Buy Apartment Or Condo

[markeewan]

I am looking to purchase a coastal property in Thailand that I can use myself and also rent out. I am considering either an apartment or condominium development.

I have researched the previous postings on condominiums and I understand the legal differences between an apartment and a condominium, but I would like to know what are the disadvantages of purchasing an apartment instead of a condominium?

The reason that I am asking is that I have seen an apartment that I quite like, it has a range of financing options, including 30 year lease, lease and buy later at fixed price or 80% financing to own outright. Depending upon which financing option is taken a 20-30% occupancy would cover the repayments.

Can anyone can provide insight into what are the disadvantages of buying into an apartment complex compared to one that is sold as a condominium?

[jackdawson]

will this be on the test ?

[trogers]

Since you already have done some homework between having a property title in your name (condo) or just a 30-year lease rights registered in the property title under the name of someone else (30-year lease), just consider what you will face in trying to sell 10 or 15 years in the future.

[cyfanaz]

There is a very small market for selling a partial ownership in an apartment. So be careful getting into that and make sure you will want to own it for several years. Condos are a much safer investment.

I am the owner of Homespace Realty. We have over 1600 properties for sale. I also have an exclusive arrangement with the Thai Asset Management Corp. This is a Thai government agency that gets

rid of bank properties. There are some tremendous deals on these properties. Some as long as 17,000 per square meter. Most of these properties need some work but most are also WAY under market

value. If I can be of any help let me know.

email and commercial URL removed per forum rules

[markeewan]

Thanks for the comments and to be sure there is no test. Everyone has a different perspective and I am pleased to take it all onboard.

Some people say, "don't buy property in Thailand under any circumstances", others think differently. I already own one condo in Bangkok, it is not an investment, it is somewhere to live for part of the year.

I am now looking for somewhere that I can rent to overseas tourists via a rental management program. Maybe I can use it for part of the year myself. If the holiday rentals cover the repayments, then I am essentially getting the place for free. At least that is how I look at it.

Has anyone out there had experience of renting out a holiday apartment; would you recommend it?

[bustersizemore]

Since you already have done some homework between having a property title in your name (condo) or just a 30-year lease rights registered in the property title under the name of someone else (30-year lease), just consider what you will face in trying to sell 10 or 15 years in the future.

Absolutely correct! Don't even consider a lease-hold interest in Thailand. It's nothing short of a scam!

Would you rent property for the same price that you could purchase the property in freehold in your native country?

[bustersizemore]

Thanks for the comments and to be sure there is no test. Everyone has a different perspective and I am pleased to take it all onboard.

Some people say, "don't buy property in Thailand under any circumstances", others think differently. I already own one condo in Bangkok, it is not an investment, it is somewhere to live for part of the year.

I am now looking for somewhere that I can rent to overseas tourists via a rental management program. Maybe I can use it for part of the year myself. If the holiday rentals cover the repayments, then I am essentially getting the place for free. At least that is how I look at it.

Has anyone out there had experience of renting out a holiday apartment; would you recommend it?

Unless you are very wealthy and/or can afford to lose whatever funds you've invested, you should (must ) consider your BKK condo as an investment. Not doing so is nothing short of being in denial. Whenever I hear of a real estate purchase as "not an investment", I typically think "it's probably not a good investment".

You should ask yourself: Has it appreciated in value?, What has been the cash-on-cash return?, What would similar accommodations have cost when I was in BKK?, How many days of the year did I actually use this condo? What is the opportunity cost of the funds that are tied up in this investment?  

Good luck! I think I already know the answer... 

Edited February 21, 2010 by bustersizemore

[torrenova]

Absolutely correct! Don't even consider a lease-hold interest in Thailand. It's nothing short of a scam!

Would you rent property for the same price that you could purchase the property in freehold in your native country?

But therein is your answer, the price. There could well be (unlikely but possible) a lease price which is very favourable compared to the purchase price. Short term is one area where money can be made by subletting.

