Location Advice: Best area to buy a condo for rental income

[RecklessRon]

I'm retired and expecting to live in the CM area for a long time. To get around the rules about foreign ownership of land I'm looking to buy a condo that I can rent by the year to offset my rent payments on a house in the CM area

I want to pick a location that most people would like to live (rather than a place that I would like to live)

So... 2 questions:

Where in CM would you want to live?

Where in CM do you think newbies would?

All pertinent comments welcomed, eh!

[heybruce]

Oh boy, here's a topic guaranteed to open the flood-gates. Expect many pages of conflicting opinions on the future of the condo market in Chiang Mai and the desirability of different locations.

I'll start with the obvious: Don't invest more than you can afford to lose. If you really want to do this, first stay in Chiang Mai for a while and get a feel for the place, then look for older units that can be renovated. The price of new condos, many yet to be built, is ridiculous. Regarding location, keep it somewhere inside the ring road. People buy condos for convenience, and living out in the boondocks is inconvenient.

Edited April 4, 2014 by heybruce

[SDM0712]

Why buy the rental investment property in CM ? You should consider one of the more popular tourists locations such as Pattaya or Phuket. Even consider one of the residential areas of BKK.

SDM

[Dante99]

Why Chiang Mai? Why Thailand? You are just making an investment, aren't there better places to do that?

[WinnieTheKhwai]

Why Chiang Mai? Why Thailand? You are just making an investment, aren't there better places to do that?

^ Well, for the times it isn't rented you gain yourself a #*¢%-flat. Also, it means you're around in case some work needs to be done, renters need to be checked in, etc.

But yes, condominiums almost by definition make more sense in places where ground floor land is scarce and very expensive. Bangkok, Singapore, Hong Kong. I'm less sure why there is a condo market at all in places like Chiang Mai, especially when condominium buildings often aren't even built in places where land prices are highest. (With a handful of exceptions)

Which also answers the question: pick a condo in one of those few buildings that are actually downtown. And downtown does NOT mean all the way in Nong Hoy, up Chotana or at the Railway Station. It basically means Rim Ping, Flora, and maybe the new fancy one on Chang Klan though that's already a bit of a walk. Many renters are new arrivals to Chiang Mai and appreciate being in the city center, and being able to walk to places. There are a handful of buildings from which you can do that; buy in those.

NB: Nimmanhaemin / CMU area is popular with Thai people. So that's a second option. But harder to rent to the long-stay tourist market.

Then, a significant segment of the market is single retired guys with not too much money. It's good to keep in mind they're not paying more than their studio shoebox in places like Veerachai, Smith and Life in Town. (all of which are smack downtown). That's what you're competing with, and luxury 1 or 2 bedroom condominiums are much harder to rent at the price you need to that market.

Which brings us back to 'why not Bangkok' : because there you actually get corporate expats with a 50K rent budget to blow for the family. Lot more mileage in that than to renting to a retired Soi 2 tiger who thinks 5000 Baht is up-market.

Edited April 5, 2014 by WinnieTheKhwai

[WinnieTheKhwai]

( ^ And by the way I have just the condo for sale for you in that very central and soon to be gentrified grow-location! )

Kidding.

But be careful with advice in general on forums such as this when it's something related to you spending a lot of money. Not everyone is a selfless git like yours truly.

[NancyL]

If you're a hands-on kind of guy there appears to be money to be made in buying run-down units in well-located buildings like Srithana II, Nakorn Ping, Hillside 4, getting them fixed up to a reasonable standard and then managing them as rental property. These buildings may look a little shopworn in the lobbies, but they're well-located, have good security and are the sort of places that newbies like to rent.

[Thighlander]

I would look for something you could get 1% of purchase price per month in rent...that way you could still be netting 6% and keep the place in good condition. No pets, no backpackers, no bad credit.....More and more people are realizing that a good, convenient city location is worth its weight in gold. It's not like there's a bike trail network or even decent sidewalks. 300 m down a narrow soi seems like a mile, when you have to turn around every 10 seconds to check for vehicles coming at you.

[worgeordie]

Theres some new condo's just been finished over the

road (thats Mae Jo Road),from Meechok Plaza,the area

has a good road network to all Chiang Mai,easy access

to shops,banks,restaurants,movies,Central Festival is 10

mins away.

The problem is you would be buying at the height of the

market ,and lots of properties seem to be asking telephone

number amounts,and at those prices return would be very

low, but so are interest rates.

My wife has houses in this area and they are very easy to

find tenants for,but most are long term anyway.a good

location i think,as i live here as well and everything is very

handy.

regards Worgeordie

[umbanda]

Neimman and Suthep are good areas to get tourist/expat and university students/teachers tenants, but are not the cheapest areas in Chiang Mai....that why you will get good level tenants. If I was buying to live in, I will buy in Neimman if I can.

Cheapest areas but not so good tenants will be around the Bus and Train stations, other side of the river.

