Investing In Property

[sadako]

Hi to you all !

OK , I am thinking of purchasing 3 properties in Thailand soon , for around 4,500,000 Baht total . I plan on renting out 2 of these to tourists/locals . Providing I choose the right areas , and right advertisement for the 2 I will rent , what chances have I got of getting a decent income from this ? Is it a bad idea ? ! I am looking at the areas of Hoa Hin and Pattaya.....

Thanks for any views , no matter how negative !!!!

David ........Sadako

[thaistick]

Commercial real estate was my business here in the states and naturally looked into investing in properties in Thailand.

I decided to hold off on investing in properties,which for foreigners is only condos,

which is very limiting profit-wise.

There appear to be so many condo rentals available for the amount of renters looking and the rents are rather low.Plus the legalities and taxes and government oversight would make for more headaches and less profits.

For the price of one condo you can invest in or start a good cash business which is the path I will be taking.

If the laws change and foreigners are able to invest in commercial properties I will be ready with my bank accounts to acquire good commercial properties in busy areas.

Also one doesn't need a real estate license to be a real estate broker in Thailand which is another option I may look into.

[ThaiPauly]

No- dont do it- if the laws change in the future then maybee it would be OK. I considered purchasing a string of Condos until I researched how many were available for rent. It used to be that if you bought property to let you would get your money back through rental in ten years-now its 15-18 which is not a sound financial return. You would have to undercut everyone to get them let and that would squeeeze your margins so much that you would be better off investing your money elsewhere, besides who knows what the future holds for us Farangs in Thailand. We could all be kicked out in a heartbeat- who knows??

[pautai]

No- dont do it- if the laws change in the future then maybee it would be OK. I considered purchasing a string of Condos until I  researched how many were available for rent. It used to be that if you bought property to let you would get your money back through rental in ten years-now its 15-18 which is not a sound financial return. You would have to undercut everyone to get them let and that would squeeeze your margins so much that you would be better off investing your money elsewhere, besides who knows what the future holds for us Farangs in Thailand. We could all be kicked out in a heartbeat- who knows??

<{POST_SNAPBACK}>

or the bottom could fall out of the market which is what happened at the asian crash when BKK property was hit by large price reductions and unsalability . you can still see mothballed half builts around ,rotting away . some are being bodged up for sales again and some suckers might actually buy them .

[Khun Jean]

Why not consider to buy many small appartments (25-50m2) in Bangkok. They are in the range of 150-500.000 baht. You have to look good for them but they are there, check out some banks. These appartments when not in the outskirts are easy to rent out to locals as more and more people are staying in Bangkok and looking for cheap accomodation. Rule of thumb in Europe was about 100 times the monthly rent for a purchase price. Here you can buy for 50 times the rent or even less. But do take care you not invest in 1 appartment building and that the buildings are in a good condition.

And get a trustworthy Thai to manage it for you and collect the rent.

4,500,000 can get you 70,000 - 100,000 baht a month.

[LaoPo]

Rule of thumb in Europe was about 100 times the monthly rent for a purchase price. Here you can buy for 50 times the rent or even less. But do take care you not invest in 1 appartment building and that the buildings are in a good condition.

And get a trustworthy Thai to manage it for you and collect the rent.

4,500,000 can get you 70,000 - 100,000 baht a month.

<{POST_SNAPBACK}>

If you have real estate voor 100 times monthly rent in Europe....let me know I might be your buyer .

But, in BKK I wouldn't buy real estate in the smaller apartments range; to many 'cheap' people who rent; too many problems if they run away leaving a messy apartment, even with a downpayment; what do you do if they don't pay? You don't speak the language and going to court for such a small amount is too much of a problem and costly.

Calculating is done quickly, in real life it will be a REAL pain in the .ss.

In real estate there is a rule: a lot of assets but no real cash flow and many problems...I know.

And...where do you find a trustworthy Thai

Know any?

LaoPo

[thedude]

Good points Laopo regarding smaller and cheaper apartments. Its true that rental returns can be high for these properties, but if you are not able to actively manage them, it could be a very painful experience. High Risk = High Returns. A disadvantage for this type of investment is your options for exit. Maintenance standards are generally bad in Thailand so capital upside is limited especially if you are not in a prime location, given that you are able to offload the properties in the first place. In effect you are swapping capital growth for high yield. It is not a bad strategy but it really depends on your circumstances and the specific property.

For foreign investors, i would normally advocate buying something that is located in prime districts and that is Grade A and professionally managed. Buy something small if you have less resources. Prime Grade A (not only here but generally in Asian cities) property values are generally more resilient to economic cycles and are the first to recover in pricing if a downturn is experienced. Downtown rental occupancy remains high, about 82% (above 90% if you look only at single-owner apartment blocks), and it has been this level for many years. There has been a yearly net inflow of foreigners in Bangkok the past few years following the trend of economic recovery, and we see this being sustained in the medium term, hence occupancy and rental rates should remain robust.

Now is a good time to bargain hunt among some inner city projects undertaken by reputed devlopers - many are moving units very slowly in this interim period of around 6-18 months before the units get completed. Prices of completed prime units will almost certainly be raised because these developers are now absorbing the increased material and steel prices during the construction period.

Edited February 12, 2005 by thedude

[LaoPo]

TheDude:

out of curiousity:

how much has someone to pay as downpayment when he/she rents an apartment in BKK?

1 month, 2 or more?

In Holland where I'm from it's 1 month (on a 1 year lease) maybe 2.

In China however (Hangzhou-city) a full year (!!!) has to be paid upfront...

In Europe that's almost impossible.

LaoPo

[mbkudu]

Two months up front with a one year signed lease is typical.