Bkk Condo Investment: What Roi To Expect?

[davejones]

trogers: ROI is calculated based on rental income. the profit one makes from selling is due to appreciation, and is unrelated to ROI.

in today's costs, a desent condo is around 15M-20M THB, and rental income would be around 20K THB/month.

ROI = Total rental Income + Capital Gain (or - Capital Loss)

From your definition, a person buying at the peak of a bubble and selling it at 30% of his purchase price will still have a positive ROI counting just total rents he collected before selling the unit?

Terms like appreciation and depreciation are used in accounting. Gain and loss are actual values after cashing out.

Let me know which Bt15-20m condo is renting out at Bt20k/month. I will rent it for my own use using the rental income from my Bt3m condo, which is also Bt20k/month...

No chance. I'm first in line to rent that 20 million condo for 20,000 baht. In fact, I'll pay 25,000, so I've gazumped you. LOL.

[davejones]

But we all know how difficult it is to value a property, esp an old refurbished unit.

In most countries apartments (condos) and houses on estates (villages, sub-divisions) are considered to be the easiest type of property to value due to there being so many similar examples of them. That it may be difficult to do so here says a lot to me about the market and asking/achieved prices.

The properties that are truly hard to value are the unique ones, and I doubt that there are many Thai condos that fall into that category.

There is a condo building near me that I think is around 5-7 years old. There are condos for sale there for prices ranging from 50,000/sqm to 100,000+/sqm. The prices really are all over the place, depending on how desperate the seller is. I've seen prices drop from 12 million to 8 million in one go. I find it hard to believe the someone would pay 80,000/sqm in Bearing when you can get pretty good condos in Sathorn near the BTS for well under that. I know people do, buy why? Do they get taken in because they are shiny and new?

Edited February 4, 2013 by davejones

[davejones]

Now, as for what is ROI, and me being confused, and the other mumbo jumbo u posted:

http://www.rentalson...roperty_roi.asp

I hope you're not planning to follow that totally flawed advice. They suggest selling the property and buying another one because ROI has dropped. Would be easy to take equity out and then you'd have a higher ROI (according to their calculations). Then buy another property, so that you then have two. Can't see the point of selling one that's making good rent and good appreciation. Those are the ones to keep. Be careful what you read on the internet.

Edited February 4, 2013 by davejones

[trogers]

I find it hard to believe the someone would pay 80,000/sqm in Bearing when you can get pretty good condos in Sathorn near the BTS for well under that. I know people do, buy why? Do they get taken in because they are shiny and new?

Probably buying a small unit to house their kid(s) studying at the most famous and prestigious international school (deemed by the rich Thais) located in Soi 105.

[davejones]

I find it hard to believe the someone would pay 80,000/sqm in Bearing when you can get pretty good condos in Sathorn near the BTS for well under that. I know people do, buy why? Do they get taken in because they are shiny and new?

Probably buying a small unit to house their kid(s) studying at the most famous and prestigious international school (deemed by the rich Thais) located in Soi 105.

But that doesn't explain the other buyers who pay more to live further out, and in an area with less amenities.

[rgs2001uk]

I find it hard to believe the someone would pay 80,000/sqm in Bearing when you can get pretty good condos in Sathorn near the BTS for well under that. I know people do, buy why? Do they get taken in because they are shiny and new?

Probably buying a small unit to house their kid(s) studying at the most famous and prestigious international school (deemed by the rich Thais) located in Soi 105.

But that doesn't explain the other buyers who pay more to live further out, and in an area with less amenities.

They live further out because thats the area they work in, not everyone works or wants to live in the CBD.

I know Thais who buy a condo as someplace to shower and sleep in during the week, at weekends they go elsewhere.

The other day I was on the expressway up by Don Muang, hadnt been up that way for a couple of years, I was shocked at the amount of new condos that have sprung up in that area alone.

[davejones]

I find it hard to believe the someone would pay 80,000/sqm in Bearing when you can get pretty good condos in Sathorn near the BTS for well under that. I know people do, buy why? Do they get taken in because they are shiny and new?

