Purchasing An Investment Condo In Bangkok

[dmbd]

Hi all,

I was recently in Bangkok and the prices of apartments are considerably cheap for a single room condo in a new development. Sure the rental return will not be as high as say in Australia, but the initial outlay is much much less. I am only 28 years old, working as an engineer in Australia and don't plan on retiring for quite some time

I was considering buying a new off the plan single unit apartment as a small investment. Sure its not going to give me a huge return in Australia (probably say 12,000 baht a month or so). I could just about pay off an apartment in 1 year which would be pretty good and then the apartment is purely just an income driver.

I'm not sure how many people here have purchased apartments in Bangkok when they live in Australia, the rules on tax, the rules on keeping the money in a bank in thailand and setting up a bank account in thailand for rental to be paid into and for me to transfer money from Australia to pay for the loan, body corporate fees, management fees etc etc,

I am considering a condo near Sukhumvit Soi 24 which is about to commence.

Does anyone have any advise, points, experience that they might be able to help with?

Thanks for your help.

David

[GreenSnapper]

Don't do it.

Your post shows you haven't done any research.

Read the real estate forum for 6 months and visit some of those 'cheap' places 10 years later.

You are too young to burn money like that.

[ExpatJ]

Hi

In general, I would recommend buying a condo if you are looking for a stream of revenue rather than just trying to buy and sell it soon after for a profit (prices likely to go down , not up, in short term). Based on my experiece, i would recommend saving up and buying one higher end condo for say 3-4 00,000 USD rather than 3-4 condos at 100,000 - it takes time to manage a condo (looking for tenants, responding to tenent requests, following up etc) and if you have another fulltime job it will be tricky to manage more than one unit. I bought one high end one 4-5 years ago and i also pay an agent to manage the tennants for me so i get the slightly reduced revenue (agent costs me about 1000$ per year) with alomost no effort on my part.

Buying around suk 24 is good, likely to increase in value alot in med-long term 15-20 years.

Edited January 16, 2012 by ExpatJ

[PattayaParent]

I'd say go for it if you're guaranteed continued current employment and you can pay it off quickly.

The location is good and should have no problems renting or selling in the future.

And at the end of it you have somewhere to live in the future.

[SlyAnimal]

Green snapper you said prices go down a lot. How much roughly? I'm also thinking about investing in a couple of apartments over here, since from talking to an agent, the return sounds similar to in Nz (8%ish) but with less tax. However most apartments in Nz retain their value (only decreasing in real terms due to inflation), if apartments in Bkk often lose value then this may change my perspective

[dmbd]

I should have probably said I was thinking of spending about 2-2.5m baht so it won't be anything too flash, more so a small single bedder.

Anyone know how this works with tax in Aus and for visas?

[bonobo]

I wouldn't recommend it.

I bought a condo in a fairly upscale development, but I needed a place to stay. Other's bought condos as investments, and I have seen units for rent now for over a year with no takers. And this is for a development which has pretty heavy advertising.

A Thai friend of mine who has done very well in real estate has gotten completely out of the condo market and now only buys commercial real estate. I know that as a foreigner, it is a condo or nothing, but the fact that he has abandoned the condo market still should carry some weight.

[GreenSnapper]

Green snapper you said prices go down a lot. How much roughly? I'm also thinking about investing in a couple of apartments over here, since from talking to an agent, the return sounds similar to in Nz (8%ish) but with less tax. However most apartments in Nz retain their value (only decreasing in real terms due to inflation), if apartments in Bkk often lose value then this may change my perspective

Don't talk to agents. They will tell you anything to get their commission.

About prices in Suk 24: one square meter is now around 120,000 Baht or more. Is that really cheap, considered that they are poorly built by Burmese workers for 30 Baht/hour.

You cannot compare with NZ or OZ. In both countries, you will have a proper maintanance which is often lacking in Thailand. That's why I said, go and see 10 year old buildings how run down many of them are, and you may reconsider your plans of purchase.

One more remark: there is a high demand for condos in Bangkok without question. But the big majority of Thais cannot afford condos for 5+ Million Baht. Nobody would finance them.

So the only people who buy them are rich Thais or foreigners.

[wamberal]

My (Thai) wife and I live in an apartment building in SE Queensland. Maybe one day in the future, we will end up in BKK. If we do, one thing for certain is that I would only consider buying into a building with good management.

The building we live in is 25 years old. There are 60 odd units, we pay an average of $10,000 per annum each into the big bucket which pays our ongoing building expenses, pays for the on-site managers (a husband and wife, who man the office and do the basic chores) and on-going building maintenance. In the last four years we have replaced the lifts (very expensive) and painted the whole building. The owners elect a management committee, and we retain the services of a specialist management company to look after the legal and other stuff.

