Investing In Condos: Your Opinion

[yoshiwara]

Hong Kong ? London ?

Having experience in both markets, there is a slight cost differential between them and Thai property.

Invest in the East,

Yes, that is true, the buy in is a lot more expensive, but much safer. But if one is above the line of affordability a good choice if you know your way around.

I would also recommend Singapore but that is even more expensive and there is now a 10% foreigner purchase tax, so scrub that one.

If I only had 1.2 millionHKD (5 million baht) I would still rather borrow another 1.2 million to buy a studio in HK.

If I only had 2.5/3 million baht to invest and no hope to invest in HK, would I purchase a property in Thailand? For investment? No.

[mike111]

Yoshiware,

What's the return on investment (monthly rent/purchase price) for a studio in HK? what's the appreciation of the property over a year?.

What are the tax like for property investment there? any special taxes imposed on foreigners?.

TIA

[mike111]

Yes, the 6% is pretty much it from my experience and if you can get that, or better, from a term deposit, then why would you bother?

Re Appreciation: yes, its there, but to predict how much in 10 years is difficult. My experience is that it is a conservative appreciation, possibly 5%pa....perhaps more in other developments. However, that said, I am very happy with a 5% pa appreciation and a 6% yield. It is an effective 11%pa.

Well,the 6%pa I'm getting on my term deposit does compare well when one compare the return on investment + property appreciation. 6%pa is achievable with the return on investment alone. appreciation, for good properties, could be 10%pa or more. not sure about thailand though.

What concerns me about properties in thailand is the build quality. some new buildings I've seen didn't look they'll hold very well in 10 years time, which can severley diminish the appreciation factor, and can even spell big expenses for the owner down the road.

[Khun Jean]

All of mine give at least 10% and also appreciated in value the last 5-10 years although that is constantly being cancelled out by inflation.

Older buildings that still are in good shape are more secure then new ones (often lousy build quality), around 25-30m2 seems to be the sweet spot for a good return.

Next month i am going to buy another 4 or 5.

Edited May 29, 2012 by Khun Jean

[eeeya]

Yes, the 6% is pretty much it from my experience and if you can get that, or better, from a term deposit, then why would you bother?

Re Appreciation: yes, its there, but to predict how much in 10 years is difficult. My experience is that it is a conservative appreciation, possibly 5%pa....perhaps more in other developments. However, that said, I am very happy with a 5% pa appreciation and a 6% yield. It is an effective 11%pa.

Well,the 6%pa I'm getting on my term deposit does compare well when one compare the return on investment + property appreciation. 6%pa is achievable with the return on investment alone. appreciation, for good properties, could be 10%pa or more. not sure about thailand though.

What concerns me about properties in thailand is the build quality. some new buildings I've seen didn't look they'll hold very well in 10 years time, which can severley diminish the appreciation factor, and can even spell big expenses for the owner down the road.

Looking at different developers and price ranges might help here. Having spent 3 years in an apartment from new in the ratchada area I can say the 3 years took quite a toll on the building. The price when new was approximately 2.5mil for a 1 bed corner apartment of 45 m2.

there was a reasonable maintenance program (a larger repair being draining and repairing the pool tiles etc and a bit of crack repair on the exterior as the building settled.)

I don't know if they would ever repaint the 9 floor building though.

Has anyone an opinion on the sweet spot or best price bracket for an investment purchase. Taking into consideration. Type of renter: lo so, hi so, student or expat.

New or refurb an older larger hi rise.

An arguement about exterior condition not being important was posted on tv (aparently in hong kong some look like slums on the outside but inside is full of marble).

Don't know if this is the same here.

[Khun Jean]

With the amount of soot in the air, no building looks good after a few years. You need to be away from the busy parts of bangkok to find reasonable clean (outside) buildings. The outside of the buildings is approximately the same as the color of your lungs when you live in bangkok long time.

Painting is done when it is build and almost never afterwords, meaning the paint will fall of, the soot sticks to the concrete like glue.

Combine it with some algae, and rust and you get a very colorful building.

