Rental propeties - Investment Income in Thailand

[TealLA]

Hello all,

I've been thinking of a purchasing several condominiums in Chiang Mai for rentals and wanted to ask the community if anyone has any experience with this. I have roughly $90,000 USD and by doing some research I believe I could get roughly 3 units. My first question has to do with the fact that I'm not a Thai Citizen and owning property in Thailand has some special rules if you are a foreigner. I know a foreigner can own a condominium. Does anyone know if there is a limit to the number of units a foreigner can own? My second question is what kind of return on investment can you expect, e.g.- investing 1 million baht will return 10% annually in rents, 15% or perhaps even higher. I realize it all depends on what you pay for the property but I don't know if there is a general rule of thumb to consider or not. My logic is that if I could rent out 1 unit for around 10% of the cost of the unit annually, then that would give me a decent enough income to live in the SE Asia region on a full-time basis. Thank you for any information you can provide.

[chiang mai]

All I will say is that there is an over supply of condominiums in Chiang Mai and rents on small units can be very low. Good luck with your plan but make sure you do your research properly.

[bkkjames]

Keep your money in the bank. Look at any classifieds site here. Dreaming prices and few takers. Maybe you will be lucky one...

[ATF]

Renting out property anywhere in the World is a PITA. and Thailand is no different.

Your properties will get trashed and you will spend your time chasing rent and people doing moonlight flits.

Keep your money in the bank and use the interest to support your expenses.

Changing your USD into GBP at this point wouldn't be a bad idea if you don't need to use it for a year or so.

[Lukecan]

No 1 Rule of investing

Never invest all your money in the same instrument

You can buy 1 condo in CM, Keep some of it in cash, invest the rest in SET and S&P 500.

[ttthailand]

It all really depends on how much of a deal you can get on the condo(s).If you can buy a condo worth 2mill or 2.5 for 1.2 and rent it for 10k + a month I think ok. From what I see there is now a 15 to 20 year return on your money once you figure in what you would get if you just invested your cash at say 3% interest. You have to buy below market price to make out here. Maybe prices will come down in another year ???

As an example, I am currently paying 15K on a place that sells for 2.8m. Do the math but figure in about what your money would bring if you have it sitting in the bank collecting interest, say 3%. You must also figure in the maintenance fees and times that the unit is empty. It is currently a renters market in most of Thailand. Many reasons not to buy right now.....

[kannot]

"if" you had bought about 7-8 years ago when the baht was weak it was "ok" now its really not so good at all, maybe you will get 3-4%, 8 years ago 10+% was what I got in BANGKOK which was the best place to do this.

My advice dont bother "now"

Save yourself a lot of hassle with poor quality construction ( especially water) leading to problems later and shove it in the highest interest account you can.

Units I bought way back 8 years ago cost me 1.1 million baht (5x 30m2 units) close to the BTS

I started renting them for 15k a month as at the time few new units available at my location, over the next 4-7 years rents fell as more stock came online, rent went down to 14-13.5-13-12-11-and last customer 10k a month.

I have since sold ALL the units and they sold for 1.45 million baht, no problems selling if in good condition and location, all were studios, no commission to any agents as..................Wife is an agent!!!

I did pretty well out of them.

I wouldnt buy in the current market

Edited January 15, 2015 by kannot

[advancebooking]

As an investor myself I would first assess what happens if you buy 3 condos and cant find tenants for a long time. Is this going to make or break you. If you are really well off then take a risk as it wont affect your cash flow. If its the only money you have then I would suggest only buy one and sit on it for a few years until you know the market better.

Back home I learnt that the best investment property is in a town where there is a chronic shortage of rental properties.

If I were you I would spend many months looking at as many properties for sale and also look at many rental condos to give you an idea. By the way you make money in property when you buy ..... if you get it cheap...

good luck

[how241]

^{Buy the smaller, lower priced units. Look for condos under 1 million. You can always rent them out and don't need farang customers. Your return should be around 10%.}

[bangkapi]

I have a friend who has done this successfully in Thailand with many smaller units.