Edited April 5, 2014 by umbanda

[NancyL]

I would look for something you could get 1% of purchase price per month in rent...that way you could still be netting 6% and keep the place in good condition. No pets, no backpackers, no bad credit.....More and more people are realizing that a good, convenient city location is worth its weight in gold. It's not like there's a bike trail network or even decent sidewalks. 300 m down a narrow soi seems like a mile, when you have to turn around every 10 seconds to check for vehicles coming at you.

Good advice, except for the part about pets. Part of what makes Nakorn Ping and Hillside IV attractive to long-term tenants is that small pets are permitted. Just about every retired western lady I know living by herself has a cat and they make very good tenants.

[beau thai]

I would look for something you could get 1% of purchase price per month in rent...that way you could still be netting 6% and keep the place in good condition. No pets, no backpackers, no bad credit.....More and more people are realizing that a good, convenient city location is worth its weight in gold. It's not like there's a bike trail network or even decent sidewalks. 300 m down a narrow soi seems like a mile, when you have to turn around every 10 seconds to check for vehicles coming at you.

Help!

I like your advice but where to find a condo in chiang mai that delivers 1% a month-a 2mil purchase renting at 20k?

And if they exist how does that net to only 6%?

1 month a year agent fee, 1 month void maybe, and small repairs. So the potential 240k per annum gross becomes, say 180k or 9% - or are you assuming more repairs/longer voids. Or maybe I am missing something, or my math is faulty??

[Thighlander]

Many use 40% of rent for all expenses, at 50% you can have a manager, reserve funds, pay commissions, and screen tenants thoroughly. This would likely covered a furnished place, too.

Two million isn't a sweet spot; but say 1000000 at Riverside or Hillside 7...rent for 10,000 and 5000 goes to pay maintenance, management, repairs, commissions, and vacancy. Some years, you could likely keep 75-85% of your gross, but the big picture will prove it to be 50-60%.

Also, rents are trending up...maybe you only are getting 8333.00 for your million thb place at Riverside...that's a 10% gross, but in a few years if you can get 12000 per month, it is now 14.4%.....I was getting 18000 thb on a condo I paid 680,000 for in the US. Then the Canadians, Australians, and Chinese swarmed in and prices doubled in two years. But, it is still a lot more of a headache than owning tobacco stocks that are paying about a 5% dividend.

[WinnieTheKhwai]

I would look for something you could get 1% of purchase price per month in rent...that way you could still be netting 6% and keep the place in good condition. No pets, no backpackers, no bad credit.....More and more people are realizing that a good, convenient city location is worth its weight in gold. It's not like there's a bike trail network or even decent sidewalks. 300 m down a narrow soi seems like a mile, when you have to turn around every 10 seconds to check for vehicles coming at you.

I like your advice but where to find a condo in chiang mai that delivers 1% a month-a 2mil purchase renting at 20k?

I was thinking the same thing. Rents in Thailand (outside of Bangkok especially) are relatively low compared to what places sell for. You do sometimes see high rents, but then it's usually for places that are furnished to a very high standard, will include top level appliances (oven, dish washer, nice TV) and even then tenants tend to gravitate away after a year or so to cheaper places. And that nice furniture and appliances also costs money of course, fully furnishing a place (nicely) can cost half a million.

On the plus side, maintenance costs aren't all that high, although it can eat up about one month's rent per year over the years on average. (For a house, likely less for a condo)

More realistically I think you're looking at 0.5% - 0.7% of the investment in monthly rent. Assuming you rent it out 100% of the time, which is by no means certain. So perhaps better to go with the 0.5% figure.

[beau thai]

Many use 40% of rent for all expenses, at 50% you can have a manager, reserve funds, pay commissions, and screen tenants thoroughly. This would likely covered a furnished place, too.

Two million isn't a sweet spot; but say 1000000 at Riverside or Hillside 7...rent for 10,000 and 5000 goes to pay maintenance, management, repairs, commissions, and vacancy. Some years, you could likely keep 75-85% of your gross, but the big picture will prove it to be 50-60%.

Also, rents are trending up...maybe you only are getting 8333.00 for your million thb place at Riverside...that's a 10% gross, but in a few years if you can get 12000 per month, it is now 14.4%.....I was getting 18000 thb on a condo I paid 680,000 for in the US. Then the Canadians, Australians, and Chinese swarmed in and prices doubled in two years. But, it is still a lot more of a headache than owning tobacco stocks that are paying about a 5% dividend.

Thanks -now I get it.

But gone are the days of 1mil condos in Riverside. (Never heard of Hillside 7)

I looked at 2 small studios in Riverside, owned by a friend, last week- He paid 1.45m for 1 and 1.5m for the other and they have been empty since last November-he cant get 8500 a month for either.

And it seems to me that rents are highly seasonal - even if for long term. Much easier to get a low annual rent now than it was 2 months ago. I saw a big new house with a relative today outside San sai on an established Moo baan - offered at 3.1m and the rental potential was put at 15k gross a month.

