Arguments Against Buying A Condo?

[Andreas84]

I have been considering to buy a Condo in CM, most likely to live there myself for a few years, then sell it or lease it. The main reason for buying, would simply be that it would/should be cheaper than if I rented a condo during all that time. I am thinking about the kind of condo which easily costs 20-25.000 pr month to rent, and around 3,5 million to buy. In example at Sritanna Condo 2, Huay Kaew RD. I was warned by some foreigners, that in the worst case the thai government can even claim ownership of condos owned by foreigners? It sounds crazy, but is there any truth to it? Such as if the political situation becomes very unstable, could one actually lose the ownership of the condo?

Then there is of course also the question of how easy it is to sell the condo at a later point in time. 

If I live here for three years, and pay 25.000 baht monthly for rent, that would be 900.000 baht altogether for these three years. That is about 1/4 of the sum it would cost me to buy the condo. So even If I have sell the condo afterwards at a lower price, it should perhaps be unlikely that I would actually lose any money, if the alternative was to rent for the same period of time?

I know that one major concern is the management of the common area. If the building after some time starts to be poorly maintained, the condo is also likely to decrease in value.

Anyone have input or this? Anyone been considering the same thing, or anyone here owning a condo?

[CobraSnakeNecktie]

it's nice if your going to customize it. Your not going to want to sink many improvements into someone else's rental.

As far as condo appreciation there hasn't been much in CM for years. People just prefer to buy new condos and new buildings are sprouting up all over.

If you plan on keeping it to lease then have to make the decision about declaring the rent and paying tax on it. A lot of landlords and expats don't report the income. So far there haven't been a lot of crackdowns but it's a potentially serious liability. If you figure on full tax in the equation then the buy and lease scenario losses a lot of luster.

Throw in with that condo fee's and their tendency to go up. Bad tenant expenses. low occupancy rates in some condo's, poor original building quality which might need to be maintained etc. I know a number of owners who have had their units for sale for extended periods and only receive low ball offers.

There are always going to be some buildings that people just want to live in. The question would be does the original purchase price already factor in higher tenancy rates and resale value.

[whiterussian]

Buy land and DIY

PM me for land.

loads of it.... and I only get a very small commision

Why on earth would you wnt to live in a beehive of farang? Go on welfare in the west and you get it free!

[naboo]

If my house were a condo, it would probably set me back 25k a month. As it's a house, it costs me 8k, with the added bonus that I pay government rates for water and electric, have a large garden and can choose a decent internet service provider instead of putting up with the generally appalling internet in condo blocks. And I get a garden, with 5 large trees and two lawns. And I can't hear my neighbours. And I can park my car outside my front door. 

The main downside of buying a condo is you might have to live in it. House all the way.

[tigerbalm]

it's nice if your going to customize it. Your not going to want to sink many improvements into someone else's rental.

As far as condo appreciation there hasn't been much in CM for years. People just prefer to buy new condos and new buildings are sprouting up all over.

If you plan on keeping it to lease then have to make the decision about declaring the rent and paying tax on it. A lot of landlords and expats don't report the income. So far there haven't been a lot of crackdowns but it's a potentially serious liability. If you figure on full tax in the equation then the buy and lease scenario losses a lot of luster.

Throw in with that condo fee's and their tendency to go up. Bad tenant expenses. low occupancy rates in some condo's, poor original building quality which might need to be maintained etc. I know a number of owners who have had their units for sale for extended periods and only receive low ball offers.

There are always going to be some buildings that people just want to live in. The question would be does the original purchase price already factor in higher tenancy rates and resale value.

You show some common sense in what you say, or your attitude, in my opinion as a general rule of thumb consider two things one location and two the state of the condo complex. if it has been up for like 10 years and the general condition of the exterior and the surrounding grounds (Landscaping) look good then this is a positive sign especially if you are looking at the higher end of the market, also consider if you are not buying it furnished then there will be a considerable extra expense of furnishing it and don't forget you will probably want high end furnishings that if you decide to rent it out will be of benefit to the renter and may be expensive to replace.

