Buying A Condo Off Plan!

[checkoutcomplete]

Please be honest.

I have a few friends who keep showing me new condos they are purchasing for very good prices, I went to see them (3 different locations). The problem I have is the developers haven't actually started building and they claim it will be ready in 2 years.

One thing I have over my friends is I'm young enough to take the risk, but I'm still wary.

Please reply with either good or bad experiences.

Thanks

[tropo]

Consider if the stress of uncertainty is worth the savings? How much will you save?

Are the benefits worth the risk?

Compare the stress of losing your money with the stress of losing out on the deal?

Ask these questions.

Pardon the pun, but things often don't work out as planned in Thailand.

I wouldn't do it.

Edited May 11, 2013 by tropo

[WinnieTheKhwai]

What actually does the phrase 'buying off plan' mean? What would be the plan?

[Satcommlee]

Lots and Lots of bad stories about buying off plan..

Many of these developers do not have the financial backing to actually complete the projects without people like yourself buying off plan.

If they don't get enough interest then the Condo doesn't get built and you may have done your money in.

You need to do some due diligence! Carefully google/research the company and any people you are doing business with.

Thailand is Scam central... be very careful!

Due diligence is the key, find other satisfied customers on previous builds..

Anyone can draw up plans and attract investors, give me a week and I will do something on computer that would probably look equally attractive.. Would you give me money?

[checkoutcomplete]

A 2ft by 1ft model of the complex.

Also included a price plan and a few pictures.

There were show rooms.

That's "off plan".

Basically buying a property that is t actually visible.

The more I right, the more I persuade myself not to buy.

[checkoutcomplete]

One of them, was really cheap.

20,000 baht for the contract.

Thereafter 7,000 baht for 24 monthly payments.

Then either the remaining amount to be paid in full or spread over 10/20/30 years. (Rent income can cover that)

Over 800 condos are being built.

The 2 bed was 72sqm which is decent at a cost of 2.6 million baht.

As I said I'm young enough to take a risk. Being only 25 I could afford the loss.

Now I'm just confusing myself.

Please more info.

[Satcommlee]

Nobody can tell you with any certainty if it is a good deal.

But sometimes there is an old saying "If it seems to good to be true, it probably is"

I wouldn't know where to start to be honest, and Thailand is not a place where you have any consumer rights..

You must research the company, I don't think you would be allowed to name them here, but there's a lot of simple due diligence you can do yourself..

Did they register their domain name last week for example? What are their existing success stories? and most of all (this is my favourite) pretend to be very stupid and let them fall into their own trap if they are not Kosha!

You'd be surprised how rich scam artists can get on collecting 20'000 baht deposits in a short space of time.

[checkoutcomplete]

I fully agree.

[WinnieTheKhwai]

Just paying a deposit (like 20K mentioned above) and monthly payments doesn't seem very high risk. If it all goes South for any reason then the loss is limited. If you then also pick a company that has a track record of actually delivering buildings to spec, then I don't see too many downsides.

[tropo]

Just paying a deposit (like 20K mentioned above) and monthly payments doesn't seem very high risk. If it all goes South for any reason then the loss is limited. If you then also pick a company that has a track record of actually delivering buildings to spec, then I don't see too many downsides.

That's exactly how good scam artists scam. Ask for small amounts that people are quite happy to part with and won't cry too much if they lose it... and not enough to make legal action worthwhile.

In the OP's example, 20K deposit plus 7K per month. Let's say 18 months until he knows the deal. About 150K plus hidden extras.

It could be the ultimate scam or the ultimate bargain.

Edited May 11, 2013 by tropo

[Fgis]

Keep it clear ! People buying unbuilt condos in Thailand are just plain stupid ! But we love them because we prefer others to be cheated than us !

[guzzi850m2]

Just paying a deposit (like 20K mentioned above) and monthly payments doesn't seem very high risk. If it all goes South for any reason then the loss is limited. If you then also pick a company that has a track record of actually delivering buildings to spec, then I don't see too many downsides.

Yes some very big Bangkok builders are now starting to build condos in Pattaya, they should be fairly safe I would say.

I know a few guys that have earned good money by buying off plan, they buy the good units and then sell them when the building is completed for typical 200-400K baht profit pr unit.

