Is There A Market To Rent Out A 1 Bedroom To Thai People

[teammk]

Hi Thaivisa,

I'm thinking to buy a 1 bedroom condo with the purpose to rent it out. However, I have the concern that there no market for it. It is a new LPN condo with swimming pool, fitness center etc. at Ratchadayotin opposite the Major Mall.

The rent would be between 10,000 to 13,000 THB for 28 Sqm.

First I had in mind that I could rent it out to student, as there are 2 universities located very close. One university only 1 Km from the condo. However, I have the feeling that university students would not rent at that high a price. They would rather rent the cheap flats for 5000 baht a month, which have no extras. Furthermore, they tend to share the room with a room mate, so for a 5000 room they would only pay 2500. The condo would then be 5000 THB

Then I was thinking on the office people around this area. I was thinking if people earn between 30,000-40,000 THB why should they spend half of there money for rent if they could take a loan a buy the condo, even if they do not want it they can always sell it and and make a small profit by selling it again.

Foreigners would also not be an option as there is no MRT or BTS yet. However, the BTS is planed but could take another 7 years if ever.

So the only target would be Thai people who are living in this area.

Some say Thai people would rent, as some of them are saving for a car or a house and do not want to take the loan. I'm just thinking again why would they want to rent an expensive 1 bedroom for 10,000 if they can get a flat for 6000 THB and save more?

Please advise

Thank you

[trogers]

A 1-bedroom unit of only 28 sqm?

Putting a partition into a studio unit between the bed and the entrance door does not make it a 1-bedroom unit...

[ShopBoy]

You already have all the answers to your questions.

The only thing now is what you going to do if you can't find any tenant.

[teammk]

You already have all the answers to your questions.

The only thing now is what you going to do if you can't find any tenant.

So you can confirm that my assumptions are right. That there will not be a market??

[trogers]

You already have all the answers to your questions.

The only thing now is what you going to do if you can't find any tenant.

So you can confirm that my assumptions are right. That there will not be a market??

Not correct assumptions. There is a market, but as a studio unit and asking rent should be around Bt8-9k/mth. Redo the maths and see if rental yield is reasonable.

[dave111223]

Surely there has got to be plenty of people working at the SCB Park/Unilever across the street that would looking for room in that price range. Maybe put up some fliers if they bulletin boards around there.

[teammk]

Thank you all for the comments. I appreciate it.

Yes at SCB Park Plaza there would be a lot of people available.

I understand if I would set the rent to be around 8000 to 9000 THB for the studio there would be a market.

I understand that Thai people like the rest of us would like to rent the news. So, I would have the benefit that if people are renting at the elephant condo or else where and their rent term is over there would also be a possibility that they would jump to the new LPN place. However, there will always be the risk that a newer condo would be build they would jump to that.

It is realistic with the mentioned price for let say 10 years to expect at least 33 % occupancy if I'm having a rent contract for a year?

By the way if any of you a page Thai or English that discuss the topic of area developments. Like what plans are there for certain areas, e.g. building new school, malls etc. I would much appreciate to know.

Thank you all for the comments.

You you can advise more, please do. If you know great ways to rent out. How top attract tenants.

Thank you

[ShopBoy]

You already have all the answers to your questions.

The only thing now is what you going to do if you can't find any tenant.

So you can confirm that my assumptions are right. That there will not be a market??

Not correct assumptions. There is a market, but as a studio unit and asking rent should be around Bt8-9k/mth. Redo the maths and see if rental yield is reasonable.

I rented a 1 bedroom (not studio) LPN unit for 8k before.

As teammk said there is a market if you are willing to adjust your rates.

I believe most of the buyers of such condos are buying for investment purpose and most are looking for tenants as well. If a working class person who is willing to fork out 8 - 9 k why not they just buy it as their mortgages could be as low as 4 - 6k per month.

[trogers]

You already have all the answers to your questions.

The only thing now is what you going to do if you can't find any tenant.

So you can confirm that my assumptions are right. That there will not be a market??

Not correct assumptions. There is a market, but as a studio unit and asking rent should be around Bt8-9k/mth. Redo the maths and see if rental yield is reasonable.

I rented a 1 bedroom (not studio) LPN unit for 8k before.

As teammk said there is a market if you are willing to adjust your rates.

I believe most of the buyers of such condos are buying for investment purpose and most are looking for tenants as well. If a working class person who is willing to fork out 8 - 9 k why not they just buy it as their mortgages could be as low as 4 - 6k per month.

And such a working class person shall remain a working class person... looking only at the quantum of monthly mortgage payment without considering length period of the debt. Why would you be a debtor for 25-30 years, paying off loan interest for a third of that duration (and longer should interest rates increase during this time frame) and still owing the principal sum?

[trogers]

You you can advise more, please do. If you know great ways to rent out. How top attract tenants.

Tenants like to rent units that are owner occupied for two main reasons - facilities and equipment are complete (cable tv, internet, etc...) and the unit is not haunted...

I was staying in my 1-bed in sukhumvit when my agent called and brought a client to look at the unit. He moved in 10 days later.

[teammk]

You you can advise more, please do. If you know great ways to rent out. How top attract tenants.

Tenants like to rent units that are owner occupied for two main reasons - facilities and equipment are complete (cable tv, internet, etc...) and the unit is not haunted...

I was staying in my 1-bed in sukhumvit when my agent called and brought a client to look at the unit. He moved in 10 days later.

Thank you very much

Appreciate it.

[AyG]

Lumpini developments usually have a board near the office where people looking to rent out their properties can put notices. Look at the board and you can work out the going rental rate. However, for a studio apartment I rather doubt it will be much higher than 6,000 Baht. The number of notices will also give an indication of occupancy rate. At one development which I know quite well, I would estimate that about 70% of the apartments are empty (though not all are available for rent).

I also wouldn't count on students renting a place; even at 6,000 Baht/month it's too expensive for most students.

[Soutpeel]

Yes at SCB Park Plaza there would be a lot of people available.

I understand if I would set the rent to be around 8000 to 9000 THB for the studio there would be a market.

IMHO opinion you are years too late, I suspect there is not a lot of turn over from people working at SCB park, the only real turn over would be from expats working for the large oil and gas company there and they wouldnt be staying in studio's.

[dave111223]

I suspect there is not a lot of turn over from people working at SCB park

LOL, what have they got Oompa-Loompas working there or something?

[Soutpeel]

I suspect there is not a lot of turn over from people working at SCB park

LOL, what have they got Oompa-Loompas working there or something?

....What I meant was people for the most part who work in SCB and are permanently based there will have bought their own condo'/houses, based on the fact that SCB is a bank and employees of said bank will get discount mortages etc, yes theres Chevron and Unilever there as well, but the vast majority of bodies in SCB plaza work for SCB

[trogers]

I suspect there is not a lot of turn over from people working at SCB park

LOL, what have they got Oompa-Loompas working there or something?

....What I meant was people for the most part who work in SCB and are permanently based there will have bought their own condo'/houses, based on the fact that SCB is a bank and employees of said bank will get discount mortages etc, yes theres Chevron and Unilever there as well, but the vast majority of bodies in SCB plaza work for SCB

OP has already said he is looking at local tenants. Foreign tenants will be a bonus. Where there is a concentration of people, there is a market, irregardless of how mature that locality is. What is most important is the location of the condo with respect to commercial activities and mass transport.

Edited December 17, 2011 by trogers