jay1980 Posted May 13, 2012 Share Posted May 13, 2012 (edited) I have been thinking of buying a Thai 'dormitory' apartment building, popular with Thai workers and students depending on the area purchased. Of course I could not own the building under my name but as it would be operated as a genuine business I would think that it would be completely legal to form a company for the purchase and ownership? The ROI initially looks attractive purchase price V what the rooms would rent out at. In the right area the occupancy also appears to be high. Does anyone own a building like this and could give any in site into the overheads to run it, and any downsides to this type of investment. Pic to show an example of type of building I am thinking of in case my description is not clear. Many thanks Edited May 13, 2012 by jay1980 Link to comment Share on other sites More sharing options...
farang000999 Posted May 13, 2012 Share Posted May 13, 2012 (edited) it is the same as any other real estate investment in thailand. your roi will be very tiny unless you buy it below market value but probably will beat inflation. as for legality i don't know. Edited May 13, 2012 by farang000999 Link to comment Share on other sites More sharing options...
thaigirllondon Posted May 13, 2012 Share Posted May 13, 2012 Farang, define tiny? Link to comment Share on other sites More sharing options...
lannachiangrai Posted May 13, 2012 Share Posted May 13, 2012 I don't own one but have worked with numerous clients who have purchased them and from the experience I have learned that the main issue is the clientele. If you have working professionals renting from you, you will have fewer problems. If you get students, be prepared for non-stop headaches. Also, you will need to have a repair person on call or on salary (assuming you don't want to fix clogged toilets on a Sunday morning) so make sure to put that cost into your spreadsheet. Take your time and get good renters, don't just try to fill the building as quickly as possible. Link to comment Share on other sites More sharing options...
starship Posted May 14, 2012 Share Posted May 14, 2012 I have a number of points for you to consider before you may make your purchase. I also have looked at these type of investments, but over my time in Thailand have not been entirely convinced that they will produce enough return. If you are only looking for income on your capital above what you would get from a deposit account i think they would probably return this, although obviously your capital is tied up. However, if you are looking at this type of investment as your main income i am not sure you would produce enough income after all costs and issues unless you had a substantial sized building and large number of rooms. You do not say where you might invest but from my knowledge in rural areas you can buy or build these types of apartments for a reasonable cost but the rents you can charge are very low. For example where my gf comes from in issan rooms in a basic apartment only rent for 1000b a month, 1500b with aircon maybe 2000b for a really nice one with aircon. In BKK these types of rooms start at maybe 2500/3000b depending on the area, a bit more with aircon. Other rooms start maybe around 4500/5000b a month but these are apartments not dormitories and are generally larger in area and nicer. I know about these basic types of properties because i have lived in them before. So the main downside is that you may not produce enough income from the rooms/building depending on it's size. From this you have the cost of someone to collect the rent/manage the property unless you have a thai partner who is willing do do so. This will cost you at least 10000b a month and from my experience they tend to move on quite often. On top of this you have got all your taxes/charges/maintenance costs to come off. More importantly as another poster mentioned is the issue of having the right type of tenants. As in all countries the cheapest properties attract those at the bottom end of the work spectrum (no disrespect intended). So you tend to get taxi drivers, motorbike taxi's, labourers etc with the problems that often come with them. It will be common for you not to get rent or to be behind on rent payments/utility/maintenance payments. As i understand it, you are responsible for the utility/maintenance fees and then charge tenants it monthly. It is common particularly with maintenance fess that tenants don't pay or are behind, sometimes for a long time. Thai's also love aircon so you could be in the position of having some very expensive electric bills to pay before you try to get it back from them. I am not trying to put you off just make you aware of the realities or potential issues which may arise. Out of interest if i was to do it i would do it in BKK there is constant demand in most areas, but i would do it on a good sized property maybe 30 rooms+ to give you a decent income but of course the properties are much more expensive here. Anyway, hope this helps in your considerations. 2 Link to comment Share on other sites More sharing options...
Asianrider Posted May 14, 2012 Share Posted May 14, 2012 rents thai workers and students pay are incredibly low . Have seen these type buildings in Pattaya where some of the rents have been increased to 5-6k per month with foreign renters, but the rooms are in better condition ( ie painted and maintained ). Normally they have the option of aircon too. Link to comment Share on other sites More sharing options...
