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

[heybruce]

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.

I think 0.5% per month is a lot closer to what the average renter pays than 1%. If you can keep the unit occupied and if you can keep maintenance and other costs down it is a reasonable but not exciting return on investment. However those are two big "if"s, as a renter I get the impression, whenever I even suggest the possibility of moving, that responsible long-term renters that pay on time and take care of the property are hard to find.

I'm surprised that little has been made of the fact that new condos are being built all over the place in Chiang Mai, I can see three under construction from my living room window. Maybe these developers have a good grasp of the future market, or maybe there's a bubble inflating. If the developers have it right then the new condos will restrict room for rent increases, and if they have it wrong now is a terrible time to invest in condos.

[WinnieTheKhwai]

^ I'm guessing none of those new ones are going up in downtown areas (near the moat) that are more easily rented to foreigners. The last ones that went up there were The Shine and Twin Peaks on Chang Klan, both very expensive. (If there are any others then I'd like to know about it. ) For me I'm not interested if it's all the way near Payap / CM Business Park, Meechoke Intersection on the way to Mae Jo or up the Canal Road. ( For Nimmanhaemin I acknowledge that some people like it. )

[NigelKennedy]

Reckless Ron if you have 750k and want 7500 a month have a look at JC Hill Place on Canal Road close to Maya. Good management, will be painted, pool to be renovated. Many now rented at 7500/8000. Don't let negative people put you off old condo blocks.

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[beau thai]

^ I'm guessing none of those new ones are going up in downtown areas (near the moat) that are more easily rented to foreigners. The last ones that went up there were The Shine and Twin Peaks on Chang Klan, both very expensive. (If there are any others then I'd like to know about it. ) For me I'm not interested if it's all the way near Payap / CM Business Park, Meechoke Intersection on the way to Mae Jo or up the Canal Road. ( For Nimmanhaemin I acknowledge that some people like it. )

Not sure if Maya meets your definition of downtown, but if so Moda is taking shape opposite Vieng Ping, within a few hundred metres of Maya. Up to about floor 6/8 yesterday, but maybe 12-18 months from completion. When I saw the show flat 3 months back it was very high quality and nearly all were pre-sold at what looked to me to be very fancy prices - more than 3mil for small studio and they only had poorly located units left to sell. Not sure who the buyers are but it looks a big leap of faith to me. 110k per sq mtr??

[NigelKennedy]

Beau Thai the guy has 750k to spend so why is Moda starting 3 mil relevant.

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[beau thai]

Its relevant to Heybruce asking about new condos downtown. That's all!

And I dont think you can buy a condo in JC for 750k anymore can you??

Edited April 7, 2014 by beau thai

[worgeordie]

Should have mentioned at beginning he had only 750K bht to buy condo,

that makes a great difference,and expecting 7500 bht rent is a bit ambitious

in my view,not into days market.

regards Worgeordie

[Thighlander]

The rental pickins listed here on TV classifieds are pretty slim right now. 8500 at Vieng Ping, anything less is at PP. The 200 per month psm algorithm is pretty close, in most cases.

[heybruce]

The rental pickins listed here on TV classifieds are pretty slim right now. 8500 at Vieng Ping, anything less is at PP. The 200 per month psm algorithm is pretty close, in most cases.

Yeah, thinking back on what I've rented I'd say that for a modern, good quality but not luxury condo between the river and Nimmanhamin area 200 baht per square meter is about right, but to head off nitpickers let's say that most decent condos in this area rent for 150 to 250 psm. What is the purchase price psm for these types of condos in this area?

[Thighlander]

The rental pickins listed here on TV classifieds are pretty slim right now. 8500 at Vieng Ping, anything less is at PP. The 200 per month psm algorithm is pretty close, in most cases.

Yeah, thinking back on what I've rented I'd say that for a modern, good quality but not luxury condo between the river and Nimmanhamin area 200 baht per square meter is about right, but to head off nitpickers let's say that most decent condos in this area rent for 150 to 250 psm. What is the purchase price psm for these types of condos in this area?

15K (shell)-60K (as in the example given of 6 million for 100 sm at Flora).

[RecklessRon]

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.

Okay to buy to live in but not okay to invest in? Seems weird since I stated the point was to buy a condo and use the rent to rent a house. This is not the same as requiring the income and is almost the same as living in it except for the rental hassle. The biggest difference is the risk of long term vacancy and I can get around that by moving in and living there during any extended periods - as I expect to live here for decades.

I also suspect the glut of available rental units has a lot more to do with the political unrest deterring tourists than an actual over-supply of units. And I believe that the local economy, renting included, will pick up significantly the next high season after the political crap has settled to the point of being ignored internationally.