Not many condo projects go belly up, over 98% are finished build.

Off-course don't buy from a guy on the street but do your home work first before signing any contract & parting any money.

[Sommaz]

Older resale condos are bring overlooked by many of those who are buying new developments but there are many decent deals to be had at some good prices if you look hard enough.

Fair enough you generally won't be able to spread payments over time but atleast with older existing condos the element of risk is reduced.

I personally would not advise you to be buying off plan if your purpose is simply to resale and make profit. The market will be overloaded with similar resales in 3 years time. Buy to rent is fine, but you'll struggle for reselling at profit - unless you get in at the first knock and pick a doozy.

Existing condos are also often cheaper to own, ie maintenance fees etc. With many new developments charging from 35b upto 50b per sqm per month! - it all adds up.

If you do go the offplan route, do your homework and find out about the developers history and financing of the project. Also ask to see copy of the purchase agreement and see what clauses it has regarding late or non- completion. Also (although this won't sit well with many here), go ask 3 or 4 agents their opinion on some of the developments/developers - you'd be suprised how candid some can be

[rak sa_ngop]

Is there any guarantee that you will be able to buy the condo in your own name? If they sell more than 49 pc to non Thais some people will have to put the condo 'they' bought into a company name, or a Thai partner's name.

[Asiantravel]

Did your friends tell you whether the developers they have dealt with subscribe to the Thailand Escrow Act which was introduced specifically to safeguard the deposits of purchases of off the plan developments?

Details here

http://www.articlesnatch.com/Article/Buying-Off-Plan-Real-Estate-In-Thailand--Condominium-Acquisition-And-Escrow/1900970

After all the bad experiences over the past few years anyone today that simply hands over a deposit to a real estate developer but without taking precautions must have rocks in their head.

[craigt3365]

You've got some sound advice here. Thousands and thousands of apartments are under construction now. I've heard in the range of 40k or more, over the next 3 years. And thousands of existing ones are for sale.

If you do buy off plan, as stated above, make sure you're with a developer who has a solid track record and the financial strength to finish even if the market goes south. Nobody has a crystal ball. The Thai economy could rock on for the next few years, or take a breather like in China. Nobody can predict that.

There are quite a few buildings here that were never finished. And many more that were delayed, then not finished according to what was promised.

Also, many who buy in early hoping to flip find out they can't make any money a year or so down the road. Some need to get out before the big payments hit. These come up quite often and can be a good deal.

Again, if you are nervous about this, look at resales. Lots of units are up for sale that are ready to move in.

[chris2004]

Why buy off plan. There must be thousands of condos already built and you can look around them and make a choice. If you have cash you can probably get a good deal.

I always laugh when i hear the Grande Caribbean advertised on the radio. They have been promoting it for nearly 2 years and they haven't even dug a hole yet. That tells me they haven't got the money to start it let alone finish it.

[PattayaPhom]

Go with an established developer and you wont go far wrong however the payment plan you describe seems more like a small one time developer so be ccareful

[guzzi850m2]

craigt3365 says that app. 40.000 units will be build around Pattaya the next 3 years, holy cow that's a lot.

My guess is that many of them will be small shoe box units below 30M2 for a holiday/weekend retreats for Russians and BKK Thais and then a few penthouses on the upper floors for the really well off's.

I am not myself gonna buy any condo as an investment (we live in a house), I don't know enough about the market to take the risk.

What concerns me most about this is if the infrastructure of Pattaya can cope with this, as it is now the traffic is getting too heavy now during weekends/holidays and it's difficult to go anywhere in a car.

[craigt3365]

A good thing to try is setting up an email alert from the thaivisa classifieds. I get daily emails with listings of condos and homes for sale in the area. I'm not in the market and many days just delete them, but I find it interesting to see what's going on.

http://classifieds.thaivisa.com/

[toenail]

I wonder how long you have lived in Pattaya or do you come here only for holiday? I live/work in the Pattaya area and have learned a lot about buying apartments here (I rent but would like to buy someday). If you want something to sleep in away from the sea, the condo complex will be cheaper than buying something that is near the beach or sea view. Here are some other things to consider:

1) Is there an empty lot next to it? Someday is it possible for another building to be built next door and block my view?