Probably buying a small unit to house their kid(s) studying at the most famous and prestigious international school (deemed by the rich Thais) located in Soi 105.

But that doesn't explain the other buyers who pay more to live further out, and in an area with less amenities.

They live further out because thats the area they work in, not everyone works or wants to live in the CBD.

I know Thais who buy a condo as someplace to shower and sleep in during the week, at weekends they go elsewhere.

The other day I was on the expressway up by Don Muang, hadnt been up that way for a couple of years, I was shocked at the amount of new condos that have sprung up in that area alone.

True, but if you can get good condos in Sathorn near BTS for 50,000/sqm, it's madness to pay 80,000/sqm in Bearing. I haven't seen this happening anywhere else. Imagine in London if people paid 60% extra for a house to live further away from central London. To me, the condos in Bearing are grossly overpriced. Should be 40,000/sqm or less. It's mind-boggling how overpriced many condos in Bangkok are. That they are overpriced is obvious by the hundreds of thousands of unsold condos.

[rgs2001uk]

True, but if you can get good condos in Sathorn near BTS for 50,000/sqm, it's madness to pay 80,000/sqm in Bearing. I haven't seen this happening anywhere else. Imagine in London if people paid 60% extra for a house to live further away from central London. To me, the condos in Bearing are grossly overpriced. Should be 40,000/sqm or less. It's mind-boggling how overpriced many condos in Bangkok are. That they are overpriced is obvious by the hundreds of thousands of unsold condos.

I haven't seen this happening anywhere else

Agree, I dont understand and dont pretend to understand, I only report on what I see and hear.

It makes me laugh when farang come on here and think its the same as back home, wherever that may be.

People talking about going to real estate school in Florida and expecting the Thai market to be the same.

People talking about the "1/100th" rule, sorry doesnt apply here.

The OP asked about what he could expect, I answered about cases I know, I remember years ago driving into Pattaya and the BS advertising started before you even got to the place, returns of 12% per year were being touted.

Houses doubling in value every 10 years was another often repeated mantra on here.

Its a minefield, yes there will be winners and losers, sadly the losers will outnumber the winners.

Some of the dross I have seen for sale I wouldn't buy for 1/2 the price being asked.

I know of older condos that never seem to increase in value, parents buy them for their kids while they study, kid finishes schooling and the place is sold for almost the same as the purchase price, the attitude is the kid lived rent free for 3 or 4 years.

The bottom line is, why are you buying?

[davejones]

True, but if you can get good condos in Sathorn near BTS for 50,000/sqm, it's madness to pay 80,000/sqm in Bearing. I haven't seen this happening anywhere else. Imagine in London if people paid 60% extra for a house to live further away from central London. To me, the condos in Bearing are grossly overpriced. Should be 40,000/sqm or less. It's mind-boggling how overpriced many condos in Bangkok are. That they are overpriced is obvious by the hundreds of thousands of unsold condos.

I haven't seen this happening anywhere else

Agree, I dont understand and dont pretend to understand, I only report on what I see and hear.

It makes me laugh when farang come on here and think its the same as back home, wherever that may be.

People talking about going to real estate school in Florida and expecting the Thai market to be the same.

People talking about the "1/100th" rule, sorry doesnt apply here.

The OP asked about what he could expect, I answered about cases I know, I remember years ago driving into Pattaya and the BS advertising started before you even got to the place, returns of 12% per year were being touted.

Houses doubling in value every 10 years was another often repeated mantra on here.

Its a minefield, yes there will be winners and losers, sadly the losers will outnumber the winners.

Some of the dross I have seen for sale I wouldn't buy for 1/2 the price being asked.

I know of older condos that never seem to increase in value, parents buy them for their kids while they study, kid finishes schooling and the place is sold for almost the same as the purchase price, the attitude is the kid lived rent free for 3 or 4 years.

The bottom line is, why are you buying?

Yes, all very true.

[BlackPuddingBertha]

...... under-declaration is a common practice at the Land dept.