These experiences this week (and others) are why I would like to hear where I can find a condo returning 1% a month

As for tobacco stocks - I am not that big on ethics I guess, but I choose not to invest in companies that encourage children in 3rd world countries to smoke. But maybe i am dellusional as i am sure I invest unknowingly in other companies that do worse things....

[WinnieTheKhwai]

Many use 40% of rent for all expenses, at 50% you can have a manager, reserve funds, pay commissions, and screen tenants thoroughly. This would likely covered a furnished place, too.

Two million isn't a sweet spot; but say 1000000 at Riverside or Hillside 7...rent for 10,000 and 5000 goes to pay maintenance, management, repairs, commissions, and vacancy. Some years, you could likely keep 75-85% of your gross, but the big picture will prove it to be 50-60%.

Also, rents are trending up...maybe you only are getting 8333.00 for your million thb place at Riverside...that's a 10% gross, but in a few years if you can get 12000 per month, it is now 14.4%.....I was getting 18000 thb on a condo I paid 680,000 for in the US. Then the Canadians, Australians, and Chinese swarmed in and prices doubled in two years. But, it is still a lot more of a headache than owning tobacco stocks that are paying about a 5% dividend.

Thanks -now I get it.

But gone are the days of 1mil condos in Riverside. (Never heard of Hillside 7)

I looked at 2 small studios in Riverside, owned by a friend, last week- He paid 1.45m for 1 and 1.5m for the other and they have been empty since last November-he cant get 8500 a month for either.

Right, and 1.5 would still be a very good deal. But, that's a smallish studio size most likely, so not surprised he gets few takers at 8500 rent per month. At 8500 I can stay at any of the downtown apartment buildings which offer similar space, and are in the city center. (although they tend to get renters also on an inflated electricity charge per unit)

Ultimately, few people would want to live truly long term in something very similar to a hotel room. Imagine you get a girlfriend/boyfriend. Now you're in the same small space together all of the time.

To invest in any condo I think I'd want at least a one bedroom, say 60 square meter or so. Those might start around two million, and for one of those I can see getting around 10K in rent if centrally located, maybe a little more if immaculately furnished and presented. Of course that's still 0.5%, nowhere near 1%.

That may just be the way it is though; at least if you buy now you secure that place for 2 million or so, and eventually rents might (should) catch up.

[Thighlander]

I think the investors are getting 1% at PP. Don't like tobacco companies? Use the dividends to buy thai kids motorcycle helmets. Look at City-View....I thought it was a bit dumpy, but at 450K; you could get 1% there, also. The house we paid 915,000 for at BWT, would have many rental applicants at 10K, possibly 12K. The renters have their moments, but in the long run they get slaughtered. Cheap rentals are good while they last, but your always a phone call away from somebody jacking the rent or selling it...or both. We've seen what happens to the bar owners...I was looking at some photos of a bar in nyc..rent was 900 usd....it got raised to 15000 usd per month...now a verizon store. I think anyone, who has followed the businesses on LK Rd, would appreciate this:

http://www.businessinsider.com/james-and-karla-murrays-photos-of-new-yorks-disappearing-store-fronts-2014-4

Edited April 5, 2014 by Thighlander

[WinnieTheKhwai]

Here is an example that might show why condominiums are such an iffy deal in Chiang Mai, versus regular houses. (Ownership issues aside, I'm just talking market value here)

Let's take one of the buildings I previously mentioned as being among the few that are actually in central Chiang Mai: Floral Condominium. From there you can walk to all the riverside pubs and restaurants, the Big Market, and Thapae Gate is 1.9 km / 25 min walk away. It's also desirable because the units are actually large: two bedrooms plus living area, 100 - 150 square meters. And it's the tallest building in town, with great views from most units.

This of course does not come cheap. I just looked up one of the 100 sq meter units and it goes for 6 million Baht. Going with 0.5% per month that's still 30,000 Baht per month in rent. Not many people in Chiang Mai want to allocate that kind of budget. (Unless you work at the US consulate; that's pretty much your target market: consular staff and top level Japanese/Korean management at factories in the larger area.) But it's doable.

Now, let's say there is also a very small plot of land, 17 square wa, in a location that's very similar to Floral: Same *walking* distance to the Big Market, Thapae Gate, etc. Asking price is 870,000 Baht. You now need to spend 1.5 million to build something with just a car park at the bottom level (and because it floods for a couple days every 5-6 years) and two floors of living space above that. Let's use every square inch of that area for the building, so you now have 17 square wa = 68 square meters, times two levels equals 136 square meters living space.. Let's round that down to 125 square meters because you lose some for stairs and what not.

Wait.. what?! I now have MORE space than the condominium in the same general location, and I've spent.. 870K + 1.5MB = 2.37 million Baht.. That's.. way cheaper.. for more space. At this point condo fans vs house fans will make the case that a condominium comes with a view, that there is a swimming pool, and security. The other side will mention that those things don't come free, and there is a monthly fee for that of several thousand Baht, AND that for many things you're dependent on the building being managed properly.. will they do the maintenance to the elevators.. will they paint the building when needed.. if not then that's potentially disastrous to your investment.

