Buying A Discounted Condo - Any Advice?

[trogers]

I'm not getting 8% elsewhere. But my London property has a yield of 6-7%. I'd have to borrow against that to buy here, so no point borrowing to make 5% yield here. Especially with added currency risks, etc.

One final point. I did read about people buying condos in older buildings and renovating for resale or rent. Do you think this is a viable option?

It is possible to get over 8% net rental yield (after deducting maintenance and agency fee) for studio and 1-bedroom units if you buy into older projects and self-renovate them.

Do you know a good place to start looking for these types of condos? Or is it a matter of just visiting some older buildings and asking what's for sale?

Look through the rental sections for older projects and note down their locations and visit them to check out their occupancy rates,location and the environment. High occupancy, reasonable asking rents and selling prices point the way.

[w11guy]

I'm not getting 8% elsewhere. But my London property has a yield of 6-7%. I'd have to borrow against that to buy here, so no point borrowing to make 5% yield here. Especially with added currency risks, etc.

One final point. I did read about people buying condos in older buildings and renovating for resale or rent. Do you think this is a viable option?

It is possible to get over 8% net rental yield (after deducting maintenance and agency fee) for studio and 1-bedroom units if you buy into older projects and self-renovate them.

Do you know a good place to start looking for these types of condos? Or is it a matter of just visiting some older buildings and asking what's for sale?

Look through the rental sections for older projects and note down their locations and visit them to check out their occupancy rates,location and the environment. High occupancy, reasonable asking rents and selling prices point the way.

Thanks, I'll check that out.

[w11guy]

All banks do it, many have them on their websites.

Plenty of cr@p on them, but the odd gem.

I'll try a few and see what shows up. Very helpful advice. I now have two avenues to check. Cheers everyone.

[Jebhead]

Go into a bank and ask for a list of bank owned properties.

Look into the Srinakarin area, i have a condo that is for sale in that area and it is currently undergoing major development with bridges and widened roads as well as a tunnel and mini shopping mall. This area is booming for sure, and you will not lose.

With the bank repo's you'll find that all the decent properties to go buddy buddy somewhere before you have a chance. Normally it's just the shit that buddy buddy does not want that is left....

JH

[london]

London - thanks for that detailed reply - it's very helpful. Here are some comments on the points raised.

First of all I don't think it's unrealistic to get a 20% discount. I know this is some time ago, but the first property I ever bought in London I offered over 25% below the asking price and my offer was accepted. The apartment had been on the market for over a year. I'm not saying this is at all common but it is what I am looking for. I may never find it, but I know plenty of people that have had similar discounts. It takes extra work to find these offers, but they are available. But if someone had a condo for sale for 5m baht, I'm pretty sure they wouldn't just say ok if I offered 4m baht. But there are plenty of distressed sellers around these days and they would rather get 4m than wait a year or two for 5m. I don't intend to beat them down on price and make them fee bad, but if they are offering a condo at 20% discount for a very quick sale, then I'm not going to offer more than they've asked just to make them feel better.

But herein lies the problem. As you have pointed out, Thais don't like to take a loss on their property, so if there are condos for sale for 5m and not selling and then a farang wants to leave Thailand and only wants 4m for his condo, then which price is 'real'. the 4m condo may be the true market price and may not be discounted at all. This also leads to another point that you raise about people always saying that property prices will drop but they never do. I tend to agree with you here, because it's just something that is always said. But if Thais never sell at a loss, then this gives a very distorted view of prices. If condos sold for 5m and then there was a property crash, but people still tried to sell at 5m, then it may not be obvious that there is a property crash. All this means is that sellers are asking inflated prices. This doesn't mean that the true value hasn't drop. For me, the real price is what you could realistically sell for if you need to sell fairly quickly, in say 3-6 months. If a 5m condo has been on sale for 2 years and still hasn't sold, then it is clearly not worth that much, even if the owner paid 5m for it and holds out for 10 years until they get it. From what I've seen myself there is a huge amount of unsold condos that have been empty for years. This to me means over supply and downward pressure on prices.