The inside depends on the 'class' of people living there and if they pay there monthly bills to maintain the building.

All these things are more obvious with older buildings (10 year or older). When these still look good you at least have a good change the ones that maintain it are doing a decent job. No guarantees for the future but it at least you have some indication, newer buildings always look good and that can be a real problem later as in Thailand it is the norm to do as little maintenance as they can get away with.

Edited May 29, 2012 by Khun Jean

[eeeya]

I've noticed that condos when new and not yet all occupied tend to have the best guards/security outfits. Best cleaning and gardening staff.

The gamble is how long will it stay in effect.

[london]

Mike111, what are you actually wanting to achieve?

Do you want to buy to rent out and live on the rental, which I thought was your original requirement?

Do you want to have a lower rental return and get better appreciation ie: in a higher capital cost unit?

Or do you want both?

Frankly, IF you can get 10% appreciation on any property anywhere in the world at this time, well done. Khun Jean has given you an important insight above: his rental is 10% BUT the appreciation only keeps pace with inflation. Really, this is as good as you can REALISTICALLY expect. If you get any more, then thats a huge plus, but I haven't seen it recently.

I'd be interested to know where appreciation is currently 10% pa.

If you are concerned about build quality, don't buy that particular development. Simple.

In fact, apart from the climate here, its NOT necessarily the build quality that makes a building look old.....its lack of a well funded maintenance programme for the building. That is vital. From my experience, many Thai's just want to buy and are not interested in the value of maintenance. This IS an issue.

But you can't have it both ways. Maintenance costs money.

If your CAM fees are high, theres a reason for it....maintenance.

This cuts into your annual rental return, BUT increases the likelihood of higher appreciation.

[yoshiwara]

Yoshiware,

What's the return on investment (monthly rent/purchase price) for a studio in HK? what's the appreciation of the property over a year?.

What are the tax like for property investment there? any special taxes imposed on foreigners?.

TIA

I would expect an initial ROI an investment should be 4-5%.

Broadly speaking the market is divided into 3 areas: HK Island, Kowloon and New Territories. HK Island is the more expensive and within that there are different definable areas. Mid-levels is the fashionable area. If you are looking for cheaper stuff in a good area, then Urbana 38 in Sheung Wan is one option. The apartments have balconies. They sell for 2.7 million to 2.9 million HKD. Size 360 sf. That's gross not net BTW. That's between 7500-8000hkd psf. Currently you would get ~ 12,000 HKD rental per month.

Prices in this price range just creep up.

Tax is less than 20%. I think 17%. There is an additional tax if you sell within 2 years of purchase. There are no special taxes on foreigners and no restrictions on foreign ownership. Everything for sale! All documents for sale and purchase and rental are written in both English and Chinese.

http://goo.gl/maps/zdSD

http://hk.centadata....PA&info=&page=0

http://www.gohome.com.hk/en/

Edited May 30, 2012 by yoshiwara

[craigt3365]

With the amount of soot in the air, no building looks good after a few years. You need to be away from the busy parts of bangkok to find reasonable clean (outside) buildings. The outside of the buildings is approximately the same as the color of your lungs when you live in bangkok long time.

Painting is done when it is build and almost never afterwords, meaning the paint will fall of, the soot sticks to the concrete like glue.

Combine it with some algae, and rust and you get a very colorful building.

The inside depends on the 'class' of people living there and if they pay there monthly bills to maintain the building.

All these things are more obvious with older buildings (10 year or older). When these still look good you at least have a good change the ones that maintain it are doing a decent job. No guarantees for the future but it at least you have some indication, newer buildings always look good and that can be a real problem later as in Thailand it is the norm to do as little maintenance as they can get away with.

With all respect, I have seen a few older buildings that have been kept up very nicely. My friend just got one in Thong Lor and it's a beauty, about 17 years old. An expensive building for sure. I have other friends here in Pattaya who live on the beach and their building just got repainted. Looks great. Again, a more expensive building. Down the road, we have some real monstrosities. Ugly, ugly, ugly....