RAZZELL Posted May 14, 2012 Share Posted May 14, 2012 How much would it cost to build one to a decent standard? Say 30 rooms? (Excluding land) RAZZ Link to comment Share on other sites More sharing options...
mccw Posted May 14, 2012 Share Posted May 14, 2012 How much would it cost to build one to a decent standard? Say 30 rooms? (Excluding land) RAZZ About 5-6 million bht 2500- 3000 per room + a bit "admin " mark up on bills and maintenance. 3000x 30 = 90,000pm Minus about 20,000 pm on staff = 70,000pm if full Not great , not bad. If I were to do it I would refurbish an existing building of about 80 rooms = about 200,000bht pm profits. Location - chiang mai - target students. Thailand much better place to do this business than uk or west - no stupid laws or courts preventing you kicking out those who don't pay. Uk I do this business now- big head ache but good returns with the mortgage leverage available. In Thailand I would not contemplate it with out a most excellent, intellegent wife who has connections and can deal with tenants while my job would be just to do the books / master plan. Right now I need to do everything. In uk I now target foreign students as they are top from their country instead of dealing with the shit of mine. Maybe spend a little more to target farang would make life easier, but then you have issues with seasons and higher expectations of service. For a 80 room building I see 16-20million bht inc land and everything but could do with a luck of paint. Not bad- looking at about a 10% return on investment if all cash. Link to comment Share on other sites More sharing options...
jay1980 Posted May 14, 2012 Author Share Posted May 14, 2012 Many thanks for the replies so far. Link to comment Share on other sites More sharing options...
farang000999 Posted May 15, 2012 Share Posted May 15, 2012 (edited) . Edited May 15, 2012 by farang000999 Link to comment Share on other sites More sharing options...
simple1 Posted May 15, 2012 Share Posted May 15, 2012 A bit off topic, but I live in Pattaya East where my wife owns some land. She has been quoted building cost of 210,000 baht per Thai style appartment, painted, plumbing, wiring incl. Expected rental income of 2,500 baht pcm per appartment. Also have a friend who's considering building student rooms in Nakorn Sawan with similar cost/rental return. As mentioned need to factor in cost of maintenance, rent collection etc Link to comment Share on other sites More sharing options...
Mroovah Posted May 29, 2012 Share Posted May 29, 2012 (edited) Nice to see a topic like this here! I am also thinking about this business. Im doing it in Poland at the moment. Also my thai wife has aunt who does this with her thai husband in a big scale. They let rooms out for students. For me investment like this in thailand seem to be more profitable than condo letting(doing it in thailand too), and a good diversification of the portfolio and business in general. Maybe there is someone who want to talk first and potencially purchase a large building split 50-50 or similar ? There would be definitely a better deal to buy a bigger one, price and business(profit) wise. Edited May 29, 2012 by Mroovah Link to comment Share on other sites More sharing options...
bbradsby Posted May 30, 2012 Share Posted May 30, 2012 wife's family is in this business in bkk. believe posters who say the clientele is difficult. they barely get by on their income, so if they get behind on any rent or utilities it's pretty much never ever received. Same in the US, actually. So the rule is/should be that no one gets behind on anything, else they're out before they run up expenses beyond any deposit received. Non-payers are pad-locked out of their units with their stuff inside. It's a hard business, in any country, if you have a heart. Link to comment Share on other sites More sharing options...
mccw Posted June 1, 2012 Share Posted June 1, 2012 ^ yeah sure- tenant must make up what's owed on the next payment due date or they're out. "give an inch, take a mile". If you let one do it they'll all start. Not about heart but plain business sense. Better to run business properly and give to charity, not make your business the charity. "Firm but fair". No cheating people out of deposit- at end of tenancy and all ok for sure give deposit back. Bad for business to get rep as a cheat or a soft touch; as with everything in life "middle way" is the one Link to comment Share on other sites More sharing options...
mccw Posted June 1, 2012 Share Posted June 1, 2012 Also you'll find if you maintain good standards of decor, service, facility etc and treat tenants with respect but enforce the rules vigorously then you will get a better standard of tenant and referrals = less head ache. Also a bit above average price with standard to match will = easier life and better profits. Link to comment Share on other sites More sharing options...
pipo1000 Posted June 1, 2012 Share Posted June 1, 2012 How much would it cost to build one to a decent standard? Say 30 rooms? (Excluding land) RAZZ About 5-6 million bht 2500- 3000 per room + a bit "admin " mark up on bills and maintenance. 3000x 30 = 90,000pm Minus about 20,000 pm on staff = 70,000pm if full Not great , not bad. 14% annual profit after costs and almost guaranteed not great?I'll sign for that anytime Link to comment Share on other sites More sharing options...