Also don't forget like all property in Thailand you can own the house or condo but not the actual land it sits upon regardless of condo or house.

look at 8 months occupancy in your calculations if renting most people look at 12, if you are happy with the returns on an eight month occupancy then if you manage a twelve month occupancy then that is a bonus.

You will be more than likely to be paying three times the amount for electricity but if you can afford 25k a month on rentals then your probably not going to be worried about a couple of thousand baht a month.

Don't buy one next to the service elevators the walls are only as thin as those little red bricks and noise will be a problem, the higher up you go usually the more expensive the units are well at least if it is a new project that is but at the same time the less problem mossies become the higher up you go .

There is very little choice of good condos in Chiang mai in the right location at the higher end of the market (Compared to like Pattaya) if you feel that you like a place and there are a high number of farrang owners then. Go for it.

Good luck.

[liveinlos]

First of all Thai's as a whole do not buy used housing so ask yourself what percentage of foreigners do you have left as buyers?<BR><BR>Secondly, glutton of condo's all over Thailand that never sell.<BR><BR>Third, I think is a proven fact once all the units are sold, the condo owners scram and do very little if any upkeep to the building. They simply run off and build another one, leaving the first building to complete deteriorate. Look around at some condo building 10 years old or less and see for yourself.

[phomsanuk]

_{Why does it seem that house rentals are less than condos of anywhere near similar size?}

[KRS1]

Find a cheaper place and just rent. Unless your involved with any crooked business dealing (you being the crooked one) i wouldn't worry about the gov seizing your property.

alot can happen in 3 years, rent for thefirst year, then make your decision.

[sarahsbloke]

If my house were a condo, it would probably set me back 25k a month. As it's a house, it costs me 8k, with the added bonus that I pay government rates for water and electric, have a large garden and can choose a decent internet service provider instead of putting up with the generally appalling internet in condo blocks. And I get a garden, with 5 large trees and two lawns. And I can't hear my neighbours. And I can park my car outside my front door.

The main downside of buying a condo is you might have to live in it. House all the way.

2 bedroom house with nice lawn, big garden, in my Mooban, 6000bht a month asking, 20km from CM, 25mins to town centre, no takers.

Plenty of other properties 2 bed -6000 upto 4 bed 10000, nobody wants em.

If you buy anything at the moment you are taking a big risk, property prices are going down.

Just rent.

[Thaihog]

If my house were a condo, it would probably set me back 25k a month. As it's a house, it costs me 8k, with the added bonus that I pay government rates for water and electric, have a large garden and can choose a decent internet service provider instead of putting up with the generally appalling internet in condo blocks. And I get a garden, with 5 large trees and two lawns. And I can't hear my neighbours. And I can park my car outside my front door.

The main downside of buying a condo is you might have to live in it. House all the way.

2 bedroom house with nice lawn, big garden, in my Mooban, 6000bht a month asking, 20km from CM, 25mins to town centre, no takers.

Plenty of other properties 2 bed -6000 upto 4 bed 10000, nobody wants em.

If you buy anything at the moment you are taking a big risk, property prices are going down.

Just rent.

You're a right 'Mr know it all' aren't you!

You have lived here only a few months and you are giving people advise on all manner of topics

[F4UCorsair]

nabo, my understanding is that farang can only own condos, not houses. Is that the case?

If you 'own' a house in the name of a local, do you have it 'tied up', mortgage, caveat, contract with the nominal owner re sale when you choose, etc., so that it can' be sold from under you without you securing the proceeds?

[Thaihog]

Another caveat to consider when buying a condo is to check the ratio of Thai & Farang owners. Farangs can only own up to 49% of the registered condos in the building.

I have heard that one condo building near CMU is close to exceeding the 49/51% ratio....

Caveat Emptor....

[CobraSnakeNecktie]

some people do long term lease backs. Can still be overturned or liens attached in some cases.

If one has deep pockets and can capitalize a company then it's possible to buy in the companies name.