Let's say those arguments balance out. But the massive price difference remains. This rather nice, very new little town unit with private parking will -at 0.5%- rent for 11,870 Baht per month. and will accommodate a family of the same size as is living in the 30K condominium. I'd say that's an easier 'sell'.

Edited April 5, 2014 by WinnieTheKhwai

[beau thai]

Here is an example that might show why condominiums are such an iffy deal in Chiang Mai, versus regular houses. (Ownership issues aside, I'm just talking market value here)

Let's take one of the buildings I previously mentioned as being among the few that are actually in central Chiang Mai: Floral Condominium. From there you can walk to all the riverside pubs and restaurants, the Big Market, and Thapae Gate is 1.9 km / 25 min walk away. It's also desirable because the units are actually large: two bedrooms plus living area, 100 - 150 square meters. And it's the tallest building in town, with great views from most units.

This of course does not come cheap. I just looked up one of the 100 sq meter units and it goes for 6 million Baht. Going with 0.5% per month that's still 30,000 Baht per month in rent. Not many people in Chiang Mai want to allocate that kind of budget. (Unless you work at the US consulate; that's pretty much your target market: consular staff and top level Japanese/Korean management at factories in the larger area.) But it's doable.

Now, let's say there is also a very small plot of land, 17 square wa, in a location that's very similar to Floral: Same *walking* distance to the Big Market, Thapae Gate, etc. Asking price is 870,000 Baht. You now need to spend 1.5 million to build something with just a car park at the bottom level (and because it floods for a couple days every 5-6 years) and two floors of living space above that. Let's use every square inch of that area for the building, so you now have 17 square wa = 68 square meters, times two levels equals 136 square meters living space.. Let's round that down to 125 square meters because you lose some for stairs and what not.

Wait.. what?! I now have MORE space than the condominium in the same general location, and I've spent.. 870K + 1.5MB = 2.37 million Baht.. That's.. way cheaper.. for more space. At this point condo fans vs house fans will make the case that a condominium comes with a view, that there is a swimming pool, and security. The other side will mention that those things don't come free, and there is a monthly fee for that of several thousand Baht, AND that for many things you're dependent on the building being managed properly.. will they do the maintenance to the elevators.. will they paint the building when needed.. if not then that's potentially disastrous to your investment.

Let's say those arguments balance out. But the massive price difference remains. This rather nice, very new little town unit with private parking will -at 0.5%- rent for 11,870 Baht per month. and will accommodate a family of the same size as is living in the 30K condominium. I'd say that's an easier 'sell'.

interesting thought provoking post.

I like the numbers but... is your proposition hypothetical? Or is there a tiny plot there for sale at the equivalent of 2mil per rai-if my math is correct? If so, I assume you cannot build to the boundary and your living space needs to be interior- measured- so maybe a footprint inside of 7mt by 6mt ? And at a guess, other buildings close by, so views and maybe light are issues? And you didnt want to be concerned with ownership, as in, a farang can own a condo but not land, without a 'scheme' which may be dubious? That concerns me.

And as a renter I would far sooner spend my 12k in a well maintained high condo with views, light and a pool etc, knowing that if it ceased to be well maintained I could move on. Personally I have had living in houses, in spades, and much prefer the convenience and simplicity of condo life-but I know many others feel differently, so you may be right about your numbers. But would you buy the house you describe?? I suspect many would not and that impacts your capital growth potential. And for me Floral is not in an attractive location - a 25 min walk to Thapae, as you say.

But our differing approaches and predilictions are what makes a market, so if this is a real plan, I wish you every success.

But I dont think your example proves your going- in proposition that houses in CM are better investment rentals than condos. In all big, traffic heavy cities I can think of, in a downturn (and we will have one one day here) inner city apartments decline less and recover more quickly than the suburbs. I dislike such sweeping generalisations but I cant think of an exception. No doubt some kind soul will enjoy informing me of many!

[Thighlander]

and in a place like San Sai (for example), you will be competing with the builders for many years to come. Even with increases in building costs; theirs will still be "new," which has always been a big attraction for new buyers, as well as old. A basic house in an infill, good lot is usually an easy sell. Concrete monstrosities in the exhurbs; not so much. Every time gasoline and electric goes up this becomes even truer. Houses where the land is worth a lot more than the house seem to be especially hot commodities. Land ownership restrictions do make the condo/house comparison apples and oranges, unfortunately. Location is always the most key.