[Khun Jean]

Hi graigt,

My point was actually that with older buildings you can see how maintenance was done and that is a good indicator of how it will hopefully be done in the future. I dislike new condo buildings for investment because they have nothing to prove for what they promise. As buying prices are often 200 times monthly rent or higher, it takes about 20 years to get your initial money back. Way to long and so much can happen in those 20 years. For me the formula is simple. At least 10 years old, visible good maintanance, surplusses for management fees, at least 90% occupied, 10 year payback time and buying price not exceeding 1.000.000 baht (not a lot of money inveted in one small area/building). If it fulfills those i buy it, irrelevant of where it is located and what size it is.

Myself i live in a rental condo, 17 years old, good condition, great manager, consistent positive balans etc..That is very valuable information that new builds don't have.

Of course i bought in the same building too, but only because it was a good price with the right ratio (10%). The one i rent has a ratio of 3% so i would be foolish to buy it.

[craigt3365]

Hi graigt,

My point was actually that with older buildings you can see how maintenance was done and that is a good indicator of how it will hopefully be done in the future. I dislike new condo buildings for investment because they have nothing to prove for what they promise. As buying prices are often 200 times monthly rent or higher, it takes about 20 years to get your initial money back. Way to long and so much can happen in those 20 years. For me the formula is simple. At least 10 years old, visible good maintanance, surplusses for management fees, at least 90% occupied, 10 year payback time and buying price not exceeding 1.000.000 baht (not a lot of money inveted in one small area/building). If it fulfills those i buy it, irrelevant of where it is located and what size it is.

Myself i live in a rental condo, 17 years old, good condition, great manager, consistent positive balans etc..That is very valuable information that new builds don't have.

Of course i bought in the same building too, but only because it was a good price with the right ratio (10%). The one i rent has a ratio of 3% so i would be foolish to buy it.

You've got it figured out for sure! Excellent road map. I have been toying around with the idea of an investment condo, but here in Pattaya, it's so over built. But! Even with that, I have friends doing very well...others not so well.

And yes, I also looked at new buildings. The fit and finish was very poor. Not impressed at all for the money they were asking. Not good value.

Thanks for your advise!

[monjanji]

Great advise!

Do you mind sharing a bit more (as much as you are willing) on what areas you look at for some of us newbies who are considering putting some investment dollars into this.

Thanks.

[Khun Jean]

Great advise!

Do you mind sharing a bit more (as much as you are willing) on what areas you look at for some of us newbies who are considering putting some investment dollars into this.

Thanks.

Start with the beginning.

And that means lot and lots of footwork. Stop wasting time looking at realestate websites!!

Driving around in a taxi will not give you the right information, use a taxi to go to an area then walk or hire a motorcy taxi and stop at every place that looks decent. Then talk with management, every condo building has one but they are not always on site. The guard is the best place to start, talk about if he knows empty condo's, prices etc. If people come out of the building and they seem friendly enough ask them some questions about the building. You will here some horror stories, but don't believe it right away, confirm it.

The guards are the guys that know a lot, same like the barber in small villages, those are my favorite places to get 'intel'.

Never be in a hurry, gut feeling is almost never good. This is actually the most difficult because your gut has strong control.

Invest in knowledge, takes at least a year. Be patient, be patient, be patient!!!

I have a good memory but i still write down names of sois, building names, prices for condos i have looked at (over a thousand i estimate in the last 10 years) to establish a fair price for the area and building. Leave telephone numbers and email with security guards and management and promise a commision when there is a good deal. etc, etc.

Al this gives me an edge over 'newbies' on the market so you will understand that i will keep all of that information private, the only information i can give is how i did it, which is only one way of doing it.

I understand Thai but don't speak it, my wife does that for me. In the first years that was extremely difficult because 'i asked too much'. Now i don't have to anymore because she asks all the important ones by herself.

The one area i really need to improve is my ability to speak Thai. I never had the time for it as i always lived on and off in Thailand. Now that i am here permanently (because i earn Thai bahts with those investment) i am signing up for school soon.

