Future Of Real Estate Business

[shubh]

What is the future of investing in real estate business without being active partner in any company? I am looking to earn around 2-3% return per month.

[quiksilva]

24-36% annual yield?! Don't want much do you?

Is that Net or Gross? If Net, do you mean EBITDA or ...? Also would this be leveraged? What sort of minimum lot sizes are you looking at?

What type of investment are you looking for? If looking for those numbers on net unleveraged rental income, including void periods? Forget it.

It just might be possible through development, but not many projects are selling out these days, and you are trying do this without Thai partners. So that rules that out anyway.

I'd say capital appreciation in land would be possible, but again you don't want legit Thai partners so that rules that out too. Doesnt leave you with many options...

So yeah I have to say impossible, for now. You might have got those sort of returns speculating at the start of the bubbles, but that time has passed.

[TongueThaied]

24-36% annual yield?! Don't want much do you?

Is that Net or Gross? If Net, do you mean EBITDA or ...? Also would this be leveraged? What sort of minimum lot sizes are you looking at?

What type of investment are you looking for? If looking for those numbers on net unleveraged rental income, including void periods? Forget it.

It just might be possible through development, but not many projects are selling out these days, and you are trying do this without Thai partners. So that rules that out anyway.

I'd say capital appreciation in land would be possible, but again you don't want legit Thai partners so that rules that out too. Doesnt leave you with many options...

So yeah I have to say impossible, for now. You might have got those sort of returns speculating at the start of the bubbles, but that time has passed.

I do not have a clear answer, but I did read the OP's post. He NEVER said he did not want a Thai partner. Jesus, read the post. He said he did not want to be an active partner. This suggests to me that he would like to invest money in the American equivalent of a Real Estate Investment Trust (REIT) or a limited partnership where he is a passive partner. These opportunities are available here, though I don't think anybody is going to get 24-36% in this market! There is something here called "property funds," some of which have shares sold on the SET. The funds are invested in income property and the returns come from rents. A well managed fund usually delivers steady returns, often in the range of 9-14% per annum. Find a Thai broker that speaks English.

[think_too_mut]

So yeah I have to say impossible, for now. You might have got those sort of returns speculating at the start of the bubbles, but that time has passed.

Just in, past bubble burst real estate prices movements:

[quiksilva]

I do not have a clear answer, but I did read the OP's post. He NEVER said he did not want a Thai partner. Jesus, read the post. He said he did not want to be an active partner.

Geez, what's with all the shouting and aggro? Chill out.

He said "without being active partner in any company?", so my points were perfectly valid.

Yes he could invest in Thai REITs or Property Funds for Public Offering (PFPO's) as they are known here, but he will not get close to anything like the levels of returns he is seeking. But understand too that the vast majority of PFPO's on the Thai market are not secured by freehold assets, most are secured by long leases so their returns are driven by rents and as such their risk profiles go hand in hand with their returns.

Edited September 17, 2009 by quiksilva

[Theyreallrubbish]

What is the future of investing in real estate business without being active partner in any company? I am looking to earn around 2-3% return per month.

2-3% return per month is only possible in the last stages of a bubble. We've just had a bubble pop so there probably won't be one around again for another 10 years or so. Or you need a successful development, but those are tough right now as getting the development loan necessary to boost returns on equity is very difficult, even if the development is a success and sells out.

To earn those kinds of returns you aren't looking at capital asset appreciation, but at some kind of service company that doesn't require much capital. That's the only way to get such a return on capital right now, but anyone good enough to make a startup service business in the real estate sector succeed in this environment probably doesn't need you.

[olsen]

Lot of talk about "bubbles"....I actuallyn live in the middle of a "Bubble" in Khanom!

Anyone said Economic Crisis? Well...not here in Khanom!

Here there is a BOOM in tourism and especially in Real Estate.

Foreigners and Thais are investing a lot of money here at the moment buying land for their new resort, hotel or housing project.

The past 3 years the land prices have raised in average 150%.....

So shubh, you're welcome to PM me for further info regarding investing in land or property in this area....if you want a monthly return however, land-investment is not the way to go....but by now and double your money within 12 to 24 months!

[eljeque]

I may be wrong, but I think the OP wants to invest in a Real Estate Business, not real estate.