This seems unlikely to me for several reasons. Not least because the buyer has very little interest in doing it as he just runs up a bigger potential liability for himself if/when he sells on. Also in all property deals that I have been involved in here (not many, admittedly) the full selling price has always been stipulated in the contract. And in any deals that involve bank loans I would expect the bank to have something to say about values not being fully declared also.

So I'm inclined to think that "under-declared prices" are just another way of talking away the apparent disparity between asking prices and the prices that places may actually sell for.

[trogers]

...... under-declaration is a common practice at the Land dept.

This seems unlikely to me for several reasons. Not least because the buyer has very little interest in doing it as he just runs up a bigger potential liability for himself if/when he sells on. Also in all property deals that I have been involved in here (not many, admittedly) the full selling price has always been stipulated in the contract. And in any deals that involve bank loans I would expect the bank to have something to say about values not being fully declared also.

So I'm inclined to think that "under-declared prices" are just another way of talking away the apparent disparity between asking prices and the prices that places may actually sell for.

Have you personally been to the Land Dept for a property transfer, either as a seller or buyer, or as an agent?

[BlackPuddingBertha]

Yes. Cant really describe it as a highlight of my life though.

[davejones]

BlackPuddingBertha,

tnx for ur reply, but what ur saying is true for rental properties anywhere in the world.

Im trying to understand the specifics of the bkk property market, from people who actually own & rent properties.

The specifics of the Bangkok market compared to many other markets around the world, is that many condos are empty and unrented for months and even years. I have never seen anywhere else in the world where there is such an oversupply of condos. Just walk into a few condo buildings and say you're looking for a condo to rent. When I did this, most buildings were able to show me 5-10 condos that were available. This is unheard of in most major cities. These condos are all over, not just in a few buildings. You need to be very careful indeed if buying to invest. If you are asking on here for advice, then you don't know enough about the market to make an informed decision. Buy a condo and you might not be able to sell at anywhere near the purchase price. All depends on what you pay of course.

Is there any particular reason that you're thinking of investing in Bangkok? You could get 2.8% return on your money at Bangkok Bank, without all the hassles and expense of owning, finding tenants, fixing problems, etc. If you're not interested in capital appreciation, then most condos won't be worth your time. Others on here have found condos with 8% return, so it is possible, but I think that will be difficult if you don't have any experience of the market.

Edited February 5, 2013 by davejones

[iluvbeaches]

BlackPuddingBertha,

tnx for ur reply, but what ur saying is true for rental properties anywhere in the world.

Im trying to understand the specifics of the bkk property market, from people who actually own & rent properties.

The specifics of the Bangkok market compared to many other markets around the world, is that many condos are empty and unrented for months and even years. I have never seen anywhere else in the world where there is such an oversupply of condos. Just walk into a few condo buildings and say you're looking for a condo to rent. When I did this, most buildings were able to show me 5-10 condos that were available. This is unheard of in most major cities. These condos are all over, not just in a few buildings. You need to be very careful indeed if buying to invest. If you are asking on here for advice, then you don't know enough about the market to make an informed decision. Buy a condo and you might not be able to sell at anywhere near the purchase price. All depends on what you pay of course.

Is there any particular reason that you're thinking of investing in Bangkok? You could get 2.8% return on your money at Bangkok Bank, without all the hassles and expense of owning, finding tenants, fixing problems, etc. If you're not interested in capital appreciation, then most condos won't be worth your time. Others on here have found condos with 8% return, so it is possible, but I think that will be difficult if you don't have any experience of the market.

I think a lot of Thais are looking for a long term investment rather than a flip. Like how many Thais think gold is an investment. I mean it has been profitable for some recently but gold is really just considered a hedge to gain liquidity or earn capital growth when there is turmoil in the market.

Anyways, since juristic fees are so low (I pay less per year than I do for one month in my home country) it is cheap to leave the money parked in a condo for 10 years. If there is rental income great but most figure it is safer than banks, growth will be there in 10 years and they can use it.

[pampal]

I bought 4 condos in Aspace condos on Din Daeng street in 2009.

They were purchased for 934000 Baht each.

I rent them out at 9000 baht/month. They have been occupied continually since I bought them.

BTW they are 28 sq/Meter condos.