2) Will the condo complex be basically rented out to vacationing partiers (noisy at night) or to long term renters?

3) What will the monthy maintenance fee be for this complex? How reliable will the "housing committee" be in spending the monthly maintenance fee on MAINTENANCE and not pocket the money (this is hard to predict - but happens a lot!).

4) Is the condo complex built by a reliable firm (such as Nova?). This takes homework but worth it.

5) Realize that most condos will NOT increase in value but remain about the same in resale - unless right on the beach.

6) Does the area have problems with city water?

7) How close is the condo to public transportation ? (If you need to jump on a "baht bus".)

8) Any noisy bars near by?? or in the future????

9) Don't be fooled by the artist's fancy drawings of the planned complex. In Thailand you can draw the condo complex next to the sea when it isn't . Go to the sight of course and see reality.

Personally, there are plenty of condos where construction has already started. I think you can negotiate the price of a new condo with the company but do not have experience with this. The most important aspect is to choose an apartment complex that is built by an establish firm. Again, this takes research.

[craigt3365]

craigt3365 says that app. 40.000 units will be build around Pattaya the next 3 years, holy cow that's a lot.

My guess is that many of them will be small shoe box units below 30M2 for a holiday/weekend retreats for Russians and BKK Thais and then a few penthouses on the upper floors for the really well off's.

I am not myself gonna buy any condo as an investment (we live in a house), I don't know enough about the market to take the risk.

What concerns me most about this is if the infrastructure of Pattaya can cope with this, as it is now the traffic is getting too heavy now during weekends/holidays and it's difficult to go anywhere in a car.

I found the report that listed the number of new units being built. It's a year old and doesn't include some of the big announcements recently, but it said 28,000 units were either under construction or planned. So I might be off a bit on what I reported initially. But still, 28,000 units is a lot.

[juliusk]

I bought 2 off plan condo's myself in Pattaya, one is almost due to be finished, guess in 4 months and the other one in 1.5 years.

I will keep this condo's just for renting out and see how it goes.

Further more i was always interested in buying more condo's and real estate in Thailand but they are building so many projects now that its not worth it anymore. The thing whats the most important thing in real estate is location location location. Thats why there isnt any available free plot of land in the center of Pattaya, last project whats going to be build is the Base from Sansiri. This is a huge developer in Thailand, actually maybe one of the biggest.

The reason why i not buy anything else anymore inhere is that i believe more in investing in my homecountry in real estate then in Thailand, i can keep my condo's inthere for quite some years, of course need some renovation at some time. The ROI is a less then Pattaya of course, think about 5% instead of 8 or even 9%. BUT you need to sell your condo within 5 years otherwise its gonna look like Nirun Condo or Center Condo and those projects are difficult to sell. The maintenance is just not at the same level as back in Europe imo.

Anyways, my advice would be just put some money in the real estate market but same as everywhere, just money you can lose and chose a a developer with a good track record. Then it shouldnt be a problem to buy off plan at all.

[Tolley]

I wouldn't buy anything in this market because in a couple of years time Pattaya may be unliveable

Pattaya has had its day. The infrastructure is already bursting at the seams and it is only going to get worse with all the new condo developments.

The main reason for Pattaya's existence is also on a steep decline. The P4P scene has deteriorated significantly over the last 10 years and it is only going to get worse. So if that is the reason you are coming I would reconsider and go elsewhere.

[Swiss1960]

You can safe a lot of money (I found up to 25%) from buying off plan to buying when it is finished. I monitored a few places in Pattaya that WERE acutally built and that is where the figure comes from (I compared the prices during the construction time).

First thing, op, is to look up the reputation of the developer. What buildings did he finish? Are the people living there happy with the quality? Did he finish his previous projects more or less on time? How many other projects is the developer trying to sell off plan?

Remember that developers with many projects will start building the ones that sold best off plan, the others might be put back in the drawer no matter the people who did a prepayment.

Only buy off plan, if the developer is willing to link the payments to the building progress. Make small payments at the beginning (i.e. first one on signing the contract, second on start of the earth movement, third on finishing ground floor) and higher payments towards the end. Might cost you more and you might only safe 10-15%, but your risk of loosing lot of money is much lower.