[beau thai]

I think the investors are getting 1% at PP. Don't like tobacco companies? Use the dividends to buy thai kids motorcycle helmets. Look at City-View....I thought it was a bit dumpy, but at 450K; you could get 1% there, also. The house we paid 915,000 for at BWT, would have many rental applicants at 10K, possibly 12K. The renters have their moments, but in the long run they get slaughtered. Cheap rentals are good while they last, but your always a phone call away from somebody jacking the rent or selling it...or both. We've seen what happens to the bar owners...I was looking at some photos of a bar in nyc..rent was 900 usd....it got raised to 15000 usd per month...now a verizon store. I think anyone, who has followed the businesses on LK Rd, would appreciate this:

http://www.businessinsider.com/james-and-karla-murrays-photos-of-new-yorks-disappearing-store-fronts-2014-4

I like your idea with tobacco divs- but surely these kids all have helmets ; the challenge is to make it cool to wear them!!

I have a friend who did well with City View and probably still does if he looks at his rental against what he paid. But for me, the rental should be viewed against what he could sell for today.Many property owners in China have seen values go up 300% in 6 years but now only get 1% annual return on current values. No good looking at what they paid, that's history.

PP- I think a purchase and reno is 600k and rental 5500 if you are lucky, so getting close to your 1% . But not sure they will earn much cap ap.

I dont know what BWT is (??) but the numbers look interesting- if you are able to own a house.

I am unable to persuade a thai relative to buy what looks to me to be good value on a new Moo Baan because he is intimidated or whatever by the maintenance fees of 800 baht a month. They collect 36 months up front and after that I guess many owners will not pay and it will then look like many other old,tired, run down, moo baans, infested with stray dogs. Looks great today though.

My strong preference is for older, well maintained and well managed 'city' condos as an investment but they are hard to find - andgetting a reasonable return is very difficult just now,

[Thighlander]

but, how much cap appreciation are you going to get paying 1.7 for a new one that rents for 12? An Aussie accountant once told me to find the yields, and the appreciation will take care of itself. And you can add not to buy anything you wouldn't live in yourself.

There has been one sitting on the market at Nakorn Ping for 900K...if you could buy it for 800, you might be getting close there, too.

Nobody is giving anything away...and the REO market is almost non-existent. Someone on here stated a 200 thb psm per month estimate....so if accurate; you need to get in for 20,000 psm to get your 1%.

[WinnieTheKhwai]

Here is an example that might show why condominiums are such an iffy deal in Chiang Mai, versus regular houses. (Ownership issues aside, I'm just talking market value here)

Let's take one of the buildings I previously mentioned as being among the few that are actually in central Chiang Mai: Floral Condominium. From there you can walk to all the riverside pubs and restaurants, the Big Market, and Thapae Gate is 1.9 km / 25 min walk away. It's also desirable because the units are actually large: two bedrooms plus living area, 100 - 150 square meters. And it's the tallest building in town, with great views from most units.

This of course does not come cheap. I just looked up one of the 100 sq meter units and it goes for 6 million Baht. Going with 0.5% per month that's still 30,000 Baht per month in rent. Not many people in Chiang Mai want to allocate that kind of budget. (Unless you work at the US consulate; that's pretty much your target market: consular staff and top level Japanese/Korean management at factories in the larger area.) But it's doable.

Now, let's say there is also a very small plot of land, 17 square wa, in a location that's very similar to Floral: Same *walking* distance to the Big Market, Thapae Gate, etc. Asking price is 870,000 Baht. You now need to spend 1.5 million to build something with just a car park at the bottom level (and because it floods for a couple days every 5-6 years) and two floors of living space above that. Let's use every square inch of that area for the building, so you now have 17 square wa = 68 square meters, times two levels equals 136 square meters living space.. Let's round that down to 125 square meters because you lose some for stairs and what not.

Wait.. what?! I now have MORE space than the condominium in the same general location, and I've spent.. 870K + 1.5MB = 2.37 million Baht.. That's.. way cheaper.. for more space. At this point condo fans vs house fans will make the case that a condominium comes with a view, that there is a swimming pool, and security. The other side will mention that those things don't come free, and there is a monthly fee for that of several thousand Baht, AND that for many things you're dependent on the building being managed properly.. will they do the maintenance to the elevators.. will they paint the building when needed.. if not then that's potentially disastrous to your investment.

Let's say those arguments balance out. But the massive price difference remains. This rather nice, very new little town unit with private parking will -at 0.5%- rent for 11,870 Baht per month. and will accommodate a family of the same size as is living in the 30K condominium. I'd say that's an easier 'sell'.

interesting thought provoking post.

I like the numbers but... is your proposition hypothetical? Or is there a tiny plot there for sale at the equivalent of 2mil per rai-if my math is correct? If so, I assume you cannot build to the boundary and your living space needs to be interior- measured- so maybe a footprint inside of 7mt by 6mt ? And at a guess, other buildings close by, so views and maybe light are issues? And you didnt want to be concerned with ownership, as in, a farang can own a condo but not land, without a 'scheme' which may be dubious? That concerns me.

And as a renter I would far sooner spend my 12k in a well maintained high condo with views, light and a pool etc, knowing that if it ceased to be well maintained I could move on. Personally I have had living in houses, in spades, and much prefer the convenience and simplicity of condo life-but I know many others feel differently, so you may be right about your numbers. But would you buy the house you describe?? I suspect many would not and that impacts your capital growth potential. And for me Floral is not in an attractive location - a 25 min walk to Thapae, as you say.