But I think the problem here is that there is no reliable way to know what prices condos sold at. I'm pretty sure that what I read in the press is the prices on new condos, so those are advertised prices and not the prices that they were actually sold at. So how does anyone know if prices are going up or down? For example, if you bought a condo 5 years ago for 5m and you now think it's worth 7m, could you actually sell it for that price in 3-6 months? There has to be a way to exit the market.

All this kind of reminds me of some people who buy shares when they are £5, but when the price drops to £3 they claim they haven't lost any money because they won't sell them until they're above £5. And they will stick to this even if they own them for 20 years and die before selling them. LOL.

I will try to find the details of the condo I saw at a reduced price. I remember reading it and think it was interesting, but it didn't suit me, so I ignored it. It wasn't rented out though. I just worked out the yield by using current rental prices in the building. Of course, if there were no many empty units in the building it may not have been possible to let out at that price, or at all. I will definitely try to find it, but it was about 3-6 months ago so may be sold by now.

The first rental property I ever bought in the UK (in a dodgy area) had a yield of 25%. I know things have changed, but I think a yield as 5% isn't taking into account the true risk involved. Yes it may be ok for years to come, but when it ends people will realise that it wasn't so good after all. Maybe I am just more cautious than most. But if you're not getting 8-10%, then what's the point? Just seems to low to me for all the hassle involved.

I'm not getting 8% elsewhere. But my London property has a yield of 6-7%. I'd have to borrow against that to buy here, so no point borrowing to make 5% yield here. Especially with added currency risks, etc.

You have given me plenty to think about and maybe this isn't for me just yet. I'll do a bit more research and see what I come up with. I'm still at an early stage and still have my doubts about the market here. In particular, I read that farang buyers are down form around 40% to under 20% in the last few years. This is bound to have a big effect on farangs trying to sell, as there are less other farangs to buy their properties from them.

One final point. I did read about people buying condos in older buildings and renovating for resale or rent. Do you think this is a viable option?

Hi W11guy,

thanks for taking the time to respond. Appreciated.

Re the 20%. Yes, what you say IS possible, but I suspect only with a farang buyer, as you have already pointed out.

This leads to my current feeling about whats happening here: there is an influx of buyers from outside Asia (as well as a substantial inflow from Asia as a whole) and its is this buying that intrigues me. Why?

Well, certainly a great deal of it is related to "lifestyle" property: Phuket, Pattaya etc...but there is a HUGE (yes H U G E ) amount of money inflowing into Bangkok for Hi End condos.

The reasons I feel are fairly straight forward: cost (lower than many other parts of the world for comparable property) Lifestyle (yes, Bangkok, as you are aware is a very cosmopolitan and livable city) and finally, diversification. This last point will make some members smile, BUT I do believe that many Europeans and Americans who still have money left are seeking other areas of the planet to diversify what they have left and feel that Bangkok is relatively secure AND is a hub of Asia. Certainly, I know of at least 6 people who fall into this final category.

If there is a farang trying to sell out at a substantial discount, I would be more concerned about the building than with the discount. Certainly, with the properties I have seen recently, nothing is really on the market that long and in one example, less than 30 minutes and the unit was sold....to a farang incidentally.

W11guy, honestly, there IS a way of finding what a property previously sold for: as the management office. They have records. I am always interested to know trends in a building too, so if a building increases year on year, thats a great sign for me.

Also, check out property in Malaysia. I bought 3 years back and the price has doubled. No, I am not bragging, just as a matter of interest. There are still bargains there. It is a 3 b/room, study, lounge/dining, maids quarters and 3 bathrroms in one of the better areas.

Re buying and renovating: yes, it is viable...depending on the building. If people want to live there, they will pay a premium for a renovated property if it matches their dreams.

Really, I would just buy something here with a moderate yield and sit on it......thats what I have done. Every year the rent has increased and every year the property has gone up.

There's always naysayers W11guy....as you would know. Just go with your gut feeling.

Regards and good luck with it !