Over the years I have read several horror stories about what happens to condonimium developments in Thailand when things go wrong. Is there a well understood, fairly adjudicated, body of law that covers disputes, financial problems, etc etc in Thailand? I douby it.

An earlier poster mentioned something about the value of condominiums in 15 or 20 years time. The value could be nil, frankly. That is what I would be worried about.

[Hooters]

Dont listen to people who have never bought and rely on rumours only. Most of them dont have a bean and strugle to survive on the breadline, why the haunt the condo threads full time is beyond me

I own 2 condos untill last friday where the condo I bought off the plan on sukhumvit 101 was sold to a Japanese fellow for a very tidy profit but I did do some reasearch before I bought

1. I bought after viewing the Bts extensions before the new stations were built and then soucred a condo that would be near

the proposed Bts and made sure it would be built around the same time the condo would be completed.

Well the Bts was a year late but at least the tracks had been laid

2. that condo was built on progressive deposit meaning the downpayment was split into 24 months so you could view the progress and pay accordingly so there is pretty much zero risk of losing your depost due to inactive production.

3 buy on the highest floor available the extra money is well worth it

4. Go for it, some new BKK condos have doubled in price in the last 7 years

Edited January 16, 2012 by Hooters

[jimbeam1]

My (Thai) wife and I live in an apartment building in SE Queensland. Maybe one day in the future, we will end up in BKK. If we do, one thing for certain is that I would only consider buying into a building with good management.

The building we live in is 25 years old. There are 60 odd units, we pay an average of $10,000 per annum each into the big bucket which pays our ongoing building expenses, pays for the on-site managers (a husband and wife, who man the office and do the basic chores) and on-going building maintenance. In the last four years we have replaced the lifts (very expensive) and painted the whole building. The owners elect a management committee, and we retain the services of a specialist management company to look after the legal and other stuff.

Over the years I have read several horror stories about what happens to condonimium developments in Thailand when things go wrong. Is there a well understood, fairly adjudicated, body of law that covers disputes, financial problems, etc etc in Thailand? I douby it.

An earlier poster mentioned something about the value of condominiums in 15 or 20 years time. The value could be nil, frankly. That is what I would be worried about.

Just to add to what you are saying. I was looking into buying a Condo a couple of years back. Going on what I read on the subject. It would seem that Condo's are built with a 30 year lifespan in mind?

jb1

[Dave9000]

Property values are dependent primarily on two things. If supply is short and demand is high, property values rise. Conversely oversupply and poor demand will see values plummet. Where there is no actual real property (land) involved, capital returns can never equal those for land and dwelling. Sinking funds are not what they are in the west. Many owners simply do not pay their bills, and corruption must always be a consideration in Thailand.

The other determinant in real estate prices is economic stability. The Baht is artificially managed and while this remains the case supply and demand can regulate the market. But things may change in the months following April. The stability of the elected government may be challenged again and the value of the currency may dip with little warning.

If you wish to invest in the lower end of the market, Thais will rent your condo. The value of the currency will not necessarily affect them and, if building investment dries up, you may win on a local basis At the high end of the market, you will be appealing to westerners who will be affected by currency fluctuations and stable governance.

It is most probable that, as a westerner, you will not make any real estate 'killings' in Thailand; and, not losing can be counted as a win. My preference is to invest in condos that you can holiday in and that, if they lie vacant, will not break your bank.

You can buy a decent condo in Thailand for a similar price that you will pay in the west for a decent car. A car will always lose you money. Approach Thai real estate on the same basis and you will not be disappointed.

[Hooters]

If you are looking for a 2.2m bht condo there are a few being built on the BTS extension in between ONNUT and BEARING this is just a recently completed extension

[PattayaParent]

I should have probably said I was thinking of spending about 2-2.5m baht so it won't be anything too flash, more so a small single bedder.

Anyone know how this works with tax in Aus and for visas?

You won't get any preferrential treatment for visas.

I believe in Aus you are taxed on worldwide income so you would have to declare the rent, possibly less condo maintenance fees and mortgage interest charges?

Condo prices in Bangkok and Pattaya never drop, they just remain unsold until someone is prepared to pay the asking price.

[dmbd]

I might have a look down that end thanks.

The site I am considering that might be good (pending release of the units!) is opposite President Park in Soi 24, opposite where Tops used to be.

[ExpatJ]

Green snapper you said prices go down a lot. How much roughly? I'm also thinking about investing in a couple of apartments over here, since from talking to an agent, the return sounds similar to in Nz (8%ish) but with less tax. However most apartments in Nz retain their value (only decreasing in real terms due to inflation), if apartments in Bkk often lose value then this may change my perspective

Your agent is lieing if he says 8% rental returns are the norm in Bangkok- after researching over 2 years i saw that the average, achievable, rental return was btw 4-5.5 %

[StreetCowboy]

Have you thought about buying a tenament flat in the East End of Glasgow as an alternative?