mccw Posted June 1, 2012 Share Posted June 1, 2012 How much would it cost to build one to a decent standard? Say 30 rooms? (Excluding land) RAZZ About 5-6 million bht 2500- 3000 per room + a bit "admin " mark up on bills and maintenance. 3000x 30 = 90,000pm Minus about 20,000 pm on staff = 70,000pm if full Not great , not bad. 14% annual profit after costs and almost guaranteed not great?I'll sign for that anytime Yes it's nice business. Not bad like a house yielding 4-7% ; not great like a rooms for rent business with mortgage leverage making an actual return on capital investment of 30-40%. I think the financing options in Thailand are pritty expensive. Not sure about large scale though, just remember when buying house it all got more bother than it was worth. Does any one know about commercial financing options? If it's not too bad then I'd seriously consider selling up and relocating. 70% LTV would do nicely. 3 or four buildings with 60 or so units in each be spot on. Link to comment Share on other sites More sharing options...
mccw Posted June 1, 2012 Share Posted June 1, 2012 (edited) How much would it cost to build one to a decent standard? Say 30 rooms? (Excluding land) RAZZ About 5-6 million bht 2500- 3000 per room + a bit "admin " mark up on bills and maintenance. 3000x 30 = 90,000pm Minus about 20,000 pm on staff = 70,000pm if full Not great , not bad. 14% annual profit after costs and almost guaranteed not great?I'll sign for that anytime I think that was in answer to build cost but no land. So probably more like 8-10% in total investment. But buying an old existing building with land and refurbishing it I would expect around 12-14% return on total. The land value would make a real difference to return. Hence why I would choose chiang mai over bangkok and a larger building on smaller land. Edited June 1, 2012 by mccw Link to comment Share on other sites More sharing options...
pipo1000 Posted June 1, 2012 Share Posted June 1, 2012 How much would it cost to build one to a decent standard? Say 30 rooms? (Excluding land) RAZZ About 5-6 million bht 2500- 3000 per room + a bit "admin " mark up on bills and maintenance. 3000x 30 = 90,000pm Minus about 20,000 pm on staff = 70,000pm if full Not great , not bad. 14% annual profit after costs and almost guaranteed not great?I'll sign for that anytime Yes it's nice business. Not bad like a house yielding 4-7% ; not great like a rooms for rent business with mortgage leverage making an actual return on capital investment of 30-40%. I think the financing options in Thailand are pritty expensive. Not sure about large scale though, just remember when buying house it all got more bother than it was worth. Does any one know about commercial financing options? If it's not too bad then I'd seriously consider selling up and relocating. 70% LTV would do nicely. 3 or four buildings with 60 or so units in each be spot on. 30 - 40 % return after after the mortgage payments are deducted? Why isn't everybody building appartments? Link to comment Share on other sites More sharing options...
mccw Posted June 1, 2012 Share Posted June 1, 2012 I don't know how mortgage available for this kind of thing in Thailand. In uk there is a major housing shortage and none really are getting built + planning permission is a nightmare. The only way to create this kind of thing is to select suitable houses and convert to many individual room and/ or extend to make more rooms. In London big developers have cottoned on and are building student only towers for yearly rents to foreign students, but the rents are astronomical, still plenty of demand to be met mid range and at the returns I'm talking about here. I think most people do not do this business though because of the work involved and the potential head aches with protection for non payers/ the stupid laws that enable scumbaggary without repercussions. More than 14 units and it becomes a full time job. + Agents don't bother with single rooms, so all leg work is on you. Link to comment Share on other sites More sharing options...
yoshiwara Posted June 1, 2012 Share Posted June 1, 2012 What exactly are you going to do if a tenant doesn't pay their rent? Link to comment Share on other sites More sharing options...
mccw Posted June 1, 2012 Share Posted June 1, 2012 what happen in Asia when no pay; im told it same as how used to do in uk before lefties legalised thievery and endorsed idleness as a lifestyle choice. Some people still do the direct way of course but there's a risk of loosing more than you might of gained. Link to comment Share on other sites More sharing options...
Jitar Posted June 2, 2012 Share Posted June 2, 2012 I have a friend with a couple of dormitory building rented to factory workers. He is very happy with it reckons retruns are OK. I gather unpaid rent is not a problem, deposit paid up front, lock the door before the unpaid rent exceeds the deposit. As mccw pointed out Thai laws do not give as many Tenants rights. The cheaper end of this business would not suit kind, sensitive types. The unknowns to keep in mind are land appreciation and occupancy. These are related to location but there are wild cards in Thailand like tenants driven away by ghosts if someone dies in the building or a future undesirable development next door. Link to comment Share on other sites More sharing options...
mccw Posted June 2, 2012 Share Posted June 2, 2012 I think a third or maybe half deposit is a good cut off/ kick out point. You need to protect yourself against possible damage in the room, redecoration or new locks, little bonus for the security etc. Plus a financial penalty makes others less likely to do the same. Link to comment Share on other sites More sharing options...
