Empty Properties

[ChiangMaiFun]

Well... the market speaks! I usually get 7/8% net and get 3/4% net in Europe - you can think what you like but I get what the market gives me - I explained that this year it has lowered a tad to 6/7%. You can't compare with Europe - you can get many things cheaper here and more expensive here than your dear old Europe - and what???

Hmm. Thailand is full of properties that are empty and either for sale or for rent (and indeed this is the title of the thread). Europe is quite different: most places available for rent or sale go in days or weeks at most. If they dont go quickly everyone knows that there is something wrong with them or they are seriously overpriced.

Hence my doubt as to the validity of the figures that are bandied about. Maybe people do sometimes get 8% when they finally get a tenant here, but it is patently obvious that there are far more properties than potential tenants (or buyers for that matter) and as such the numbers just dont add up. I still think that this is classic Thai style pricing: it it doesnt move, increase the price.

Well you do have a point here - but most of the 'empties' are Thai owned because of their stubbornness in not reducing rents and/or sale prices. Most farangs who are in this (including me) don't let their properties stay empty for long if a price reduction will get it shifted. I have one such property now - reduced by 10,000 a month because the market couldn't take the higher price. Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price' - in Europe the banks want them off their balance sheets and it get's what it get's at auctions.

[Khun Jean]

Maybe times are changing. I have a few properties but i rent them out without furniture. I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash. Took 11 years all together, but my plan was to target Thais and not foreigners. It seems more sensible to me as Thais will always be here in need of a place to live.

Foreigners just bugger of when they not like it anymore.

Without furniture forces people to bring or buy their own furniture. This causes people to have more feeling with the place and can sooner call it "home". This helps tenants to stay much longer. It attracts tenants that look for a place to rent for a longer time period than the typical 1 year.

And i don't have to worry about a damaged tv, sofa, tables, beds etc...

[trogers]

Well... the market speaks! I usually get 7/8% net and get 3/4% net in Europe - you can think what you like but I get what the market gives me - I explained that this year it has lowered a tad to 6/7%. You can't compare with Europe - you can get many things cheaper here and more expensive here than your dear old Europe - and what???

Hmm. Thailand is full of properties that are empty and either for sale or for rent (and indeed this is the title of the thread). Europe is quite different: most places available for rent or sale go in days or weeks at most. If they dont go quickly everyone knows that there is something wrong with them or they are seriously overpriced.

Hence my doubt as to the validity of the figures that are bandied about. Maybe people do sometimes get 8% when they finally get a tenant here, but it is patently obvious that there are far more properties than potential tenants (or buyers for that matter) and as such the numbers just dont add up. I still think that this is classic Thai style pricing: it it doesnt move, increase the price.

Well you do have a point here - but most of the 'empties' are Thai owned because of their stubbornness in not reducing rents and/or sale prices. Most farangs who are in this (including me) don't let their properties stay empty for long if a price reduction will get it shifted. I have one such property now - reduced by 10,000 a month because the market couldn't take the higher price. Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price' - in Europe the banks want them off their balance sheets and it get's what it get's at auctions.

Renovated old condos in good locations do not face a problem from lack of interested buyers or tenants. The only determining point is the selling price or asking rent. But the question for most investors are - what is considered a good location?

[ChiangMaiFun]

Maybe times are changing. I have a few properties but i rent them out without furniture. I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash. Took 11 years all together, but my plan was to target Thais and not foreigners. It seems more sensible to me as Thais will always be here in need of a place to live.

Foreigners just bugger of when they not like it anymore.

Without furniture forces people to bring or buy their own furniture. This causes people to have more feeling with the place and can sooner call it "home". This helps tenants to stay much longer. It attracts tenants that look for a place to rent for a longer time period than the typical 1 year.

And i don't have to worry about a damaged tv, sofa, tables, beds etc...

sounds sensible but takes more work I guess - I can't find any properties here for that price range

[ChiangMaiFun]

Well... the market speaks! I usually get 7/8% net and get 3/4% net in Europe - you can think what you like but I get what the market gives me - I explained that this year it has lowered a tad to 6/7%. You can't compare with Europe - you can get many things cheaper here and more expensive here than your dear old Europe - and what???

Hmm. Thailand is full of properties that are empty and either for sale or for rent (and indeed this is the title of the thread). Europe is quite different: most places available for rent or sale go in days or weeks at most. If they dont go quickly everyone knows that there is something wrong with them or they are seriously overpriced.