[BlackPuddingBertha]

I know a few guys that have earned good money by buying off plan, they buy the good units and then sell them when the building is completed for typical 200-400K baht profit pr unit.

I know lots of people who have bought 5, 10, 50 units off-plan and who intend to sell them during construction or when the building is finished. But I wonder if there will be any demand at that time? Many off-plan units seem to be sold to speculators investors and very few seem to be bought by real people who want to actually own the units.

The word "Ponzi" springs to mind.

[paddyjenkins]

One day the large number of speculators, agents, "friends" of agents, "friends" of developers, local goernment workers etc etc, will discover there are no more real buyers left as everyone has become a mini property gambler. When that happens these people will lose everything. There is always a point in any bubble where the short term speculators realise the game is up and that point is when the world wakes up to the fact that there are no longer any real buyers...ie., not a single person who really wants to own what is on offer for anything liek the prevailing asking price.

Edited May 12, 2013 by Rimmer
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[seadoo]

My response to anyone wanting to buy a condo in Pattaya is DON'T.

Simply because everyone wants new, and when it comes to selling there is so much competition in the 2nd hand condo market.

Most agents even though they boast a large 2nd hand condo portfolio usually drive prospects to the larger more incentivised projects where they get more off field incentives and commissions than a sole owner could offer in the 2nd hand condo market.

Do the maths, a project that boasts around a 1,000 condos in its project, and there are many large scale developments around heavily marketed, when the resales start to kick in and the investor's or one off owners start to sell, assume say 10% are offered for sale at any given time then you are competing with 100 odd other condo's in the same project for the buyers attention and usually because of the simple volume on the market supported by many of these resellers who are desperate to offload for many a reason then this only drives the resale prices down as it becomes overly competitive, unless yours has the something extra special to offer.

If you have to buy a condo - Don't buy new and don't do the usual holiday emotional buy, study your market and do what a lot do who make money in this game, look out for the desperate resales, if you pick them up cheaper than the current resale market then you can afford to price match or even discount below the current resale market and still make a profit, assuming you found the really desperate seller in the first place.

Again my advice - DON'T.

[Tolley]

Just paying a deposit (like 20K mentioned above) and monthly payments doesn't seem very high risk. If it all goes South for any reason then the loss is limited. If you then also pick a company that has a track record of actually delivering buildings to spec, then I don't see too many downsides.

Yes some very big Bangkok builders are now starting to build condos in Pattaya, they should be fairly safe I would say.

I know a few guys that have earned good money by buying off plan, they buy the good units and then sell them when the building is completed for typical 200-400K baht profit pr unit.

Not many condo projects go belly up, over 98% are finished build.

Off-course don't buy from a guy on the street but do your home work first before signing any contract & parting any money.

200k - 400k baht profit. Small potatoes for the hassles and risks involved. You only have to come unstuck once and that profit becomes a whopping loss.

[tropo]

My response to anyone wanting to buy a condo in Pattaya is DON'T.

Simply because everyone wants new, and when it comes to selling there is so much competition in the 2nd hand condo market.

Most agents even though they boast a large 2nd hand condo portfolio usually drive prospects to the larger more incentivised projects where they get more off field incentives and commissions than a sole owner could offer in the 2nd hand condo market.

Do the maths, a project that boasts around a 1,000 condos in its project, and there are many large scale developments around heavily marketed, when the resales start to kick in and the investor's or one off owners start to sell, assume say 10% are offered for sale at any given time then you are competing with 100 odd other condo's in the same project for the buyers attention and usually because of the simple volume on the market supported by many of these resellers who are desperate to offload for many a reason then this only drives the resale prices down as it becomes overly competitive, unless yours has the something extra special to offer.

If you have to buy a condo - Don't buy new and don't do the usual holiday emotional buy, study your market and do what a lot do who make money in this game, look out for the desperate resales, if you pick them up cheaper than the current resale market then you can afford to price match or even discount below the current resale market and still make a profit, assuming you found the really desperate seller in the first place.

Again my advice - DON'T.

Very sound advice there.