[Darrel]

You state that you are "looking for a discount of AT LEAST 20%" on what I assume is the market price of a unit. This, frankly, is totally unrealistic. If units in Condo X sell for 4 million for the type you are looking for, no-one will sell for 3.2 million. It just doesn't happen here, based on my 15 years in Bangkok...or nearly anywhere else on the planet .....

I know nothing about BKK property and dont want to. I'm not very interested in new builds also, so I wont comment on them either.

However, if you get on a bus and pop down to Pattaya (not a million miles away, and certainly on the same planet), I will show you several resale units currently on sale that I know for a fact can be had for a discount in excess of 20% of the asking price.

I can also show you several units that I know have sold recently for discounts in excess of 40% of the average asking price for similar units in the same building.

I can show you units currently being advertised for 25% less than other similar units in the same building.

I can show you units that are being advertised (truthfully) as "reduced by (equiv.) 25% for quick sale".

The point being that as far as I can see the asking prices are not (with very few exceptions) related to actual selling prices. Here, at least, most units advertised at the 4MB you mention dont sell at that price. They sell for much less, if at all. Quite probably something near the 3.2MB you also mention.

Maybe BKK is different. I dont know.

Edited August 14, 2011 by Darrel

[Darrel]

..... there IS a way of finding what a property previously sold for: as the management office. They have records.

They only know what they are told, if that.

[w11guy]

Great replies from London and Darrel. Thanks. Here are some additional thoughts from me.

Darrel - do you know why these units in Pattaya are being sold at a discount? Is it possible that these are the real prices and the more expensive ones in the building are just advertised at unrealistic prices that don't sell. If I had two condos next door to each other that were worth 4m each, I could put on sale for 5m and say the other is on sale at 4m (a 25% discount). In reality there is no discount at all. But maybe something else is going on in Pattaya. People talk of Pattaya booming, but I think they mean there is a construction boom and not a price boom. Personally I don't buy lifestyle property, as I think it is too risky. Yes, I'm sure you can make lots of money if you know what you're doing, but when there is a recession, property price correction, or something similar, then these are the first properties to be ditched.I would rather invest where there is a local market and where people want to and need to live. For me that is safe, but that's just my personal choice. But thanks for pointing that out. I know you can get properties at 20% discount almost anywhere in the world. Maybe not in every area and not all the time, but I'm in no rush. Look at any market and eventually a problem arises to correct prices. The same will happen in Pattaya. It may be the in place now, but fashions change and soon another country will be the in place and Pattaya property won't seem such a good investment. I remember people telling me about how Dubai was such a fantastic opportunity that I would kick myself if I missed it. And we all know what happened there. Risky investments can bring big rewards and big losses. Nothing wrong with that, but just not what I want.

What sort of property have you been buying in BKK? You say to go with my gut feeling, but my gut feeling is that something is terribly wrong here. The more I investigate, the more it seems that there is a huge oversupply of property. There may be particular reasons in certain buildings, but for example, I saw a condo advertised in Yen Akart. The advert said that only a few units were left for sale. And this was in a building that was completed two years ago. So I doubt they have raised prices, which means that in that particular building prices haven't risen at all in two years. Take inflation into account and it means they have dropped.

I also came across this, which sounds pretty alarming to me...

Its figures show there were more than 135,000 unsold property units in Bangkok and its suburbs as of July 2011, including projects under construction. Another 100,000 units are expected to come in to the market next year.

AREA president Sopon Pornchokchai said he could foresee an “upcoming bubble”.

“If something happened to our economy or politics, it could cause the bubble to burst,” he said.

I was looking for a rental property for myself a few months ago and almost every building I visited had many properties for rent and/or sale. It's just not something I'm used to seeing in the UK.

London mentioned hi-end condos. I also read about this. They were called super-prime, with the latest example being MahaNakhon next to Chong Nonsi BTS. They are doing roadshows in Hong Kong and Singapore, and rich buyers from these areas want to diversify and see Bangkok as a good investment. Super prime is in a class of it's own though. Super prime properties in London have gone up in price substantially in London in the last 2 years, while some parts of London and most of the UK have see prices falling.