Hence my doubt as to the validity of the figures that are bandied about. Maybe people do sometimes get 8% when they finally get a tenant here, but it is patently obvious that there are far more properties than potential tenants (or buyers for that matter) and as such the numbers just dont add up. I still think that this is classic Thai style pricing: it it doesnt move, increase the price.

Well you do have a point here - but most of the 'empties' are Thai owned because of their stubbornness in not reducing rents and/or sale prices. Most farangs who are in this (including me) don't let their properties stay empty for long if a price reduction will get it shifted. I have one such property now - reduced by 10,000 a month because the market couldn't take the higher price. Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price' - in Europe the banks want them off their balance sheets and it get's what it get's at auctions.

Renovated old condos in good locations do not face a problem from lack of interested buyers or tenants. The only determining point is the selling price or asking rent. But the question for most investors are - what is considered a good location?

very true - but here in CM it is fairly apparent where the locations are - I have a few rooms but spread around the city

[Khun Jean]

Maybe times are changing. I have a few properties but i rent them out without furniture. I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash. Took 11 years all together, but my plan was to target Thais and not foreigners. It seems more sensible to me as Thais will always be here in need of a place to live.

Foreigners just bugger of when they not like it anymore.

Without furniture forces people to bring or buy their own furniture. This causes people to have more feeling with the place and can sooner call it "home". This helps tenants to stay much longer. It attracts tenants that look for a place to rent for a longer time period than the typical 1 year.

And i don't have to worry about a damaged tv, sofa, tables, beds etc...

sounds sensible but takes more work I guess - I can't find any properties here for that price range

Now they are more close to 400k then before. But if i estimate there are millions of those with at least thousands currently for sale. A few years back i put up poster with a "sell and rent back" offer. That was so popular i had enough offers in 1 day and had to remove them otherwise i (ok my wife ) got calls constantly. Just look to other places in bangkok instead of only around sukhumvit, silom bts and mrt lines. Those areas are only 1% of Bangkok. I prefer to look in places with factories or universities.

It does take more work to find them, but after that it requires almost none. Just the occasional repair of plumbing which is done by a local handyman.

[trogers]

Maybe times are changing. I have a few properties but i rent them out without furniture. I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash. Took 11 years all together, but my plan was to target Thais and not foreigners. It seems more sensible to me as Thais will always be here in need of a place to live.

Foreigners just bugger of when they not like it anymore.

Without furniture forces people to bring or buy their own furniture. This causes people to have more feeling with the place and can sooner call it "home". This helps tenants to stay much longer. It attracts tenants that look for a place to rent for a longer time period than the typical 1 year.

And i don't have to worry about a damaged tv, sofa, tables, beds etc...

sounds sensible but takes more work I guess - I can't find any properties here for that price range

In Bangkok, such private properties for the working class are developed by Nirun. But I guess they are not in Chiangmai.

[ChiangMaiFun]

Maybe times are changing. I have a few properties but i rent them out without furniture. I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash. Took 11 years all together, but my plan was to target Thais and not foreigners. It seems more sensible to me as Thais will always be here in need of a place to live.

Foreigners just bugger of when they not like it anymore.

Without furniture forces people to bring or buy their own furniture. This causes people to have more feeling with the place and can sooner call it "home". This helps tenants to stay much longer. It attracts tenants that look for a place to rent for a longer time period than the typical 1 year.

And i don't have to worry about a damaged tv, sofa, tables, beds etc...

sounds sensible but takes more work I guess - I can't find any properties here for that price range

Now they are more close to 400k then before. But if i estimate there are millions of those with at least thousands currently for sale. A few years back i put up poster with a "sell and rent back" offer. That was so popular i had enough offers in 1 day and had to remove them otherwise i (ok my wife ) got calls constantly. Just look to other places in bangkok instead of only around sukhumvit, silom bts and mrt lines. Those areas are only 1% of Bangkok. I prefer to look in places with factories or universities.

It does take more work to find them, but after that it requires almost none. Just the occasional repair of plumbing which is done by a local handyman.

I'm in Chiang Mai - I like the sell rent back thing I had never thought of that

[samran]

Well you do have a point here - but most of the 'empties' are Thai owned because of their stubbornness in not reducing rents and/or sale prices. Most farangs who are in this (including me) don't let their properties stay empty for long if a price reduction will get it shifted. I have one such property now - reduced by 10,000 a month because the market couldn't take the higher price. Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price' - in Europe the banks want them off their balance sheets and it get's what it get's at auctions.