mccw Posted June 2, 2012 Share Posted June 2, 2012 Your right about the wild cards in Thailand. But then everywhere has its risks. Different scenarios on different countries locations. One can try to minuses these as much as possible but nothing ever zero. Link to comment Share on other sites More sharing options...
jay1980 Posted June 3, 2012 Author Share Posted June 3, 2012 Many thanks for the input, especially to mccw. If I went for this idea I would be looking to purchase outright. I own a couple of BTL apartments in London and as mccw rightly says, evicting non paying tenants can be a nightmare in the UK, in the UK though I guess you don't have to be so tough because most tenants with money trouble can get housing benefit, just went through it with the tenant in my studio. I also used to run the properties myself but now use an agent to save me time and also to test the performance of the agent while I am still in London. For an apartment building the main thing needed for me would be a good thai manager, maybe onsite so would have to have a building with enough units to support their salary. I would hope a good manager would handle late payments and evictions and maybe be taken more seriously by working class thai's than a farang. I guess with tenants who cannot make the full month rent, a good manager could arrange to take weekly or even daily payments to allow them to keep their room. Nothing has come out so far that is putting me off, will not be looking to buy until living in Thailand with time to research more area's and buildings etc cheers Link to comment Share on other sites More sharing options...
mccw Posted June 15, 2012 Share Posted June 15, 2012 Many thanks for the input, especially to mccw.If I went for this idea I would be looking to purchase outright. I own a couple of BTL apartments in London and as mccw rightly says, evicting non paying tenants can be a nightmare in the UK, in the UK though I guess you don't have to be so tough because most tenants with money trouble can get housing benefit, just went through it with the tenant in my studio. I also used to run the properties myself but now use an agent to save me time and also to test the performance of the agent while I am still in London. For an apartment building the main thing needed for me would be a good thai manager, maybe onsite so would have to have a building with enough units to support their salary. I would hope a good manager would handle late payments and evictions and maybe be taken more seriously by working class thai's than a farang. I guess with tenants who cannot make the full month rent, a good manager could arrange to take weekly or even daily payments to allow them to keep their room. Nothing has come out so far that is putting me off, will not be looking to buy until living in Thailand with time to research more area's and buildings etc cheers If you decide on some areas you are interested in then I can link you some websites advertising these buildings. They're in Thai though. Getting a really quality manager could take some time and headaches on the way; but once it is sorted and running smoothly will be really worth the effort. Still need to watch the books like a hawk though. Good luck. Link to comment Share on other sites More sharing options...
mccw Posted July 9, 2012 Share Posted July 9, 2012 Here are some links for interested peoples: http://www.ddproperty.com/ http://www.cm2property.com/ http://apartment.ban4u.com/ http://www.propertyguideline.com/apartment/ http://www.thaihometown.com http://www.taladasungha.com or you can put this keyword then on google ขายหอพัก อพาร์ทเมนท์ then type chiangmai or bangkok Link to comment Share on other sites More sharing options...
jay1980 Posted July 14, 2012 Author Share Posted July 14, 2012 Here are some links for interested peoples: http://www.ddproperty.com/ http://www.cm2property.com/ http://apartment.ban4u.com/ http://www.propertyg....com/apartment/ http://www.thaihometown.com http://www.taladasungha.com or you can put this keyword then on google ขายหอพัก อพาร์ทเมนท์ then type chiangmai or bangkok Many thanks for the links I have mostly been looking on: http://www.dealfish.co.th/c18-realestate-apartment/ fair way off actually buying yet, as I do not live in Thailand full time right now, but is good to look at sites in Thai as I am i the process of teaching myself how to read cheers Link to comment Share on other sites More sharing options...
yoshiwara Posted July 15, 2012 Share Posted July 15, 2012 Many thanks for the input, especially to mccw. If I went for this idea I would be looking to purchase outright. I own a couple of BTL apartments in London and as mccw rightly says, evicting non paying tenants can be a nightmare in the UK, in the UK though I guess you don't have to be so tough because most tenants with money trouble can get housing benefit, just went through it with the tenant in my studio. I also used to run the properties myself but now use an agent to save me time and also to test the performance of the agent while I am still in London. For an apartment building the main thing needed for me would be a good thai manager, maybe onsite so would have to have a building with enough units to support their salary. I would hope a good manager would handle late payments and evictions and maybe be taken more seriously by working class thai's than a farang. I guess with tenants who cannot make the full month rent, a good manager could arrange to take weekly or even daily payments to allow them to keep their room. Nothing has come out so far that is putting me off, will not be looking to buy until living in Thailand with time to research more area's and buildings etc cheers Going downmarket in a country with a legal system a million miles from that in the UK and reliant on a Thai manager? Good luck with that. Link to comment Share on other sites More sharing options...
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