So I'm starting to get a better picture of the property market here and still think things could fall apart. But it could also carry on and take off again. So I want to be at least a little cautious. I want to buy in a better area of Silom, Sukhumvit and not further out. along BTS lines. When things fall apart it is the less desirable areas that tend to suffer the most.

So, London, that's why I'm interested to know what types of properties have worked for you. And are the management of buildings pretty open to giving out past sales data? And can they be trusted? And how do you source the properties you buy - estate agents, private sales, just checking buildings yourself, friends?

My other option is to buy somewhere that I would actually be happy to live myself, as then even if I was stuck with the property, I could still use it myself. I am planning to stay a while, so maybe this could be my first step into the market.

[snarky66]

You are a little confused on one point. In the building phase & presales it is the developer who handles the marketing & sales. Once all the units are sold that company clear off. Then the owners form an association, select a juristic person. Then a little office gets set up to handle owners affairs. They are what you might consider "management". However they have nothing whatever to do with sales.

Sales are either a private person selling his/her unit or much more commonly agents. And there can be many of those. Which is why comparing selling prices could be tricky.

Clearly you compare based on price per square meter. For that you would really need to talk with owners.

I know in RST there were 2 such offices of agents handling sales & also rental properties. The idea of a 20% discount is going to keep you out of a lot of nice properties. Thai would raher they sit empty rather than sell for below whatever price they have fixed in their minds. Me personally I think there are bargains to be had in Baan Onnut. An onsite agent I know there is Khun Eid. She will be delighted to show you the units that are for sale. Make a counter offer & see if they take it.

[london]

Great replies from London and Darrel. Thanks. Here a

What sort of property have you been buying in BKK? You say to go with my gut feeling, but my gut feeling is that something is terribly wrong here.

I also came across this, which sounds pretty alarming to me...

Its figures show there were more than 135,000 unsold property units in Bangkok and its suburbs as of July 2011, including projects under construction. Another 100,000 units are expected to come in to the market next year.

AREA president Sopon Pornchokchai said he could foresee an "upcoming bubble".

"If something happened to our economy or politics, it could cause the bubble to burst," he said.

So I'm starting to get a better picture of the property market here and still think things could fall apart. But it could also carry on and take off again. So I want to be at least a little cautious. I want to buy in a better area of Silom, Sukhumvit and not further out. along BTS lines. When things fall apart it is the less desirable areas that tend to suffer the most.

So, London, that's why I'm interested to know what types of properties have worked for you. And are the management of buildings pretty open to giving out past sales data? And can they be trusted? And how do you source the properties you buy - estate agents, private sales, just checking buildings yourself, friends?

My other option is to buy somewhere that I would actually be happy to live myself, as then even if I was stuck with the property, I could still use it myself. I am planning to stay a while, so maybe this could be my first step into the market.

Hi again,

OK, answers are:

I have held onto most of the properties I have bought here over the last 15 years, selling only 1 last year for a reasonable profit. The reason was that I wanted some additional capital for a development in Indonesia.

I have only ever bought properties I would be prepared to live in (like you, it appears). Not the surest way of financial gain, but one I am comfortable with. Always in 4 - 5 star buildings that are well maintained with good management.

You say your "gut" feeling is telling you that something is wrong here....then stand back for a while. The market isn't going to rush ahead and it may come down. My feeling still is of a consolidation phase.

I have never had an issue of getting prices from management offices or their accuracy. They handle all the sales data so they have it available, If they don't, that tells me a lot about the management. Simple.

When I first came here I approached a number of large international agents.....BIG mistake. Now I approach the buildings directly. More clarity and less interference.