There is more to it than that. Friends of ours (Thai) own all their condo's outright. They do the sums and in some cases it pays to hold off for quite a long time when they do eventually get a tenant the return is still better than what they'd get from a bank, or what they'd get if they reduced their price get a tenant.

It appears 'dumb' not to lower your rent to move your property...obviously this makes sense if you've got a mortgage on the place.

Most Thai's don't...and thus the leaving it empty strategy often makes more sense than locking in a lower rent.

It isn't stubbornness, for many, it makes financial sense.

[ChiangMaiFun]

Well you do have a point here - but most of the 'empties' are Thai owned because of their stubbornness in not reducing rents and/or sale prices. Most farangs who are in this (including me) don't let their properties stay empty for long if a price reduction will get it shifted. I have one such property now - reduced by 10,000 a month because the market couldn't take the higher price. Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price' - in Europe the banks want them off their balance sheets and it get's what it get's at auctions.

There is more to it than that. Friends of ours (Thai) own all their condo's outright. They do the sums and in some cases it pays to hold off for quite a long time when they do eventually get a tenant the return is still better than what they'd get from a bank, or what they'd get if they reduced their price get a tenant.

It appears 'dumb' not to lower your rent to move your property...obviously this makes sense if you've got a mortgage on the place.

Most Thai's don't...and thus the leaving it empty strategy often makes more sense than locking in a lower rent.

It isn't stubbornness, for many, it makes financial sense.

Not been my experience but I guess some may think like that - but many do not and simply hold out for a higher rent or sell price and may wait 10 or more years - they just don't understand business many of them. It's better to take a 20,000 rent now than wait for that 30,000 which may, or may not, come along. Don't forget it's only a one year contract so it's not a question of 'locking in' as you suggest. Many properties are empty because they are owed by banks or because they own a large back sum of common area fee (often more than the condo is worth to sell).

[trogers]

Well you do have a point here - but most of the 'empties' are Thai owned because of their stubbornness in not reducing rents and/or sale prices. Most farangs who are in this (including me) don't let their properties stay empty for long if a price reduction will get it shifted. I have one such property now - reduced by 10,000 a month because the market couldn't take the higher price. Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price' - in Europe the banks want them off their balance sheets and it get's what it get's at auctions.

There is more to it than that. Friends of ours (Thai) own all their condo's outright. They do the sums and in some cases it pays to hold off for quite a long time when they do eventually get a tenant the return is still better than what they'd get from a bank, or what they'd get if they reduced their price get a tenant.

It appears 'dumb' not to lower your rent to move your property...obviously this makes sense if you've got a mortgage on the place.

Most Thai's don't...and thus the leaving it empty strategy often makes more sense than locking in a lower rent.

It isn't stubbornness, for many, it makes financial sense.

It only make financial sense when property tax is zero, which is what is happening in Thailand. If your friends face annual property taxes that are 1-2% of capital value, they will decide differently. And in some places in USA, the tax can be more than 5%.

Edited March 18, 2011 by trogers

[Darrel]

Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price'

For sure. There's a big block of low-rise shop/appt units half-way down Jomtien Beach Rd. I was at the gala opening about 20 years ago and I fondly remember the rather classy (free) seafood buffet on the front terrace: some fancy restaurant had set up shop there. Now the whole place looks derelict and most of the units seem to have never been occupied at all, except perhaps by squatters.

[Darrel]

I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash.

Nice idea, in the right area. In Pattaya 300k will just about get you an allocated parking space in a decent condo. Or half a small studio in one of those great buildings on Sukumvit with yaba addicts loitering on every landing.

Foreigners just bugger of when they not like it anymore.

You're right there. In the right part of the right town you are onto a winner, I'm sure.

[trogers]

Many empties are bank owned - they have a different philosophy here than Europe - they will set a price and hang on for years, decades sometimes, to reach 'their price'

For sure. There's a big block of low-rise shop/appt units half-way down Jomtien Beach Rd. I was at the gala opening about 20 years ago and I fondly remember the rather classy (free) seafood buffet on the front terrace: some fancy restaurant had set up shop there. Now the whole place looks derelict and most of the units seem to have never been occupied at all, except perhaps by squatters.

Sounds like the Somprasong's commercial cum residential project that went bust during the Asian Financial Crisis (1997-2000). The developer lost a bomb in his venture into China in those days.

[Khun Jean]

I choose to buy only condo's in the lower price ranges and i have no occupancy problems at all. ROI easily around 10%. And because of the lower price range (think 200-400k) all are paid with cash.