Edited May 31, 2012 by Khun Jean

[monjanji]

Thanks, sir... I'll gladly trade you Thai lessons for your hard-earned knowledge., haha. 10 year payback time means 10% return annual which many here doubt possible. Plus under 1m means areas that most would not be familiar with and thus consider. Lots of legwork for sure but better you teach a man how to fish I suppose...

Well, we're not in Thailand now either so we'll take a look next trip and work on the patience part. Maybe in a couple of years.

[yoshiwara]

Great advise!

Do you mind sharing a bit more (as much as you are willing) on what areas you look at for some of us newbies who are considering putting some investment dollars into this.

Thanks.

Start with the beginning.

And that means lot and lots of footwork. Stop wasting time looking at realestate websites!!

Driving around in a taxi will not give you the right information, use a taxi to go to an area then walk or hire a motorcy taxi and stop at every place that looks decent. Then talk with management, every condo building has one but they are not always on site. The guard is the best place to start, talk about if he knows empty condo's, prices etc. If people come out of the building and they seem friendly enough ask them some questions about the building. You will here some horror stories, but don't believe it right away, confirm it.

The guards are the guys that know a lot, same like the barber in small villages, those are my favorite places to get 'intel'.

Never be in a hurry, gut feeling is almost never good. This is actually the most difficult because your gut has strong control.

Invest in knowledge, takes at least a year. Be patient, be patient, be patient!!!

I have a good memory but i still write down names of sois, building names, prices for condos i have looked at (over a thousand i estimate in the last 10 years) to establish a fair price for the area and building. Leave telephone numbers and email with security guards and management and promise a commision when there is a good deal. etc, etc.

Al this gives me an edge over 'newbies' on the market so you will understand that i will keep all of that information private, the only information i can give is how i did it, which is only one way of doing it.

I understand Thai but don't speak it, my wife does that for me. In the first years that was extremely difficult because 'i asked too much'. Now i don't have to anymore because she asks all the important ones by herself.

The one area i really need to improve is my ability to speak Thai. I never had the time for it as i always lived on and off in Thailand. Now that i am here permanently (because i earn Thai bahts with those investment) i am signing up for school soon.

The magic formula: Foot Leather!

[Khun Jean]

The magic formula: Foot Leather!

I have noticed that wearing plastic flip flops lowers the price a bit.

Edited June 1, 2012 by Khun Jean

[plopmeister]

The magic formula: Foot Leather!

I have noticed that wearing plastic flip flops lowers the price a bit.

An old friend once asked me why I obtained better rates when renting and I told him.When renting or buying dress down. When selling dress up...

[yoshiwara]

The magic formula: Foot Leather!

I have noticed that wearing plastic flip flops lowers the price a bit.

An old friend once asked me why I obtained better rates when renting and I told him.When renting or buying dress down. When selling dress up...

Some people don't know the difference. Or at least they don't look as if they do.

[mike111]

Mike111, what are you actually wanting to achieve?

Do you want to buy to rent out and live on the rental, which I thought was your original requirement?

Do you want to have a lower rental return and get better appreciation ie: in a higher capital cost unit?

Or do you want both?

Frankly, IF you can get 10% appreciation on any property anywhere in the world at this time, well done. Khun Jean has given you an important insight above: his rental is 10% BUT the appreciation only keeps pace with inflation. Really, this is as good as you can REALISTICALLY expect. If you get any more, then thats a huge plus, but I haven't seen it recently.

I'd be interested to know where appreciation is currently 10% pa.

.

There has been some info. online about 10%pa achievable in the north america market. I'm exploring that market, though have not bought anything yet.

Thaivisa Connect App

[mike111]

Frankly, IF you can get 10% appreciation on any property anywhere in the world at this time, well done. Khun Jean has given you an important insight above: his rental is 10% BUT the appreciation only keeps pace with inflation. Really, this is as good as you can REALISTICALLY expect. If you get any more, then thats a huge plus, but I haven't seen it recently.

I'm consider buying property to rent out as income. Golden rule: buy where demand is high and availability is low. This gives the owner much more bargaining power, and allows to increase the rent more than the annual inflation.