The other large issue with buying a condo or a house is that it's hard to hard to predict and deal with what might happen nearby.

The TV forums are well populated with neighbors from hel_l threads like loud bars, trash burning etc. What happens if you buy your dream condo and some corrupt developer bribes the planning people and they spend the next 12-18 months constructing yet another big building right next to you. You like the sound of hammering on stone? get used to it.

If you have a big neighbor problem and you don't feel like riding it out then a renter can simply move. If a situation becomes bad then an owner is stuck until they can sell and that is likely to affect the price quite a bit.

Many pitfalls to the housing in Thailand.

[witold]

LOL at the comparison with some 2br house 20km from town.

The key for secondary markets like CM is to make sure you are in the best location possible. When you are in the entertainment and business center of the city, people will always want to rent and buy there. The smaller the market, the more important it becomes to be in the best area.

I agree with the sentiment that Thai management fees are too low and condo buildings have a tendency to fall into disrepair. This may be one good reason to buy into something established so you can see how they have been taking care of the property. You need to remember that when you buy a condo, you buy into a building. It is critically important to see how this building has been managed in the past, what sort of problems it has, what sort of expenses may be coming up, what other neighbors complain about, etc. In other words, you need to look beyond your 4 walls to see if it makes sense to buy there. That said, low condo fees also mean low carrying costs. This is a huge advantage of Thai property over US condos, for example...

In general, Thailand's economy is doing great and it will only do better. Each year, more and more people move there. There will be more and more tourists and more and more expats. Baht will slowly get stronger and stronger. CM will not benefit from these macro trends as much as primary markets like BKK, Phuket, etc, but it will benefit some. Whether 3 years is enough or whether it will benefit enough, who knows... Baht is very strong right now.

How did you come up with the 25K rental estimate? CM is slow during off season. Is 25K average for the whole year? Do you see comparable rental properties being rented for this amount right now when you look at recent and current listings?

[mabuhay]

What if you can't sell your condo after 3 years and what if you sell or rent it in Thai Baht won't you lose money afterall because of the exchange rate Baht to Euro or any other currency ?

[oldmajor]

_{Why does it seem that house rentals are less than condos of anywhere near similar size?}

Many people find living in a condo safer than houses. This tends to keep the condo prices higher than houses.

[Thaifan2]

If my house were a condo, it would probably set me back 25k a month. As it's a house, it costs me 8k, with the added bonus that I pay government rates for water and electric, have a large garden and can choose a decent internet service provider instead of putting up with the generally appalling internet in condo blocks. And I get a garden, with 5 large trees and two lawns. And I can't hear my neighbours. And I can park my car outside my front door.

The main downside of buying a condo is you might have to live in it. House all the way.

2 bedroom house with nice lawn, big garden, in my Mooban, 6000bht a month asking, 20km from CM, 25mins to town centre, no takers.

Plenty of other properties 2 bed -6000 upto 4 bed 10000, nobody wants em.

If you buy anything at the moment you are taking a big risk, property prices are going down.

Just rent.

20 KM is too far from town .I live in a rental in San Sai 10 km from town ,3 bed good security ,B6,500 a month .Rentals in my moo ban plus sales are snapped up quickly .

[tigerbalm]

Buy a condo if you have the finances

If say over a four year period you pay 25K a month then tha's 1.2 Mil you have lashed out(on rent)

If after 4 years you want to sell and for some reason you are having difficulty selling it just drop the price you have that initial 1.2 Mil that you would have wasted on rent to play with, properties will in most cases sell if the price is right.

And as for the price of a condo dropping in value in the next 4 years ..well it would have to drop 25K a month for you to be worried and i cant see that happening, just as they don't go up 25K a month.

[sarahsbloke]

Buy a condo if you have the finances

If say over a four year period you pay 25K a month then tha's 1.2 Mil you have lashed out(on rent)

If after 4 years you want to sell and for some reason you are having difficulty selling it just drop the price you have that initial 1.2 Mil that you would have wasted on rent to play with, properties will in most cases sell if the price is right.