Nice idea, in the right area. In Pattaya 300k will just about get you an allocated parking space in a decent condo. Or half a small studio in one of those great buildings on Sukumvit with yaba addicts loitering on every landing.

Foreigners just bugger of when they not like it anymore.

You're right there. In the right part of the right town you are onto a winner, I'm sure.

With realestate it is 'location,location,location', so that is what you have to look for. We all know about deteriorating takes place so when that is spotted with early signs you need to act. Older buildings were mostly workers live are very decent. I 'roll' them over to newer ones. Selling the old one with a decent profit and using that to buy a slightly newer one works fine.

[ezzra]

Hi

It seems that this topic has generated a lively discussion from all point of views

with valid comments and questions,

The situation is that our building use to house many Japanese executives who last year got

Their marching order to pack up and head back home, those people had kids born in Thailand

and i watched them grow up, alas, when the financial melt down has hit the world many expats

and senior management people were sent back home, replacement are at the trickle now and and

RE agents come with potential tenants and with a long list of other properties to show,

It has become so bad that we don't even get a fee offer, let alone negotiate, we use to get

3-4 rental enquiries a day, and hardly one,

Top View Tower is a well maintained, modern building with all the amenities you'd expect to find

in any up to date condominium complex, the unit size are around 116 SQM each tastefully decorated

and each come with personal and assigned parking space,

Top View Tower is situated in a quiet dead end St. hence to thru traffic, with 10 Min walk to Either

thonglor or Ekamai BTS,

The area of soi 57 up to 61 has become very popular with several new mega properties have been

completed and couple more are being built and the competition is stiff,

Since i have posted at a low rent and free 2 month rent, not one enquiry, nil, Nada, ziltz,

and i was always told that investing in bricks and mortar is the safest investment there is,

[whybother]

There is more to it than that. Friends of ours (Thai) own all their condo's outright. They do the sums and in some cases it pays to hold off for quite a long time when they do eventually get a tenant the return is still better than what they'd get from a bank, or what they'd get if they reduced their price get a tenant.

It appears 'dumb' not to lower your rent to move your property...obviously this makes sense if you've got a mortgage on the place.

Most Thai's don't...and thus the leaving it empty strategy often makes more sense than locking in a lower rent.

It isn't stubbornness, for many, it makes financial sense.

How does not renting out a property make financial sense? Every month it is empty is a month that you are losing (or not gaining) money. If you reduce the rent, at least you are getting a return.

[ChiangMaiFun]

Hi

It seems that this topic has generated a lively discussion from all point of views

with valid comments and questions,

The situation is that our building use to house many Japanese executives who last year got

Their marching order to pack up and head back home, those people had kids born in Thailand

and i watched them grow up, alas, when the financial melt down has hit the world many expats

and senior management people were sent back home, replacement are at the trickle now and and

RE agents come with potential tenants and with a long list of other properties to show,

It has become so bad that we don't even get a fee offer, let alone negotiate, we use to get

3-4 rental enquiries a day, and hardly one,

Top View Tower is a well maintained, modern building with all the amenities you'd expect to find

in any up to date condominium complex, the unit size are around 116 SQM each tastefully decorated

and each come with personal and assigned parking space,

Top View Tower is situated in a quiet dead end St. hence to thru traffic, with 10 Min walk to Either

thonglor or Ekamai BTS,

The area of soi 57 up to 61 has become very popular with several new mega properties have been

completed and couple more are being built and the competition is stiff,

Since i have posted at a low rent and free 2 month rent, not one enquiry, nil, Nada, ziltz,

and i was always told that investing in bricks and mortar is the safest investment there is,

sell it? I'm looking for a cheap room in BKK

[Darrel]

The situation is that our building use to house many Japanese executives who last year got

Their marching order to pack up and head back home

That is something of a niche market. Japan has some of the world's most expensive "ordinary" property so everything outside Japan looks absurdly cheap, and Japanese companies probably pay incredibly high wages and expenses also. No real surprise that if that dries up there is no one around to replace them at the same prices.

[ChiangMaiFun]

The situation is that our building use to house many Japanese executives who last year got

Their marching order to pack up and head back home

That is something of a niche market. Japan has some of the world's most expensive "ordinary" property so everything outside Japan looks absurdly cheap, and Japanese companies probably pay incredibly high wages and expenses also. No real surprise that if that dries up there is no one around to replace them at the same prices.

I just got a Japanese executive - so they are still around!