Samui, or in Phuket, I think that 3 or 4 smaller villas are a better bet than one single luxury one. Much more liquid, and in a way easier to manage as a smooth operation, a bit like a hotel or resort.