Re Pattaya: honestly, I have little experience of this market, so I cannot comment on posts but would assume that they are accurate in detailing discounts that are currently available. I did investigate buying properties down there and at Jomtien around 4 years ago, BUT the quality of the buildings, the design and construction left a lot to be desired...so I walked away.

w11guy, really, with the concerns that you are feeling and what your gut feeling is telling you, I would honestly stay out of the market. I can't see any meteoric rise on the horizon and if anything if the market does come back, then it would be a good opportunity to buy.

In this current economic climate where fear and uncertainty rule the hearts and minds of investors, just wait for some clarity.

Regards

[london]

..... there IS a way of finding what a property previously sold for: as the management office. They have records.

They only know what they are told, if that.

The well managed ones do. This I can confirm from experience.

Also, they will often be able to show me a complete sales history of an apartment with copies of the contracts of sale.

[london]

Go into a bank and ask for a list of bank owned properties.

Look into the Srinakarin area, i have a condo that is for sale in that area and it is currently undergoing major development with bridges and widened roads as well as a tunnel and mini shopping mall. This area is booming for sure, and you will not lose.

With the bank repo's you'll find that all the decent properties to go buddy buddy somewhere before you have a chance. Normally it's just the shit that buddy buddy does not want that is left....

JH

From my experience 100% correct !!!

[w11guy]

London - I'll follow your advice and just wait a while. I'll keep looking though, and if an opportunity turns up I'll be ready. I'll also start building a list of possible buildings, so I know what's what.

On a slightly different note, have you ever bought a house here. Some of the townhouses on the sois would sell for £millions in London, but here they just seem to remain mostly dilapidated. Even ones close to central areas seem very uncared for. I think people in the UK would love these townhouses, especially for the space they offer. But here it seems like people prefer condos. I know there are issues with ownership, but is renovating a townhouse viable, or aren't there any end-users to sell to? You would have buyers queueing up to buy them in many parts of London. So different here.

[london]

London - I'll follow your advice and just wait a while. I'll keep looking though, and if an opportunity turns up I'll be ready. I'll also start building a list of possible buildings, so I know what's what.

On a slightly different note, have you ever bought a house here. Some of the townhouses on the sois would sell for £millions in London, but here they just seem to remain mostly dilapidated. Even ones close to central areas seem very uncared for. I think people in the UK would love these townhouses, especially for the space they offer. But here it seems like people prefer condos. I know there are issues with ownership, but is renovating a townhouse viable, or aren't there any end-users to sell to? You would have buyers queueing up to buy them in many parts of London. So different here.

Hi w11guy,

no, as a foreigner we cannot own land here, so you would have to buy it under a nominee or local person.

I am uncomfortable with this. If I am putting good money out, I want the security of knowing that I own it....not in someone else's name. Too risky BY FAR !

You are correct though: the opportunities WOULD be there IF we could.

Regards

[Darrel]

Darrel - do you know why these units in Pattaya are being sold at a discount? Is it possible that these are the real prices and the more expensive ones in the building are just advertised at unrealistic prices that don't sell. If I had two condos next door to each other that were worth 4m each, I could put on sale for 5m and say the other is on sale at 4m (a 25% discount). In reality there is no discount at all.

The gentleman wins a cigar.

Pattaya is awash with resale properties being advertised at hugely inflated prices. And they hang around for months or years on end, often until the owner dies and the executors of his estate drop the price 30% to get a sale. Other instances that I have personal experience of are owners being incarcerated, getting ill, getting divorced etc. etc. and needing to sell in what would be described as a normal time-frame in most developed countries (1-2 months). To achieve that here, agents will recommend a 25-30% drop on average asking prices. And even then they dont always sell.

[PattayaParent]

The reasons I feel are fairly straight forward: cost (lower than many other parts of the world for comparable property) Lifestyle (yes, Bangkok, as you are aware is a very cosmopolitan and livable city) and finally, diversification. This last point will make some members smile, BUT I do believe that many Europeans and Americans who still have money left are seeking other areas of the planet to diversify what they have left and feel that Bangkok is relatively secure AND is a hub of Asia. Certainly, I know of at least 6 people who fall into this final category.

More likely Singaporeans and Hong Kongers as prices there are so high.