Also I am looking at paying anywhere between 600,000 and 1.2M depending mainly on market rental demand and value based on its location. And for those that don't know it there are LOTS of available units in that price range (so many that a lot of people would see this as a bad 'investment', eh, but I'm here for the long run).

Lastly I am considering buying during the rainy season, which I believe will have the best deals - particularly this rainy season due to the dearth of tourists this last high season

[WinnieTheKhwai]

Reckless Ron if you have 750k and want 7500 a month have a look at JC Hill Place on Canal Road close to Maya. Good management, will be painted, pool to be renovated. Many now rented at 7500/8000. Don't let negative people put you off old condo blocks.

Right, and a friend of mine can't get a nice corner unit in that very building rented out at 5000 Baht, quite nicely furnished and with an excellent air conditioner.

The repainting is good news though, because it looks really nasty. And I do agree that it is reasonably priced within the OP's budget.

Edited April 7, 2014 by WinnieTheKhwai

[WinnieTheKhwai]

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.

Okay to buy to live in but not okay to invest in? Seems weird since I stated the point was to buy a condo and use the rent to rent a house.

What that means is that you got to live somewhere anyway, and you stated you don't mind living in a condominium for a while, so then it makes sense to buy a condominium. (I'm agreeing with you.) As in investment, a Chiang Mai condominium now competes with any other investment (things you can't live in), like stock investments. So you can find anything that will give you that 6%, which will also pay your house rent.

I'm not saying it's a ridiculous / impossible idea, just that you won't get 7,500 Baht on a 750K unit. You'd get 4,500 Baht on a 750K unit, or 7,500 Baht on a 1.5 million Baht one, and that's still doing very well. Anything more is less realistic.

Edited April 7, 2014 by WinnieTheKhwai

[heybruce]

^ I'm guessing none of those new ones are going up in downtown areas (near the moat) that are more easily rented to foreigners. The last ones that went up there were The Shine and Twin Peaks on Chang Klan, both very expensive. (If there are any others then I'd like to know about it. ) For me I'm not interested if it's all the way near Payap / CM Business Park, Meechoke Intersection on the way to Mae Jo or up the Canal Road. ( For Nimmanhaemin I acknowledge that some people like it. )

The three I referred to are on Nimmanhamin; on one work has just begun on the foundation while the other two could probably be finished this year if work continues. There is also a condo planned for Nimmanhamin soi 5 at the intersection with Srimangklachan (sp?); not a bad location, five minutes walk to Maya or Central Kad Suan Kaew. That bit of Srimangklachan floods worse than average during heavy downpours, but otherwise a decent location.

I think most of the retired western residents prefer the river and old city area to Nimmanhamin, however Nimmanhamin isn't that far away and can serve as a viable second choice if the rents in the preferred areas get too high. Four new condos (at least) will increase the number of units in Nimmanhamin significantly, all these units chasing a limited supply of quality tenants will keep rents low.

[Thighlander]

Are you talking about the Palm Springs Condo? Start at 1.8 million.

[heybruce]

Lastly I am considering buying during the rainy season, which I believe will have the best deals - particularly this rainy season due to the dearth of tourists this last high season

Don't get too optimistic, in Thailand people will let property sit unused for years rather than mark down the price.

Also tourists don't rent condos, you need workers and retirees. I don't think the political situation has had any impact on workers coming to Chiang Mai, while retirees dissuaded from coming to Thailand by the political unrest won't change their mind until things have settled down for a long time.

[heybruce]

Are you talking about the Palm Springs Condo? Start at 1.8 million.

That's the one. I assume 1.8 million buys a studio, any idea how big?

[Thighlander]

75 units, 8 floors...so few will get much of a view, and you'll pay a premium to be on upper floors. I'll betcha it's less than 30 sm, but will have to verify. Sales office was bustling today at 4:15, with two people waiving signs on Srijilankha at the office, and two more at the Nimman HK intersection.

[roger1999]

The Nimmana project on Nimmen Soi 6 is rather massive. Three buildings, 7-8 floors each. I'm not sure how many units that will put on the market, but quite a lot. Palm Springs (as mentioned) is also doing three large buildings just blocks away. I'm shocked if the 1.8 start price is for a studio, but I'm not in the market so I don't know current prices.

Something is going up just down the street from the Unique Condo. They haven't posted any signs. A local Thai living in the neighborhood told they were 5.0 million baht units and being sold out of Bangkok, but I have no idea is she is right.

[Thighlander]

1.8 would be 60K psm.....that's half of what anything on the BTS is going for, with very few exceptions.

[heybruce]

The Nimmana project on Nimmen Soi 6 is rather massive. Three buildings, 7-8 floors each. I'm not sure how many units that will put on the market, but quite a lot. Palm Springs (as mentioned) is also doing three large buildings just blocks away. I'm shocked if the 1.8 start price is for a studio, but I'm not in the market so I don't know current prices.