From what I see in Pattaya, others can chime in on Phuket, Bangkok, etc., many real estate businesses are closing shop, and any outside, silent investors who are not int he country will be the last ones to see a dime when any assets, if they exist at all, are sold.

Keep your money close at hand.

[loverboy44]

Ooooops another one telling people that foreigners can own land in Thailand.

I though they were cremated already.

[chriswatson]

Wife rents out island bungalow property to Westerner's for long term contracts. Each year she yields about 10% net of her capital investment. She's thinking of building some more, and the land she bought some 5 years ago has also gained in value by around 50% when you compare the prices adjacent vacant land is exchanging hands for.

May not be what the OP was interested in, but thought I'd put it out there.

[BEENTHEREDONETHAT]

Double your money in 12-24months. Brings to mind "if it sounds to good to be true it probably isn't"

[stevejones123]

a limited partnership where he is a passive partner

We all know what happens to passive partners. Many like it physically, few metaphorically.

[onlycw]

Things are different in the U.S. Here's my tale of woe as "partner".

In Fall 2004, a builder wanted to buy one of my lots. We got talking and he proposed forming a LLC. I would get "FMV" for my lots plus "40% of his profit". I would provide the equity needed to get a construction loan for each spec home.

3 spec homes were built and the profit was $ 6-digit. still, I am waiting to get reimbursed for the lots, the water meters and the permits, taxes and other expenses paid. The builder produced Schedule K1 forms and had an attorney write a letter saying there are $ 43,857.54 waiting in the client trust account, just sign on the dotted line and it will be yours!

Get married to the next girl calling you "sexy man". But think twice before entering any partnership deal.

The profit was used to buy lots in another county. My partners, the 2 managing directors, "sold" these lots to themselves.

I complained to the DRE and got assured that our LLC got "paid by ewscrow". Yeah, right. Glad to hear it. But we live in a bad world and when the buyer is the seller, he gets the land and gets the money back. For "escrow" one only needs money for 48 hours...

Anyhow, play it safe.

There are American REITs like NLY and ANH. You could buy the stock and sell call options for January 2010 for example. The yield is then way above 15%, dividends + option fee. And whenever you need to, you can get margin or you can sell the shares. Unlike that piece of land or buying into some unbuilt condo development.

Chris

[chriswatson]

Things are different in the U.S. Here's my tale of woe as "partner".

In Fall 2004, a builder wanted to buy one of my lots. We got talking and he proposed forming a LLC. I would get "FMV" for my lots plus "40% of his profit". I would provide the equity needed to get a construction loan for each spec home.

3 spec homes were built and the profit was $ 6-digit. still, I am waiting to get reimbursed for the lots, the water meters and the permits, taxes and other expenses paid. The builder produced Schedule K1 forms and had an attorney write a letter saying there are $ 43,857.54 waiting in the client trust account, just sign on the dotted line and it will be yours!

Get married to the next girl calling you "sexy man". But think twice before entering any partnership deal.

The profit was used to buy lots in another county. My partners, the 2 managing directors, "sold" these lots to themselves.

I complained to the DRE and got assured that our LLC got "paid by ewscrow". Yeah, right. Glad to hear it. But we live in a bad world and when the buyer is the seller, he gets the land and gets the money back. For "escrow" one only needs money for 48 hours...

Anyhow, play it safe.

There are American REITs like NLY and ANH. You could buy the stock and sell call options for January 2010 for example. The yield is then way above 15%, dividends + option fee. And whenever you need to, you can get margin or you can sell the shares. Unlike that piece of land or buying into some unbuilt condo development.

Chris

Hi, this all sounds very interesting and a good story.

If only I understood all the acronyms.

[LivinLOS]

Lot of talk about "bubbles"....I actuallyn live in the middle of a "Bubble" in Khanom!

Anyone said Economic Crisis? Well...not here in Khanom!

Here there is a BOOM in tourism and especially in Real Estate.

Foreigners and Thais are investing a lot of money here at the moment buying land for their new resort, hotel or housing project.

The past 3 years the land prices have raised in average 150%.....

So shubh, you're welcome to PM me for further info regarding investing in land or property in this area....if you want a monthly return however, land-investment is not the way to go....but by now and double your money within 12 to 24 months!

ha ha ha.. Yeah sure.. jump in with the sheep at the end of the bill run.. And get slaughtered like sheep.