But when an air conditioner needs replacement or a there is a new tile and paint job required, there goes 4 to 6 months rent.

[Suradit69]

If you can rent out for the long-term to people who don't trash your condo and you pay regularly, including utilities, it might provide a steady stream of income of 10% BEFORE considering annual condo owners' payments and maintenance & repairs of the condo and any furnishings you supply. Also your might need to employ someone to find renters and who will probably charge a percentage of rents generated.

That said, I stay in a well-located condo in Pattaya. During the high season most of the units appear to be occupied as compared to the low season when many units remain unoccupied... whether as rentals or by owners who only use them part of the year. So you might see your condos only rented for a few months per year and short-term renters are more likely to include the party-hardy crowd who cause more wear & tear.

And obviously as an investment it is about as illiquid as you can get. Expecting to re-sell the units and recover your investment in an emergency or 5, 10 or 15 years down the road is not going to be easy. The condo I own has appreciated in value, judging by others sold recently in the same building, over the 15 years or so I've owned it, but I wouldn't want to depend on what or when I would actually get anything if I decided to sell. For me the real value was in the fifteen years of rent I didn't have to pay and the personal comfort of having my own place.

I think on a risk/reward scale you could find better investments for your money that would result in income and fewer sleepless nights.

Edited January 15, 2015 by Suradit69

[stopthegreed]

Buy the condo's in Cebu, you will make a fortune

[BernieOnTour]

Buy the condo's in Cebu, you will make a fortune

Why that?

IMHO considering the poor building quality, properties in Philippines are at least as overpriced as in Thailand.

[Mudcrab]

Buy the condo's in Cebu, you will make a fortune

And that post is based on what...stopping the greed?

[AZBill]

Not a chance you get anything close to what you are thinking. I own many condo units in the US and looked seriously at Thailand. It doesn't pen out. My condos in Florida earn me 12% net each year and are hassle free. You could easily afford one there. Keep your money in the US.

[cyborgx]

Looked into it about 7 or 8 years ago in grat detail. IMHO ......

Buy to rent looks initially a good investment, but once you check out ALL the REAL taxes that you are legally obliged to pay (not all usually declared or paid by local "property management services" on your behalf), plus "property management" fees if you get the condo team for example to collect rent, advertise your property etc., plus the cost of initial furnishings and then general wear and tear of items you must maintain, plus monthly condo maintenance fees, plus the fact that reselling too quickly makes you elliigable for even more taxes, its a lot of hard work and headache for a return that is not even guaranteed, and ties up your capital too tightly leaving only expensive and probably lossy exit strategies.

Edited January 15, 2015 by cyborgx

[nzthai]

Was renting a condo in Riverside Condo's last month for 10,000...met a guy in the lift who said he had bought 2 condo's, said it was the worst mistake he ever made, due to low demand for condo's, could not rent them

Be careful, do the figures, take advice(from the right people)...make sure you account for ALL COSTS..if you cant rent it...you are losing..

I would be more interested in looking at where Russians own alot of condos...could be some bargains coming up as they are going to really struggle to service the loans soon;-)

[cracker1]

Hi Teal

It should not be difficult for you to answer your own question !

• Visit 20 Condominiums for rent with the local agents.
• Discuss the rental costs.
• Visit 20 Condominiums for sale with the local agents.
• Discus the sale price.
• Do the Math's and then you will understand the "gross" return you are likely to gain on your investment.
• You should then be able to figure out your "Net return".
• Take very much care !

[Danbit]

Be happy with 7% return that is what I get.

Look at http://www.thaigolf.dk/thaigolf_prices.htm in Chonburi at Pin High Golf Club, the rental of the 160 sq meter condoes is now 15,000 only half price of what asked.