It's not 2 million per rai; there is 400 square wa in a rai, so this is aroun 51,176 Baht per square wa which is not bad downtown. It however translates to over 20 million baht per rai! (though other factors come into play if you actually have one rai downtown: with 17 tarang wa buildin a tiny town home or shophouse is about the only thing you can do. But with 1 rai you can build a boutique hotel with higher earning potential, potentially bought by some big chain. So when there is more land it can actually be more expensive per square wa.

True that the interior footprint would be smaller, that's why I rounded down. (Chances are you'd have some storage space at the ground level though which you might count as part of the living space.) Either way you end up with more interior space than the condo.

But yes, some people prefer a condominium for the views, and Thai people apparently value it higher or else prices wouldn't be that high.

BTW if Floral isn't a great location then which place is? Rim Ping probably as it's even closer, but there are very few condominums that are a truly short walk to Thapae Gate, Kad Luang, Night Bazar, etc.

Edited April 5, 2014 by WinnieTheKhwai

[umbanda]

You say that you are looking for condos because foreign ownership. Consult with constructions around. Many contractors are building attached townhouses and houses on parceled lots in condominium system to sell to foreigners. Those are better buys than condos because is not a big difference in price with condos, but are larger and more convenient for families, and can be rented faster and in better price. When renting for short term or vacation, and to foreigners, you may get a good price, but Thai people do not pay 10000THB/month for a small condo when for the same money may get a nice house or townhouse. ..or even a mix-use property. Some mix-use 2 stories units can be purchase by foreigners, and may give you very nice return. By the bus station is a new complex of those mix-use units, where McDonalds and 7 Eleven is located. In 2012 I asked for prices and were around 9.000.000 THB....If you ask now at least you will know how much was the appreciation in one year and a 1/2.

About finding a lot and building a home in Chiang Mai now for less than 4.000.000 on prime location?.... is the dream of many, and the accomplishment of very few..or nobody.

Edited April 6, 2014 by umbanda

[RecklessRon]

Here is an example that might show why condominiums are such an iffy deal in Chiang Mai, versus regular houses. (Ownership issues aside, I'm just talking market value here)

Let's take one of the buildings I previously mentioned as being among the few that are actually in central Chiang Mai: Floral Condominium. From there you can walk to all the riverside pubs and restaurants, the Big Market, and Thapae Gate is 1.9 km / 25 min walk away. It's also desirable because the units are actually large: two bedrooms plus living area, 100 - 150 square meters. And it's the tallest building in town, with great views from most units.

This of course does not come cheap. I just looked up one of the 100 sq meter units and it goes for 6 million Baht. Going with 0.5% per month that's still 30,000 Baht per month in rent. Not many people in Chiang Mai want to allocate that kind of budget. (Unless you work at the US consulate; that's pretty much your target market: consular staff and top level Japanese/Korean management at factories in the larger area.) But it's doable.

Now, let's say there is also a very small plot of land, 17 square wa, in a location that's very similar to Floral: Same *walking* distance to the Big Market, Thapae Gate, etc. Asking price is 870,000 Baht. You now need to spend 1.5 million to build something with just a car park at the bottom level (and because it floods for a couple days every 5-6 years) and two floors of living space above that. Let's use every square inch of that area for the building, so you now have 17 square wa = 68 square meters, times two levels equals 136 square meters living space.. Let's round that down to 125 square meters because you lose some for stairs and what not.

Wait.. what?! I now have MORE space than the condominium in the same general location, and I've spent.. 870K + 1.5MB = 2.37 million Baht.. That's.. way cheaper.. for more space. At this point condo fans vs house fans will make the case that a condominium comes with a view, that there is a swimming pool, and security. The other side will mention that those things don't come free, and there is a monthly fee for that of several thousand Baht, AND that for many things you're dependent on the building being managed properly.. will they do the maintenance to the elevators.. will they paint the building when needed.. if not then that's potentially disastrous to your investment.

Let's say those arguments balance out. But the massive price difference remains. This rather nice, very new little town unit with private parking will -at 0.5%- rent for 11,870 Baht per month. and will accommodate a family of the same size as is living in the 30K condominium. I'd say that's an easier 'sell'.

So that all works out to a good argument - IF you ignore the ownership of land issues. But adding in the fact that you might be killed by whomever owns the land, or just barred from using it, and that kind of tips the scales a tad against. Include the possibility that whichever dodge you've used to 'own' the land might be voided by law (much more likely than the law on condo ownership being severely altered) and you might wind up with nothing... well the downside of that, to my way of thinking, is so dramatic that I won't be taking those risks with my nest egg - thank you very much, eh!

BTW: If you can get 0.5% per month that is 6% per year, which is way more than any safe investment or term deposit.

FYI: I'm looking to spend a ballpark figure of around 750,000B and expecting to rent at around 7,500B/mth. That's based on the magical 1% which appears to be a very common figure when talking about rental income property.