[w11guy]

The reasons I feel are fairly straight forward: cost (lower than many other parts of the world for comparable property) Lifestyle (yes, Bangkok, as you are aware is a very cosmopolitan and livable city) and finally, diversification. This last point will make some members smile, BUT I do believe that many Europeans and Americans who still have money left are seeking other areas of the planet to diversify what they have left and feel that Bangkok is relatively secure AND is a hub of Asia. Certainly, I know of at least 6 people who fall into this final category.

More likely Singaporeans and Hong Kongers as prices there are so high.

That's who Maha Nakhon is being market to at the moment.

[Darrel]

The idea of a 20% discount is going to keep you out of a lot of nice properties. Thai would raher they sit empty rather than sell for below whatever price they have fixed in their minds.

There are many farangs in Pattaya with the same deluded attitude.

Personally I would rather not buy than pay an absurdly high price that some idiot has plucked out of thin air.

It doesnt matter which building you look at, sooner or later someone will be selling a unit at a realistic price there because they actually want to sell it, and not because they have put it on at a silly price just in case some pigeon drops in.

All you need to do is wait.

[Darrel]

..... there IS a way of finding what a property previously sold for: as the management office. They have records.

They only know what they are told, if that.

The well managed ones do. This I can confirm from experience.

Also, they will often be able to show me a complete sales history of an apartment with copies of the contracts of sale.

Are you sure that you arent talking about developer sales ie not resales? In that case, yes, the sales office will know.

[w11guy]

The idea of a 20% discount is going to keep you out of a lot of nice properties. Thai would raher they sit empty rather than sell for below whatever price they have fixed in their minds.

There are many farangs in Pattaya with the same deluded attitude.

Personally I would rather not buy than pay an absurdly high price that some idiot has plucked out of thin air.

It doesnt matter which building you look at, sooner or later someone will be selling a unit at a realistic price there because they actually want to sell it, and not because they have put it on at a silly price just in case some pigeon drops in.

All you need to do is wait.

Yes, good advice.

Also, just to clarify, it doesn't matter if I'm kept out of a lot of nice properties - I'm only looking for one property.

[PattayaPhom]

London - thanks for that detailed reply - it's very helpful. Here are some comments on the points raised.

First of all I don't think it's unrealistic to get a 20% discount. I know this is some time ago, but the first property I ever bought in London I offered over 25% below the asking price and my offer was accepted. The apartment had been on the market for over a year. I'm not saying this is at all common but it is what I am looking for. I may never find it, but I know plenty of people that have had similar discounts. It takes extra work to find these offers, but they are available. But if someone had a condo for sale for 5m baht, I'm pretty sure they wouldn't just say ok if I offered 4m baht. But there are plenty of distressed sellers around these days and they would rather get 4m than wait a year or two for 5m. I don't intend to beat them down on price and make them fee bad, but if they are offering a condo at 20% discount for a very quick sale, then I'm not going to offer more than they've asked just to make them feel better.

But herein lies the problem. As you have pointed out, Thais don't like to take a loss on their property, so if there are condos for sale for 5m and not selling and then a farang wants to leave Thailand and only wants 4m for his condo, then which price is 'real'. the 4m condo may be the true market price and may not be discounted at all. This also leads to another point that you raise about people always saying that property prices will drop but they never do. I tend to agree with you here, because it's just something that is always said. But if Thais never sell at a loss, then this gives a very distorted view of prices. If condos sold for 5m and then there was a property crash, but people still tried to sell at 5m, then it may not be obvious that there is a property crash. All this means is that sellers are asking inflated prices. This doesn't mean that the true value hasn't drop. For me, the real price is what you could realistically sell for if you need to sell fairly quickly, in say 3-6 months. If a 5m condo has been on sale for 2 years and still hasn't sold, then it is clearly not worth that much, even if the owner paid 5m for it and holds out for 10 years until they get it. From what I've seen myself there is a huge amount of unsold condos that have been empty for years. This to me means over supply and downward pressure on prices.