And as for the price of a condo dropping in value in the next 4 years ..well it would have to drop 25K a month for you to be worried and i cant see that happening, just as they don't go up 25K a month.

Has anyone made a profit from selling a condo in CM (or even managed to sell one at any price)? please post on this thread.

Does anyone pay 25kbht a month for a condo in CM? Please tell us (I paid 5.5kbht a month for my last condo in CM)

Have you managed to rent out your condo in CMfor 25kbht a month?

I have no actual experience with condos, seems like a bad investment to me, but I can tell you about a small 2 bed house out-of-town that my former gf owned near CM.

She bought land and built with a mortgage .... balance 1.2million from Bangkok Bank

Repayments minimum, 7k/month, bank wants 10k/month, rental value 5k/month but nobody wanted to rent.

For sale at 1.2 million (just to pay off the mortgage), no viewers in 1 year.

So if a Thai lady can't make it work, how will a white man?

(I did see all the paperwork, talked to the bank so the figures were totally legit)

I'm sure Tiger is totally right and I am totally wrong about condos .... but Tiger ..... how do you know?

Ever sold or rented a condo you own at a profit (or just wishful thinking)?

Edited June 29, 2010 by sarahsbloke

[tigerbalm]

Buy a condo if you have the finances

If say over a four year period you pay 25K a month then tha's 1.2 Mil you have lashed out(on rent)

If after 4 years you want to sell and for some reason you are having difficulty selling it just drop the price you have that initial 1.2 Mil that you would have wasted on rent to play with, properties will in most cases sell if the price is right.

And as for the price of a condo dropping in value in the next 4 years ..well it would have to drop 25K a month for you to be worried and i cant see that happening, just as they don't go up 25K a month.

Has anyone made a profit from selling a condo in CM (or even managed to sell one at any price)? please post on this thread.

Does anyone pay 25kbht a month for a condo in CM? Please tell us (I paid 5.5kbht a month for my last condo in CM)

Have you managed to rent out your condo in CMfor 25kbht a month?

I have no actual experience with condos, seems like a bad investment to me, but I can tell you about a small 2 bed house out-of-town that my former gf owned near CM.

She bought land and built with a mortgage .... balance 1.2million from Bangkok Bank

Repayments minimum, 7k/month, bank wants 10k/month, rental value 5k/month but nobody wanted to rent.

For sale at 1.2 million (just to pay off the mortgage), no viewers in 1 year.

So if a Thai lady can't make it work, how will a white man?

(I did see all the paperwork, talked to the bank so the figures were totally legit)

I'm sure Tiger is totally right and I am totally wrong about condos .... but Tiger ..... how do you know?

Ever sold or rented a condo you own at a profit (or just wishful thinking)?

Hi SB

I was referring to the OPs position with him wanting to rent a condo at the said price he quoted up to 25k, i don't think he mentioned buying it with the sole purpose of making any profit rather than simply be that it would/should be cheaper than if I rented a condo during all that time. Hence i tried to live him some food for thought with the previous input......

Buy a condo if you have the finances

If say over a four year period you pay 25K a month then that's 1.2 Mil you have lashed out(on rent)

If after 4 years you want to sell and for some reason you are having difficulty selling it just drop the price you have that initial 1.2 Mil that you would have wasted on rent to play with, properties will in most cases sell if the price is right.

And as for the price of a condo dropping in value in the next 4 years ..well it would have to drop 25K a month for you to be worried and i cant see that happening, just as they don't go up 25K a month.

And yes i did buy a condo in 2002 in Pattaya VT2 700K and sold it about a year an a half later for 1.2M had a tenant in there for 6 months paying 12k a month did i make a profit on it no, as it cost around 400k up to deck it out but i was in a rush to sell it at the time and adjusted the price accordingly it took 4 days to secure a buyer, also a Town house in Soi Kaltalow Pattaya bought it in 2004 for just under 600k and sold it in 2006 for 1.15 Mil kept the price high and it took a year to sell (But i wasn't in a rush to sell), did i make a profit yes and i also had the use of it during the time it took to sell as i was at the time living in CM and going down to Pattaya with the wife for the occasional visiting friends.