Pattaya possibly has a high demand for rental properties, but also lots of availability, so the rent increase can, at most, just keep up with inflation.

[Burbridge]

I have 4 condos dotted around Bangkok and the most I paid was 3million baht. Aimed for the Thai mid market. They bring in between 6-8%

Edited June 17, 2012 by Burbridge

[mikekim1219]

By "Thai rooms" u mean condos or those cheap rooms for uni students?

Cheap Thai rooms rent from 2k upwards....to make sure you benefit fom a better return, source the land and build your selfe. I have 18 rooms 9 down and 9 upstairs..downstairs rents for 4k with air and hot shower upstairs 3k for fan..depends where you are, a uni town up north wont get as much as close to BKK.where are you based?...just to give you an idea, my initial investment was recoupoed in just under 4 years although I was lucky in finding a cheap plot and had my own builders.

Mind telling us amount of your your investment?

Edited July 2, 2012 by mikekim1219

[travelmann]

Strolling: what's wrong with property investment in Thailand? I understand a foreigner can't own land/house, but no such issues with owning a condo.

The country is far too unstable in the long term.

Future visa laws?

When the inevitable/unspeakable happens?

Long-term social and political instability.

As the Thais say, 'Thailand is for the Thais'... Rent, enjoy your life here, just don't get overly involved or start investing what you'll cry over if you lose.

And a foreigner can own a house. Just not the land it's built on unless they 'invest' 40 million baht.

And now speaking from my experience of renting condos out for 6 years I am now getting out of the market to some degree.

Unlike imaginary theoretical posts Ill deal with BKK only

30m2 is absolutely NO problem to rent Ive done this for 6 years, always full longest vacant room 3-4 weeks and that was unusual.

Price/ location as always is critical but now there is another thing to throw into the mix...............................oversupply.

When I bought my rooms (5) they were a good price ( 1 million each) and i got rent of 15k a month each which slowly over the 6 years has come down due to oversupply to 10-11k a month.

I also bought when my home currency was 72baht to the £ n ow its 49 and this has made a BIG difference as to why Im not buying now.

It was good for 6 years, now too many rooms, returns well over 10% and at 6 years old I have sold two of the rooms already, YES SOLD in the last 2 months at a small profit of 300k per room which in fact is not so small.

I have kept 3 rooms and will plod on eventualy selling maybe another 1-2.

Many were selling their rooms at 1.5 million baht I sold at 1.35 million very quickly,

If you can do your own maintenance it might be ok but really there is so much choice now it is getting harder to hook a customer.

New rooms also are not cheap roughly around 2 million now so the returns are even smaller and not viable for me.

If you want my website and any info you can pm me for clarification, no bullshit fantasy theoretical crap form armchairs pundits.

In the 6 years I managed to get back virtually what I paid for the rooms in rent and then a capital gain, the timing was critical, now its not a good time IMO.

[JUDAS]

By "Thai rooms" u mean condos or those cheap rooms for uni students?

Cheap Thai rooms rent from 2k upwards....to make sure you benefit fom a better return, source the land and build your selfe. I have 18 rooms 9 down and 9 upstairs..downstairs rents for 4k with air and hot shower upstairs 3k for fan..depends where you are, a uni town up north wont get as much as close to BKK.where are you based?...just to give you an idea, my initial investment was recoupoed in just under 4 years although I was lucky in finding a cheap plot and had my own builders.

Mind telling us amount of your your investment?

He already has, it's all in his post.

[mikekim1219]

By "Thai rooms" u mean condos or those cheap rooms for uni students?

Cheap Thai rooms rent from 2k upwards....to make sure you benefit fom a better return, source the land and build your selfe. I have 18 rooms 9 down and 9 upstairs..downstairs rents for 4k with air and hot shower upstairs 3k for fan..depends where you are, a uni town up north wont get as much as close to BKK.where are you based?...just to give you an idea, my initial investment was recoupoed in just under 4 years although I was lucky in finding a cheap plot and had my own builders.