Something is going up just down the street from the Unique Condo. They haven't posted any signs. A local Thai living in the neighborhood told they were 5.0 million baht units and being sold out of Bangkok, but I have no idea is she is right.

Seems like these two projects alone will approximately double the number of condo units currently in the Nimmanhamin area. I assume they will space them out so everything doesn't hit the market at the same time.

The price of new condos is ridiculous, it's much better and cheaper to buy something older and refurbish it as you like it.

[roger1999]

Since a number of you seem to know a lot about the real estate market here, can you tell me what a 34 sq. meter studio in a rundown building on the Canal Road is worth? It's on a lower floor, 3rd floor, I think. I don't know the name of the building but it is opposite Fine Thanks and about a block or two further away from Huay Gaew.

By "rundown" I mean that the building looks old and really needs a new coat of paint.

[stigvinck]

Since a number of you seem to know a lot about the real estate market here, can you tell me what a 34 sq. meter studio in a rundown building on the Canal Road is worth? It's on a lower floor, 3rd floor, I think. I don't know the name of the building but it is opposite Fine Thanks and about a block or two further away from Huay Gaew.

By "rundown" I mean that the building looks old and really needs a new coat of paint.

There are a few condos in that area, and although they look in a similar state from the outside, some of them are worth more than the others. Could even be double price (factors as management quality etc are not always visible from the outside, but important for the price. And wether the unit is renovated or not also makes quite a few k's difference in per square metre)

It would help if you can get the name of the building and a photo or 2 of the interior of the unit...

ps, depending on what building it is I might be interested if you have anything for sale. PM me in that case.

Stig

[Thighlander]

Since a number of you seem to know a lot about the real estate market here, can you tell me what a 34 sq. meter studio in a rundown building on the Canal Road is worth? It's on a lower floor, 3rd floor, I think. I don't know the name of the building but it is opposite Fine Thanks and about a block or two further away from Huay Gaew.

By "rundown" I mean that the building looks old and really needs a new coat of paint.

I'll guestimate they are asking 825K....what it is actually worth is harder to determine.

Chom Doi, perhaps?

[roger1999]

No, it's not Chom Doi. Maybe something like Thaveeporn Tower? I don't own there but I know a fellow who thinks he wants to sell. I don't know what kind of renovations he might have done.

[Oscar2]

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

those high numbers could explain why some 40 or so days after the "grand opening party" it appears that perhaps one or two units are either bought or rented out. if you go by there at night (we live 5 minutes from there and often walk past in the evening), it appears to be a ghost town, that there are more security guards than tenants. who would want to live in a place when you look out the window (as there is no room to even sit on the tiny balcony) all you see in the morning and afternoon are cars backed up and blowing smoke in your face! same for the monstrosity across from Tanawan. we counted at least 160 units - 80 of which have been complete for about 3 months now. there is one tenant in the entire complex!

[Thighlander]

I'm shocked if the 1.8 start price is for a studio, but I'm not in the market so I don't know current prices.

Saw the sign for Rawee Waree.....2.49 million. Nimman soi 15. Doesn't give the square meters, but the picture has a bed in the living room.

[Thighlander]

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.

Also I am looking at paying anywhere between 600,000 and 1.2M depending mainly on market rental demand and value based on its location. And for those that don't know it there are LOTS of available units in that price range (so many that a lot of people would see this as a bad 'investment', eh, but I'm here for the long run).

Could you show us one website link where there are "LOTS" of units in the 600-1.2 range?

[roger1999]

I'm shocked if the 1.8 start price is for a studio, but I'm not in the market so I don't know current prices.

Saw the sign for Rawee Waree.....2.49 million. Nimman soi 15. Doesn't give the square meters, but the picture has a bed in the living room.

Unreal. In 2008 I know a guy who sold a townhouse in that area for 3 million. There is a townhouse for sale on Nimmen Soi 2. It's been on the market a long time. It started at 5.9, now down to 4.9 and still no takers. Rumor is that offers in the 4.5 range are being turned down.

[beau thai]

Reckless Ron if you have 750k and want 7500 a month have a look at JC Hill Place on Canal Road close to Maya. Good management, will be painted, pool to be renovated. Many now rented at 7500/8000. Don't let negative people put you off old condo blocks.

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Looked at 2 studios today in JC Hill Place. Both recent reno's - one with no balcony at 905k and one with at 1050k. Suggested rent 8k, but 7k more likely I feel.

Tatty building and from answers to questions, desperately needed repainting not happening any time soon and pool re-opening maybe late 2015 if lucky.

Not a very good location in my view and unexciting. Perhaps that makes me a 'negative person' but sometimes hard to distinguish between realistic and negative?

Time will tell.