I am happy with the ROI and will continue to buy small condos near shopping and MRT/BTS

[Thereisnoif]

BlackPuddingBertha,

tnx for ur reply, but what ur saying is true for rental properties anywhere in the world.

Im trying to understand the specifics of the bkk property market, from people who actually own & rent properties.

The specifics of the Bangkok market compared to many other markets around the world, is that many condos are empty and unrented for months and even years. I have never seen anywhere else in the world where there is such an oversupply of condos. Just walk into a few condo buildings and say you're looking for a condo to rent. When I did this, most buildings were able to show me 5-10 condos that were available. This is unheard of in most major cities. These condos are all over, not just in a few buildings. You need to be very careful indeed if buying to invest. If you are asking on here for advice, then you don't know enough about the market to make an informed decision. Buy a condo and you might not be able to sell at anywhere near the purchase price. All depends on what you pay of course.

Is there any particular reason that you're thinking of investing in Bangkok? You could get 2.8% return on your money at Bangkok Bank, without all the hassles and expense of owning, finding tenants, fixing problems, etc. If you're not interested in capital appreciation, then most condos won't be worth your time. Others on here have found condos with 8% return, so it is possible, but I think that will be difficult if you don't have any experience of the market.

I think a lot of Thais are looking for a long term investment rather than a flip.

Lie of the Century .

[Thereisnoif]

When are people going to wake up and realize that the only driving force behind the BKK real estate bubble is money laundering ?

Probably never, and a lot more fools ( mostly farangs) are going to be screwed, fooled and eventually end up losing their investment .

.

[Mickey Cohen]

Buying and selling would be more risky but MUCH more profitable. Just need to be there on the first day when the company opens a new project. For that you need to be an old customer or have contacts with people in the companies like SANSIRI SUPALAI ... Employees will usually know 1 month before and the biggest customer will lock the units right away. Lock it, spend 500k in a year and sell you unit on internet.

Edited February 23, 2013 by Mickey Cohen

[iluvbeaches]

Buying and selling would be more risky but MUCH more profitable. Just need to be there on the first day when the company opens a new project. For that you need to be an old customer or have contacts with people in the companies like SANSIRI SUPALAI ... Employees will usually know 1 month before and the biggest customer will lock the units right away. Lock it, spend 500k in a year and sell you unit on internet.

Agreed. Reputable developer where you can go visit their previous units and buy on day 0. Usually still 5% sold already by presale but that's what I did and I'm pretty happy.

[cheeryble]

When are people going to wake up and realize that the only driving force behind the BKK real estate bubble is money laundering ?

.

Been hearing about money laundering developers for decades now and never seen a jot of evidence.

Could it be (false) urban myth?.......or just unjustified in 90% of cases?

[Thereisnoif]

When are people going to wake up and realize that the only driving force behind the BKK real estate bubble is money laundering ?

.

Been hearing about money laundering developers for decades now and never seen a jot of evidence.

Could it be (false) urban myth?.......or just unjustified in 90% of cases?

You obviously live in Lalaland .

I never mentioned developers.

Corrupt crooks with dirty cash buy property to launder their ill gotten gains.

Dig it ?

[cheeryble]

Hi from Lalaland!

Dig it ?

Not quite.I hear it from grandma.....and it may be true.....but I personally have never seen a jot of evidence.ps: like your monika.... Edited February 24, 2013 by cheeryble

[BlackPuddingBertha]

You obviously live in Lalaland.

Lalaland?

These Thai condo names get more and more ridiculous every day.

[Mickey Cohen]

You obviously live in Lalaland.Lalaland?These Thai condo names get more and more ridiculous every day.

Hahhaha are you on crack? Lalaland isnt a condo

[BlackPuddingBertha]

I'm sorry that the joke was wasted on you.

[Mickey Cohen]

I apologies i didnt want to be rude

I just didnt get it

[rgs2001uk]

I apologies i didnt want to be rude

I just didnt get it

No offence intended, are you an American?

We are talking Brit humour here.

And yes I agree with the reference to Lala Land.

[Mickey Cohen]

Im a french frog