Mind telling us amount of your your investment?

He already has, it's all in his post.

I don't see any numbers. If he has 18 rooms, average each room at 3.5k. If he recoup investment in 4 years, that's just over 3 million bath investment with 25% annual return. I would say that's pretty good investment.

Around Chiang Rai University (Rajabhat) where I stay, this is out of the question. The land price is too high.

[cheeryble]

Entirely in tune with Khun Jean....

my earlier post in another thread may even add a bit to his intelligent recommendation of the better older buildings:

"Some thoughts:

1. The older condos tend to have the prime positions

2. New condos charging much higher monthly fees (despite having no renovations required)

3. Farang are usually selling to farang (as the 50% is full or near) so no Thai cultural requirement that it must be new property

4. People are concerned about how a new buy will turn out. If not they should be. As with moo bahns they do not know if it will sell out (essential for the financial wellbeing of the block) what the power structure will be (unless you are happy with the developer ruling the roost, sometimes egregiously and possibly "finishing off" the condo from your fees. Residents need to know they will have power, there are well known cases where the developer retains power and uses it egregiously). Threads on here even show people are concerned about losing their deposits.

5. Oh! For the price of a new condo with very mediocre finish you can probably find or do a very high quality renovation in an established block. (and for all the bling, when you get inside these new places the finish ain't great. Typically laminated floors instead of real parquet or marble, the cheapest of cheap door surrounds, not enough electrics etc etc)

6. Established condos will also sell based on their rentability, which given some of the advantages above should be on a pretty even playing field with new."

Cheeryble

[johnnyk]

Entirely in tune with Khun Jean....

my earlier post in another thread may even add a bit to his intelligent recommendation of the better older buildings:

"Some thoughts:

1. The older condos tend to have the prime positions

2. New condos charging much higher monthly fees (despite having no renovations required)

3. Farang are usually selling to farang (as the 50% is full or near) so no Thai cultural requirement that it must be new property

4. People are concerned about how a new buy will turn out. If not they should be. As with moo bahns they do not know if it will sell out (essential for the financial wellbeing of the block) what the power structure will be (unless you are happy with the developer ruling the roost, sometimes egregiously and possibly "finishing off" the condo from your fees. Residents need to know they will have power, there are well known cases where the developer retains power and uses it egregiously). Threads on here even show people are concerned about losing their deposits.

5. Oh! For the price of a new condo with very mediocre finish you can probably find or do a very high quality renovation in an established block. (and for all the bling, when you get inside these new places the finish ain't great. Typically laminated floors instead of real parquet or marble, the cheapest of cheap door surrounds, not enough electrics etc etc)

6. Established condos will also sell based on their rentability, which given some of the advantages above should be on a pretty even playing field with new."

Cheeryble

I would add that older buildings are more likely to have revealed defects also.

[w11guy]

Buy in a proper country, not in Thailand.

I agree with this comment. You will get better returns and probably better capital appreciation in the UK, USA, etc. The rental market in Thailand is not good for most landlords. There are 1000s of empty condos that have been up for rent for many months and often year or more. If you're not careful you could end up with a few unrentable condos.

[w11guy]

Strolling: what's wrong with property investment in Thailand? I understand a foreigner can't own land/house, but no such issues with owning a condo.

The country is far too unstable in the long term.

Future visa laws?

When the inevitable/unspeakable happens?

Long-term social and political instability.

As the Thais say, 'Thailand is for the Thais'... Rent, enjoy your life here, just don't get overly involved or start investing what you'll cry over if you lose.

And a foreigner can own a house. Just not the land it's built on unless they 'invest' 40 million baht.

But those things can happen in any country, including the USA/UK. USA property prices have crashed in recent years. Personally I think you'd get a better return in UK, but Thailand is a growing economy and has great long-term prospects. I know people on TV love to slag off everything Thai, but the US, UK and others have made a complete mess of their economies and will still be paying off all the money lost for the next 100 years or more. The UK is still paying back what it borrowed for the 1st World Word, and that was almost 100 years ago.