SC

[patongster]

As far as paying tax on rental returns, it would appear that overseas rental income would have to be declared, and would be added onto your taxable income here in Australia. http://www.laclawyers.com.au/document/Taxation-Law-__-Taxation-of-Overseas-Based-Employees-Within-Australia.aspx

Personally I think this is crap, and would not declare. Paid into your Thai bank, how would the greedy tax office ever find out?

[london]

There are so many simialr posts, really, I think that most of what the OP is asking has been covered many, MANY times before.

Should he buy or shouldn't he buy? Why not? He has the income and this isn't going to cause him grief if things go pear shape.

The amount he is looking at spending is the price of a good medium car in Australia.

The key is location...... and can he sit on it being unrented for a period of time?

Yes, he has to declare any income to the ATO.

[wamberal]

On the subject of taxation, I would just say this. I worked offshore for many years, and had ample opportunities to hide financial assets offshore, so as to avoid Australian tax. However, the way that the Australian Tax Office now uses technology, and the apparent cooperation of foreign banks, makes me glad that I did not do so.

The ATO can track all foreign financial transactions, and, believe me, they do. Anybody who hides financial assets offshore lives with the ever present possibility - actually it is a probability - that the ATO will uncover them.

The only time that I would even think about hiding assets in Thailand, for example, is if I am certain that I will end up living and dying in Thailand, having become a foreign resident in the eyes of the ATO. In the meantime, I would keep all income offshore, and only access it via a foreign ATM, with a foreign bank card. I would not ever use an Australian based credit card or bank card to access foreign income (unless I was going to declare it in Australia).

I have a friend who worked with me in Hong Kong for many years. He now lives locally in Oz with his second family (his first wife having passed away, and the kids have grown). I am pretty sure that he owns an investment property in the UK, the income of which he has never declared in Australia. I am also pretty sure that he intends to spend the rest of his life in Australia - but there will be a problem when he dies, because that asset will have to be declared by the estate, in order for it to be distributed as part of his will. The ATO could get very nasty about this, if they wanted to.

Edited January 16, 2012 by wamberal

[PattayaParent]

I might have a look down that end thanks.

The site I am considering that might be good (pending release of the units!) is opposite President Park in Soi 24, opposite where Tops used to be.

Soi 24 is a much better location than Soi 101 unless you can get something bigger for the same price.

[patongster]

In the meantime, I would keep all income offshore, and only access it via a foreign ATM, with a foreign bank card. I would not ever use an Australian based credit card or bank card to access foreign income (unless I was going to declare it in Australia).

Exactly.

[ludditeman]

Green snapper you said prices go down a lot. How much roughly? I'm also thinking about investing in a couple of apartments over here, since from talking to an agent, the return sounds similar to in Nz (8%ish) but with less tax. However most apartments in Nz retain their value (only decreasing in real terms due to inflation), if apartments in Bkk often lose value then this may change my perspective

Rent returns typically 4-5%, Thai tax on rental income is 15%

Edited January 16, 2012 by ludditeman

[MrJohnson]

My (Thai) wife and I live in an apartment building in SE Queensland. Maybe one day in the future, we will end up in BKK. If we do, one thing for certain is that I would only consider buying into a building with good management.

The building we live in is 25 years old. There are 60 odd units, we pay an average of $10,000 per annum each into the big bucket which pays our ongoing building expenses, pays for the on-site managers (a husband and wife, who man the office and do the basic chores) and on-going building maintenance. In the last four years we have replaced the lifts (very expensive) and painted the whole building. The owners elect a management committee, and we retain the services of a specialist management company to look after the legal and other stuff.

Over the years I have read several horror stories about what happens to condonimium developments in Thailand when things go wrong. Is there a well understood, fairly adjudicated, body of law that covers disputes, financial problems, etc etc in Thailand? I douby it.

An earlier poster mentioned something about the value of condominiums in 15 or 20 years time. The value could be nil, frankly. That is what I would be worried about.

It is all about the management company (MC) and the condo committee. The MC need to be very closely managed by the committee to do the right thing. Everything has to be scrutinized as very often there is a lack of transparency in quoting etc. Our committee chairman is a Thai but most of us on the committee are farangs, a couple of engineers, a lawyer and so on so we can keep the MC honest. There are very strict laws here in Thailand pertaining to condo management and any good MC will adhere to them. We use one of the big name guys and I must say they are pretty good. There is however no way to compare Thailand with Australia, especially in terms of capitol gain. Generally speaking that is simply because demand outstrips supply therefore forcing prices up. What you have in Thailand is almost the exact opposite i.e. way too much demand. Furthermore, the market for second-hand condos amongst the Thais is not so good. They generally prefer new ones. So keep in mind that if you buy in the farang quota your market for resale and perhaps even for renting is for foreigners, not necessarily a bad thing. To be honest I reckon there are much better ways to invest than buying a condo in Bangkok. Don't worry as there will still be plenty here when/if you get around to wanting to live here and even then you may want to rent as, in many ways, it is much simpler. Good luck.