I live in a house on the outskirts of CM and have been renting it for the last 4 years 5k a month, but not every one wants to live in a house i prefer but circumstances of a lot of people dictate they would rather live in a condo and i am sure there are quite a few people living in 25K rent, 2-4 mil out right owner ship condo's in CM, not every one wants a 36 -40 sq mt 5k a month bed sit. or a 5k a month house like i have in the sticks come to that

Apologies for of topic

TB

[CobraSnakeNecktie]

There are a lot of profit examples of people who bought anything in the wake of the 1998/9 asian financial crisis. In retrospect buying in 02 or 03 was great timing as property bubbles were building in the US and EU. Since 05 however the Thai condo markets have flatlined.

Is there anything to suggest there is another boom around the corner? I suppose anything is possible but a lot of signs China's property bubble is about to crack and some smart people like Paul Krugman the economist think we are at an early phase of a 3rd great world depression.

Thailand is still an export country which relies on foreign investment and demand to fuel the economy.

With that kind of uncertainty does one really want to load up on illiquid real estate assets? Seems like the smart money would be in safe cash equivalents and wait until the prices come way down.

Krugman article

[Drew Aitch]

Many people who buy say that renting is dead money, but I think there is a time to rent and a time to buy, and it all depends on you, your age, your future forecast, and reasons for purchasing.

For someone coming over here to retire after say the age of 65, they would most probably not even spend half as much on rent as they would have done on a purchase by the time the lights of life got out.

Then again, it also depends on what you buy and where. There are plenty neat of studios (if that's your cup of tea), going for under 1,000,000 Baht.

If someone has the cash to buy, then whatever else happens in life, you always have a home. Food is cheap enough out here, and living expenses can be minimal should you need to live a frugal lifestyle for whatever reasons.

If the brown stuff hits the fan and you one day find yourself financially strapped unexpectedly, it doesn't matter how well you got on with the staff in the office, they ain't gonna let you stay in your rented accommodation if you can't pay the rent.

Let's not forget too that this is a foreign country, and with that comes an element of uncertainty. I'm not saying it would happen, but if the government of the day decided to kick all long term expats and retirees out of the county at the drop of a hat, they could. It happened to my uncle in Zimbabwe some years ago. He didn't have property there, but there was a shed load of cash in the bank he couldn’t get out of the county.

If you are buying as an investment, then you really need to look at the condo management/committee/landlord etc, and ascertain whether they maintain the building well. There are a few filthy wrecks around Thailand that looked beautiful just after construction yet some years later look almost derelict. Such places would not be a good return on investment, and what's more, undesirable places to live.

It's also important to add that some of the older buildings are beautifully maintained, which goes to show that a little homework on the project owners goes a long way.

Aitch

[LJW]

I think it is possible to rent long-term for a cheap price.

I live in Muubaan Tanawan.. It is a nice 3bd, 2bathroom

with many extras.. private Swimming Pool, large garden and 3 waterfalls.

Been here since 2000, pay 5,000 baht per month..

[jayinoz]

Buy land and DIY

PM me for land.

loads of it.... and I only get a very small commision

Why on earth would you wnt to live in a beehive of farang? Go on welfare in the west and you get it free!

Much more risk in trying to own land..... Yes you will say it is easy via a Co Ltd or a Thai person you trust. But really how many people have someone they can trust with a good portion of their life savings.

Even the 30 lease rule has HUGE risks- I have had a half a dozen lawyers tell me different yet I know many have paid the ultimate price for believing others in Thailand.

Buying LAND is HUGE risk- Listen to the Thai National Anthem sometime for insight into their views... Every inch of land is owned only by Thais forever...

[jayinoz]

In terms of buying a Condo I have only heard of Farangs losing a Condo to an X-Wife. So best you not marry or you buy it in your name before you marry. I have been advised by a lawyer. Any property you buy in Thailand after marry even in your name will be common property. Any property in her name is hers... Not fair but that is life in Thai. Be careful- heard too many stories of guys losing their life savings in Thai when I owned a GH for a few years...