But I think the problem here is that there is no reliable way to know what prices condos sold at. I'm pretty sure that what I read in the press is the prices on new condos, so those are advertised prices and not the prices that they were actually sold at. So how does anyone know if prices are going up or down? For example, if you bought a condo 5 years ago for 5m and you now think it's worth 7m, could you actually sell it for that price in 3-6 months? There has to be a way to exit the market.

All this kind of reminds me of some people who buy shares when they are £5, but when the price drops to £3 they claim they haven't lost any money because they won't sell them until they're above £5. And they will stick to this even if they own them for 20 years and die before selling them. LOL.

I will try to find the details of the condo I saw at a reduced price. I remember reading it and think it was interesting, but it didn't suit me, so I ignored it. It wasn't rented out though. I just worked out the yield by using current rental prices in the building. Of course, if there were no many empty units in the building it may not have been possible to let out at that price, or at all. I will definitely try to find it, but it was about 3-6 months ago so may be sold by now.

The first rental property I ever bought in the UK (in a dodgy area) had a yield of 25%. I know things have changed, but I think a yield as 5% isn't taking into account the true risk involved. Yes it may be ok for years to come, but when it ends people will realise that it wasn't so good after all. Maybe I am just more cautious than most. But if you're not getting 8-10%, then what's the point? Just seems to low to me for all the hassle involved.

I'm not getting 8% elsewhere. But my London property has a yield of 6-7%. I'd have to borrow against that to buy here, so no point borrowing to make 5% yield here. Especially with added currency risks, etc.

You have given me plenty to think about and maybe this isn't for me just yet. I'll do a bit more research and see what I come up with. I'm still at an early stage and still have my doubts about the market here. In particular, I read that farang buyers are down form around 40% to under 20% in the last few years. This is bound to have a big effect on farangs trying to sell, as there are less other farangs to buy their properties from them.

One final point. I did read about people buying condos in older buildings and renovating for resale or rent. Do you think this is a viable option?

' But there are plenty of distressed sellers around these days and they would rather get 4m than wait a year or two for 5m.'

If thats the case, then why havnt you snapped up one of these bargains from the plentiful distressed sellers that are out there?

[w11guy]

' But there are plenty of distressed sellers around these days and they would rather get 4m than wait a year or two for 5m.'

If thats the case, then why havnt you snapped up one of these bargains from the plentiful distressed sellers that are out there?

As already stated, I'm new to the Bangkok market and still learning what's going on. I have seen plenty of 20%+ discounts from farangs who say they are leaving Thailand. But I'm not sure whether the discounts are real, because Thai sellers may be asking inflated prices. Also, while some may be genuine, they aren't in areas or building that I'm interested in. For me, property investing isn't about buying the first property you see. It's about taking your time and finding the right one at the right price. This may take a week, a year or longer. It may even never happen for me in Bangkok. I have a lot of things to weight up, and my statement was just meant to show that there are lots of discounted properties out there. Whether they are good value is another thing entirely. I know what's worked for me in the past and am comfortable with that way of investing. I'm not going to change my investing strategy just because a property developer I've never met wants me to.

Edited August 15, 2011 by w11guy

[PattayaParent]

^if those sellers bought 5 years ago then the exchange rate has dropped 25% since then so a 20% discount in Baht means they are still making a profit in Pounds / Dollars.

[w11guy]

^if those sellers bought 5 years ago then the exchange rate has dropped 25% since then so a 20% discount in Baht means they are still making a profit in Pounds / Dollars.

Yes that's true, but whether they make a profit or not is irrelevant to me. I'm only interested in my purchase,

[Darrel]

I have seen plenty of 20%+ discounts from farangs who say they are leaving Thailand. But I'm not sure whether the discounts are real, because Thai sellers may be asking inflated prices.

Depending on which building you are interested in, there may be a huge difference in both value and asking price between farang-owned units and Thai-owned units. It all depends on the quotas.

This is certainly the case in many Pattaya buildings. Indeed there are several buildings here where many Thai-name quota units remain unsold from the developer after several years, even in nice buildings that command high prices per sqm.