[Hooters]

I might have a look down that end thanks.

The site I am considering that might be good (pending release of the units!) is opposite President Park in Soi 24, opposite where Tops used to be.

2.mill bht seems aweful cheap for a new condo in soi 24. In fact i would suggest its impossible unless its less than the standars 35sqm studio

How do you know about these condos about to be built and do you have a link? would like to have a look myself :-)

Edited January 16, 2012 by Hooters

[GreenSnapper]

Besides the uncertainties regarding future prices of the condo and state of maintanance, calculate it just like any other investment:

2.5 Million purchase price, 12,000B rental income. That is what the OP was aiming for.

Let's say after agent fees and other costs, he can get regularly 100,000 Baht per year - an optimistic estimate.

That makes an annual gain of 4%.

Then you are basically investing in Thai Baht. Even if you can sell the condo with some gain after a few years, nobody can say how the THB will have developed. At the moment it is a strong currency and it may not weaken very much in the near future. But there is a high risk that this will change some day.

So basically you gain 4%, you have the risk of selling cheaper and have the risk of losing big in currency devaluation.

Not a great investment, considered that an Australian Bank will give you at least that in AUD and then you don't spend your money in THB.

But if you believe in the longterm stability of Thailand and the THB, well....... up to you

[travelmann]

Dont listen to people who have never bought and rely on rumours only. Most of them dont have a bean and strugle to survive on the breadline, why the haunt the condo threads full time is beyond me

I own 2 condos untill last friday where the condo I bought off the plan on sukhumvit 101 was sold to a Japanese fellow for a very tidy profit but I did do some reasearch before I bought

1. I bought after viewing the Bts extensions before the new stations were built and then soucred a condo that would be near

the proposed Bts and made sure it would be built around the same time the condo would be completed.

Well the Bts was a year late but at least the tracks had been laid

2. that condo was built on progressive deposit meaning the downpayment was split into 24 months so you could view the progress and pay accordingly so there is pretty much zero risk of losing your depost due to inactive production.

3 buy on the highest floor available the extra money is well worth it

4. Go for it, some new BKK condos have doubled in price in the last 7 years

Id say by with an unblocked view not facing the sun on a high floor with the hope nothing will be built next to you, a good way to guarantee that is to buy next to a RIVER.

Corner units are good but often you have to buy the adjacent room with some developers. I wouldnt rely on any developer taking care of units too well here. Depending "when" you buy is more important ie I bought when the £ was @72 baht now its 48 a BIG difference.

[ExpatJ]

Besides the uncertainties regarding future prices of the condo and state of maintanance, calculate it just like any other investment:

2.5 Million purchase price, 12,000B rental income. That is what the OP was aiming for.

Let's say after agent fees and other costs, he can get regularly 100,000 Baht per year - an optimistic estimate.

That makes an annual gain of 4%.

Then you are basically investing in Thai Baht. Even if you can sell the condo with some gain after a few years, nobody can say how the THB will have developed. At the moment it is a strong currency and it may not weaken very much in the near future. But there is a high risk that this will change some day.

So basically you gain 4%, you have the risk of selling cheaper and have the risk of losing big in currency devaluation.

Not a great investment, considered that an Australian Bank will give you at least that in AUD and then you don't spend your money in THB.

But if you believe in the longterm stability of Thailand and the THB, well....... up to you

But the benefit of that 4% return is that its cash flow to you every month- no other investment gives you a stream of cash (as opposed to say a payment after one year deposit etc

[travelmann]

I might have a look down that end thanks.

The site I am considering that might be good (pending release of the units!) is opposite President Park in Soi 24, opposite where Tops used to be.

2.mill bht seems aweful cheap for a new condo in soi 24. In fact i would suggest its impossible unless its less than the standars 35sqm studio

How do you know about these condos about to be built and do you have a link? would like to have a look myself :-)

Studios start at 25m2 now 35m2 is a 1 bed

[Hooters]

I might have a look down that end thanks.

The site I am considering that might be good (pending release of the units!) is opposite President Park in Soi 24, opposite where Tops used to be.

2.mill bht seems aweful cheap for a new condo in soi 24. In fact i would suggest its impossible unless its less than the standars 35sqm studio

How do you know about these condos about to be built and do you have a link? would like to have a look myself :-)

Studios start at 25m2 now 35m2 is a 1 bed

well that sounds feasable. Very small though