FYI2: Also I intend to live here the rest of my life, which may be 40-ish years, so in times of no renters I will live in the unit myself. That means I want it located in CM, not Bangkok or Pattaya or...

[Thighlander]

I agree with the comments about land/house....not playing "grey areas." Worst case scenario on a condo isn't that bad, especially one that is already built. I strongly recommend exposure to the north.

[mesquite]

Here is an example that might show why condominiums are such an iffy deal in Chiang Mai, versus regular houses. (Ownership issues aside, I'm just talking market value here)

Let's take one of the buildings I previously mentioned as being among the few that are actually in central Chiang Mai: Floral Condominium. From there you can walk to all the riverside pubs and restaurants, the Big Market, and Thapae Gate is 1.9 km / 25 min walk away. It's also desirable because the units are actually large: two bedrooms plus living area, 100 - 150 square meters. And it's the tallest building in town, with great views from most units.

This of course does not come cheap. I just looked up one of the 100 sq meter units and it goes for 6 million Baht. Going with 0.5% per month that's still 30,000 Baht per month in rent. Not many people in Chiang Mai want to allocate that kind of budget. (Unless you work at the US consulate; that's pretty much your target market: consular staff and top level Japanese/Korean management at factories in the larger area.) But it's doable.

Now, let's say there is also a very small plot of land, 17 square wa, in a location that's very similar to Floral: Same *walking* distance to the Big Market, Thapae Gate, etc. Asking price is 870,000 Baht. You now need to spend 1.5 million to build something with just a car park at the bottom level (and because it floods for a couple days every 5-6 years) and two floors of living space above that. Let's use every square inch of that area for the building, so you now have 17 square wa = 68 square meters, times two levels equals 136 square meters living space.. Let's round that down to 125 square meters because you lose some for stairs and what not.

Wait.. what?! I now have MORE space than the condominium in the same general location, and I've spent.. 870K + 1.5MB = 2.37 million Baht.. That's.. way cheaper.. for more space. At this point condo fans vs house fans will make the case that a condominium comes with a view, that there is a swimming pool, and security. The other side will mention that those things don't come free, and there is a monthly fee for that of several thousand Baht, AND that for many things you're dependent on the building being managed properly.. will they do the maintenance to the elevators.. will they paint the building when needed.. if not then that's potentially disastrous to your investment.

Let's say those arguments balance out. But the massive price difference remains. This rather nice, very new little town unit with private parking will -at 0.5%- rent for 11,870 Baht per month. and will accommodate a family of the same size as is living in the 30K condominium. I'd say that's an easier 'sell'.

So that all works out to a good argument - IF you ignore the ownership of land issues. But adding in the fact that you might be killed by whomever owns the land, or just barred from using it, and that kind of tips the scales a tad against. Include the possibility that whichever dodge you've used to 'own' the land might be voided by law (much more likely than the law on condo ownership being severely altered) and you might wind up with nothing... well the downside of that, to my way of thinking, is so dramatic that I won't be taking those risks with my nest egg - thank you very much, eh!

BTW: If you can get 0.5% per month that is 6% per year, which is way more than any safe investment or term deposit.

FYI: I'm looking to spend a ballpark figure of around 750,000B and expecting to rent at around 7,500B/mth. That's based on the magical 1% which appears to be a very common figure when talking about rental income property.

FYI2: Also I intend to live here the rest of my life, which may be 40-ish years, so in times of no renters I will live in the unit myself. That means I want it located in CM, not Bangkok or Pattaya or...

The last time I was a Floral, a 100 sq m unit rented for 25k per month. If it costs 6 million as WTK says, we are talking about less than 1/2%.

Stories abound about farangs being unable to rent out their condos. I suggest you really research it before you stake your livelihood on a condo purchase for rental.

Edited April 6, 2014 by mesquite

[beau thai]

Here is an example that might show why condominiums are such an iffy deal in Chiang Mai, versus regular houses. (Ownership issues aside, I'm just talking market value here)

Let's take one of the buildings I previously mentioned as being among the few that are actually in central Chiang Mai: Floral Condominium. From there you can walk to all the riverside pubs and restaurants, the Big Market, and Thapae Gate is 1.9 km / 25 min walk away. It's also desirable because the units are actually large: two bedrooms plus living area, 100 - 150 square meters. And it's the tallest building in town, with great views from most units.

This of course does not come cheap. I just looked up one of the 100 sq meter units and it goes for 6 million Baht. Going with 0.5% per month that's still 30,000 Baht per month in rent. Not many people in Chiang Mai want to allocate that kind of budget. (Unless you work at the US consulate; that's pretty much your target market: consular staff and top level Japanese/Korean management at factories in the larger area.) But it's doable.