In terms of Condos- look only at the yield you WILL get now if rented out.

Eg. 2.5 MIO bt Condo rents for 20K bt pm.

That 240K pa minus say 40K pa for expenses (vacancy + management costs, etc) = 200K pa

That 8% yield pa- Not bad after expenses. 10% Yields are around if you look around and negoitate strong enough... Rich Thais often make more than 10% from renting to Farang and other professional Thais.

Never think you will gain any capital growth, as CMai been very poor growth wise and many developments available. That is a bonus if you do.

Just get the best deal you can- put in your name before married- rent out when you not in CMai. You will do far better than renting in the LT. Yet with the obvious risks- doubt Government will take unless a Burma type Coup- IMO. Then all Farangs and investors will bail- possible yet not probable.

Remember setup costs in the 1st year (Tax, etc). On 2.5 MIO tax will be approx 130K bt.

Do not believe the wild estimates from Thai tourism stating they will make over 1 trillion bt next year leading to Condo sales growth. Not with political unrest still in the background potentially for the next decade. :jap: Chok Dee.

[uptoyoumyfriend]

buying is good only if you really know you want to stay here and in that particular condo .

best to rent for a while and get a feel for it before buying and thai-ing yourself down.

renting a house is cheap and you can walk away from it if you find better.

in my mooban about 7k south of city center -15 min m-bike- about 6000/mth. nice area too.

[Andreas84]

I am currently staying in a 130 m2 condo, which cost 25k pr month (inclusive of common area fee of 2.000). I did the same last year. It doesn't seem that low season or high season makes much of a difference. There are quite a few of these condos. For a good 2 bedroom condo, of western standard and this size, in a good location, this seems to be where the prices are at. Just look at at the various real estate agencys websites, and you will find many condos in this (price)category. In example at www.houseinchiangmai.net 

I was surprised, though, by all the crappy condos which are avaiable at that price, in example at RimPing Condo/Riverside, if I am correct...

Personally, I do not necessarily need a very big condo, but I find that most of the condos are not even close to what can be called a western Standard. In europe, in example, you might find condos around 40 m2, but with very good solutions, the space has been made well use of , the inventory and materials are of hight quality etc. I do not find these kind of condos here in CM, I have only found high quality in the bigger units. There too, usually the solutions are not very good, in terms of making the most use of the space.

It seems that I will rather join forces with a family member back in Norway, to invest money together in a small apartment in Oslo, Norway (it will cost something like twice as much; 8 million baht), then lease it , and use my part of the rental income to rent a condo while staying here. I think this is a much safer and better investment.

[elektrified]

I don't understand why anyone would pay 25,000 THB for a condo when for 6,000 you can have your own private house with a garden.

[amexpat]

^

Nor do I but some people like condos. I don't understand demanding "western standard" in Southeast Asia.

[el jefe]

I've looked at plenty of 6-10,000 baht houses and would choose a condo every day. But I never looked more than 5km from the city center. Some people just want to live closer to town. I've lived in both condos and houses. I live in a house now, close to the city and pay a lot more than 6,000 baht. But I have the money. The OP probably does too. I don't see why that's so difficult for some (Electrified and Sarah'sB) to understand.

Back to the OP's question (renting vs buying a condo):

You can't just take the money you spend on rent and say that's thrown away money.

What no one has mentioned in doing the math is the lost investment costs if you buy a condo. A 3.5 mil baht condo should rent for about 20,000 baht per month. If you don't buy that condo you have 3.5 mil to invest. If you earn 6.86% on your investments, long term, then you would earn 20,000 baht per month on average and might be better off renting than buying. You would probably need an even lower return after you take into account management fees, taxes, and closing costs on the purchase and sale of your condo. Of course, if you think you can make a profit buying and selling your condo that's a different story. But no one here has said there's a good likelihood of a profit.