It does not make it a scam, just not an ownership thing.

[eljeque]

You do not yet know what rent you will receive or how many months of the year the property will be rented out for your income.

You do not yet know what percentage the agent will expect for renting the property for you, and you do not yet know the cost of repairs, or created repairs the agent will generate to improve his income.

Also, when renting out property, most renters want long-term. It will not be easy to find people who wnat to jump in for a couple or few months per year during the months that you are not here. Renters move in and stay for a year or longer. If you really want to buy a condo, then do not make plans to stay in it. Make plans to rent it out full time.

Best of luck

[123ace]

The OP has a good question and some of the answers so far have not been very reasonable.

Firstly, don't even look at the bank repossessions introduced above. If they were even remotely good they would be sold by now.

Secondly, if you are looking at Phuket or Samui, then leasehold is likley the only viable option open to you and therefore the only viable option to you upon re-sale. Nothing to worry about, however the comment above regarding the balance of lease term is important and I suggest that you only buy in a development where you can start a new 30 years from the outset (if it is less than 30 years with no renewals - forget it). I strongly advise not to buy any stand alone property that is leasehold (or company owned), and this would not apply for an apartment anyway.

For Bangkok, Pattaya and Hua Hin, I recommend freehold condo's only as these are the market norms in each, and apartments are considered inferior in these locations. Exceptions being branded, or quality rental return program and expect 20 - 30% discount rate from freehold.

For rental purposes, Bangkok is best, followed by Phuket (if it is hospitality serviced and rental program in place etc). Pattaya and Hua Hin are harder to find tenants and are very seasonal. Samui is only an option if it is a branded development and evertything is taken care of for you.

This forum is dominated by expats that live here (all over thailand) are owner-occupiers / semi-retired, and therefore prefer freehold or company owned. The vast majoity of buyers in Phuket are non-resident and the norm is long lease. This works perfectly well for them and all of the leading villa developments in Phuket are leasehold.

Do buy - just resarch a lot and not too much on this site I suggest.

[ChiangMaiFun]

The OP has a good question and some of the answers so far have not been very reasonable.

Firstly, don't even look at the bank repossessions introduced above. If they were even remotely good they would be sold by now.

Secondly, if you are looking at Phuket or Samui, then leasehold is likley the only viable option open to you and therefore the only viable option to you upon re-sale. Nothing to worry about, however the comment above regarding the balance of lease term is important and I suggest that you only buy in a development where you can start a new 30 years from the outset (if it is less than 30 years with no renewals - forget it). I strongly advise not to buy any stand alone property that is leasehold (or company owned), and this would not apply for an apartment anyway.

For Bangkok, Pattaya and Hua Hin, I recommend freehold condo's only as these are the market norms in each, and apartments are considered inferior in these locations. Exceptions being branded, or quality rental return program and expect 20 - 30% discount rate from freehold.

For rental purposes, Bangkok is best, followed by Phuket (if it is hospitality serviced and rental program in place etc). Pattaya and Hua Hin are harder to find tenants and are very seasonal. Samui is only an option if it is a branded development and evertything is taken care of for you.

This forum is dominated by expats that live here (all over thailand) are owner-occupiers / semi-retired, and therefore prefer freehold or company owned. The vast majoity of buyers in Phuket are non-resident and the norm is long lease. This works perfectly well for them and all of the leading villa developments in Phuket are leasehold.

Do buy - just resarch a lot and not too much on this site I suggest.

You have left off Thailand's second largest city, Chiang Mai, I own several condos here and get 10% gross/8% net - consistently.

[london]

Markeewan,

you say: I am now looking for somewhere that I can rent to overseas tourists via a rental management program. Maybe I can use it for part of the year myself. If the holiday rentals cover the repayments, then I am essentially getting the place for free. At least that is how I look at it.

In other words: short term rental.

Be careful, as this is illegal. There have been many others doing this and the Hotels have lobied the government to outlaw this practice.