Now, let's say there is also a very small plot of land, 17 square wa, in a location that's very similar to Floral: Same *walking* distance to the Big Market, Thapae Gate, etc. Asking price is 870,000 Baht. You now need to spend 1.5 million to build something with just a car park at the bottom level (and because it floods for a couple days every 5-6 years) and two floors of living space above that. Let's use every square inch of that area for the building, so you now have 17 square wa = 68 square meters, times two levels equals 136 square meters living space.. Let's round that down to 125 square meters because you lose some for stairs and what not.

Wait.. what?! I now have MORE space than the condominium in the same general location, and I've spent.. 870K + 1.5MB = 2.37 million Baht.. That's.. way cheaper.. for more space. At this point condo fans vs house fans will make the case that a condominium comes with a view, that there is a swimming pool, and security. The other side will mention that those things don't come free, and there is a monthly fee for that of several thousand Baht, AND that for many things you're dependent on the building being managed properly.. will they do the maintenance to the elevators.. will they paint the building when needed.. if not then that's potentially disastrous to your investment.

Let's say those arguments balance out. But the massive price difference remains. This rather nice, very new little town unit with private parking will -at 0.5%- rent for 11,870 Baht per month. and will accommodate a family of the same size as is living in the 30K condominium. I'd say that's an easier 'sell'.

interesting thought provoking post.

I like the numbers but... is your proposition hypothetical? Or is there a tiny plot there for sale at the equivalent of 2mil per rai-if my math is correct? If so, I assume you cannot build to the boundary and your living space needs to be interior- measured- so maybe a footprint inside of 7mt by 6mt ? And at a guess, other buildings close by, so views and maybe light are issues? And you didnt want to be concerned with ownership, as in, a farang can own a condo but not land, without a 'scheme' which may be dubious? That concerns me.

And as a renter I would far sooner spend my 12k in a well maintained high condo with views, light and a pool etc, knowing that if it ceased to be well maintained I could move on. Personally I have had living in houses, in spades, and much prefer the convenience and simplicity of condo life-but I know many others feel differently, so you may be right about your numbers. But would you buy the house you describe?? I suspect many would not and that impacts your capital growth potential. And for me Floral is not in an attractive location - a 25 min walk to Thapae, as you say.

It's not 2 million per rai; there is 400 square wa in a rai, so this is aroun 51,176 Baht per square wa which is not bad downtown. It however translates to over 20 million baht per rai! (though other factors come into play if you actually have one rai downtown: with 17 tarang wa buildin a tiny town home or shophouse is about the only thing you can do. But with 1 rai you can build a boutique hotel with higher earning potential, potentially bought by some big chain. So when there is more land it can actually be more expensive per square wa.

True that the interior footprint would be smaller, that's why I rounded down. (Chances are you'd have some storage space at the ground level though which you might count as part of the living space.) Either way you end up with more interior space than the condo.

But yes, some people prefer a condominium for the views, and Thai people apparently value it higher or else prices wouldn't be that high.

BTW if Floral isn't a great location then which place is? Rim Ping probably as it's even closer, but there are very few condominums that are a truly short walk to Thapae Gate, Kad Luang, Night Bazar, etc.

That's the trouble with my late night post while watching EPL-one zero missed equals an 18mil mistake! Sorry.

I agree abourt location but tried Rim Ping and even on the 8th floor I couldnt deal with the traffic noise out on the balcony. Not sure how high you would have to be for quite but above 14 I think, and they dont come on too often.

For many, I think the condo's near Nimman seem better located as you an walk to so many places - KSK, Maya, and te many bars, restaurants etc. Personally I prefer a river view but it depends how you spend your days- and nights!!

[WinnieTheKhwai]

So that all works out to a good argument - IF you ignore the ownership of land issues. But adding in the fact that you might be killed by whomever owns the land, or just barred from using it, and that kind of tips the scales a tad against. Include the possibility that whichever dodge you've used to 'own' the land might be voided by law (much more likely than the law on condo ownership being severely altered) and you might wind up with nothing... well the downside of that, to my way of thinking, is so dramatic that I won't be taking those risks with my nest egg - thank you very much, eh!

BTW: If you can get 0.5% per month that is 6% per year, which is way more than any safe investment or term deposit.

FYI: I'm looking to spend a ballpark figure of around 750,000B and expecting to rent at around 7,500B/mth. That's based on the magical 1% which appears to be a very common figure when talking about rental income property.

It wasn't so much an argument for buying a house in some way instead of a condo, it was just to make the case that condominiums are relatively over-valued in Chiang Mai, as land prices in most places just aren't high enough. So it's more of an argument to not bother buying a condo as an investment in Chiang Mai. To live in is an entirely different matter of course. And like you rightly state, you can't legally own land so you don't even have the option of buying anything other than a condo. I'm just saying that Chiang Mai is a weird place for condominiums.

Then: if you're spending 750K then you're looking at the run down condominiums near the railway station. (Or older buildings along the Canal road) And then pretty much a studio. You can't rent those out at 7,500. You're actually lucky to rent those out at any price.

[Choonpon]

The rental market is simply flooded with units waiting to be rented out. Not a wise idea for income.