[w11guy]

I have seen plenty of 20%+ discounts from farangs who say they are leaving Thailand. But I'm not sure whether the discounts are real, because Thai sellers may be asking inflated prices.

Depending on which building you are interested in, there may be a huge difference in both value and asking price between farang-owned units and Thai-owned units. It all depends on the quotas.

This is certainly the case in many Pattaya buildings. Indeed there are several buildings here where many Thai-name quota units remain unsold from the developer after several years, even in nice buildings that command high prices per sqm.

I'd never even thought of that aspect of things. I know about the quotas, but didn't think it through enough to realise that there could be two distinct markets in one building.

[Darrel]

I know about the quotas, but didn't think it through enough to realise that there could be two distinct markets in one building.

The difference is often very significant, if not huge.

In condos where there is a strong demand from farangs you will find farang-name units, Thai-name and also company-name which fall into the Thai-name quota. Company-name units are mostly owned by farangs as a way around the quota system. Most people who arent trying to sell/buy company-name property would probably describe company-name as not being clearly legal.

In buildings that are not popular with farangs it isnt an issue, of course, and there is no supplement for buying in farang-name, apart from the extra that a vendor may think they can milk you for.

[PattayaParent]

^if those sellers bought 5 years ago then the exchange rate has dropped 25% since then so a 20% discount in Baht means they are still making a profit in Pounds / Dollars.

Yes that's true, but whether they make a profit or not is irrelevant to me. I'm only interested in my purchase,

But my point is you may not be getting a 'real' 20% discount, just be paying the 'real' price.

[w11guy]

^if those sellers bought 5 years ago then the exchange rate has dropped 25% since then so a 20% discount in Baht means they are still making a profit in Pounds / Dollars.

Yes that's true, but whether they make a profit or not is irrelevant to me. I'm only interested in my purchase,

But my point is you may not be getting a 'real' 20% discount, just be paying the 'real' price.

I'm only interested in buying at a discount to the current 'real' price, which is probably hard to determine. In part, to protect myself from currency fluctuations.

To simplify it, I want to avoid buying a new condo from a developer at the full asking price. I personally think they're nearly all overpriced at the moment. I could be wrong, but that's my gut feeling. So if i get a good discount, it will offer me some protection. That's all I want. Things can and do go wrong with property investing and if you have a bit of a cushion it offers you some protection.

Edited August 15, 2011 by w11guy

[ExpatJ]

The OP states he wants a 20% discount...so even if a condo is 50% less than the others advertised would he still demand a 20% discount just for the sake of it?...He moans about greedy vendors and landlords yet he is happy to pay 70K sqm for a 50sqm condo and wants AT LEAST 8% yield, so probably 10%....that then equates to a monthly rental of almost 30K a month for a 50sqm condo........hmm...whats that saying...talk about calling the kettle black. Sometimes a real bargain does appear as the seller is desperate but just to want a 20% discount befor even contemplating anywhere seems a bit inappropriate.

You don't seem to be able to comprehend that i am looking for something quite specific. My investing rules have worked quite well in a few countries so I see no reason for them not to work here. The 8% yield has to be there in a market like this, otherwise there is a danger that the investment will lose money. Many think that property prices in BKK could drop 10-20% in the next year or two, so a 20% discount is essential, just so that I don't end up in negative equity. If I can't get 8% yield, then there is no point buying because I can get close to that elsewhere without the hassle.

I have been searching the real estate market in Bangkok for about 2 years looking for a good quality 1 or 2 br condo for 5-10 million baht in a prime location- i haven't seen any that come close to 8% yield- most are around 5-6%. Like you i also think there is a bubble right now so i have decided to wait and have put my cash to work in gold and equities. Indonesia has very high rental returns btw, im getting 8% on my condo in Jakarta after taxes, and after all fees including very high maintenance fees (300 US$ a month).

You mention that you can get a 8% return "elsewhere without the hassle"- seems hard to believe, can you tell us what it is?