[catman20]

done this years ago was getting 10% on my investments which was good, then with all the over building here and everyone I spoke to was doing the same as me it became harder to rent the properties and had to reduce the rents ending up with lots of work lots of problems and 3 or 4% not so good, so I sold all the properties.

hope this helps you.

[KittenKong]

My first question has to do with the fact that I'm not a Thai Citizen and owning property in Thailand has some special rules if you are a foreigner. I know a foreigner can own a condominium. Does anyone know if there is a limit to the number of units a foreigner can own?

I know. There is no limit to the global number of units anyone may own. (There is a general percentage limit to farang ownership in each building though).

You can reasonably expect property ownership taxes to be introduced at some point, along with more stringent taxation of rental income.

[asdecas]

Buy the condo's in Cebu, you will make a fortune

And that post is based on what...stopping the greed?

I assume the gentleman is being ironic; condos in the Philippines, and Cebu in particular, have notoriously poor build quality, are consistently overpriced both to buy and to rent vis-a-vis houses, and are hopelessly illiquid, even compared to Thailand.

If the OP is looking for investment income in Thailand without hassle and relatively low risk, I suggest he looks at SET corporate funds, some of which will pay a tax-free 6-7% dividend annually. The key with these however is to buy at the right moment to protect the capital investment.

[ozyjon]

I own rental property in countries around the world.

10% return on investment,,please don't make me

cry, have not seen that since 2008, and it's falling

now i'm selling my condos and putting my money

in the bank,, less interest but less stress for me.

Good luck to you though.

[Ludacris]

Have you considered REITs as a way of investing in property?

They provide capital appreciation as well as regular income, and are completely hassle free (no tenants to worry about, no maintenance, etc.) and liquid. Easy to use as part of a complete portfolio which includes regular rebalancing, so easy to avoid at least some of the effects of a property bubble.

The only drawback is you normally don't buy REITs on leverage like you would have with a mortgage, but you're probably not looking at a mortgage in Thailand so that wouldn't be a factor.

And of course look for low fee REITs and don't forget about tax considerations.

Definitely something to look into.

[NCC1701A]

i assume you know about Thailand so we will not get into that nightmare.

there is no off switch for the overbuilding.

believe me they will build just like they drive. until they crash at full speed.

I live in a sea of empty condos in Hua Hin.

dark monoliths with no lights on at night. maybe one or two units in a twenty story building.

Eleven thousand new units.

And more under construction.

and the collective denial of the owners. some I know who have been trying to sell for three years.

and empty and failing housing projects that dot the countryside every 100 meters. villa this and villa that.

i rent a three bedroom two bathroom house with a big yard, 3 minutes walk from the ocean, 5 kilometers from the Kings Summer Palace.

My rent is 10,000 baht or $306 USD.

good luck.

Edited January 16, 2015 by NCC1701A

[ExpatJ]

I looked at a lot of higher end one bedroom units on sukhumvit and next to bts - 5-9 million baht for a 1 br but the rental returns were all less than 5% and most of the condos had a lot of empty units. So cheaper units seem to have better returns - just a heck of a lot more work dealing with several units and tenants (compared to say a Japanese business man in a prime sukhumvit condo- the best tenant to have compared to farang/thai).

Im looking at some new units behind emporium mall and next to benjasiri Park-very quiet/convenient location and a bit cheaper than on sukhumvit.

[KittenKong]

I looked at a lot of higher end one bedroom units on sukhumvit and next to bts - 5-9 million baht for a 1 br but the rental returns were all less than 5% and most of the condos had a lot of empty units.

How many sqm is that? These places seem to be way overpriced to me.

[ExpatJ]

I looked at a lot of higher end one bedroom units on sukhumvit and next to bts - 5-9 million baht for a 1 br but the rental returns were all less than 5% and most of the condos had a lot of empty units.

How many sqm is that? These places seem to be way overpriced to me.

They are tiny!

[AnotherOneAmerican]

My pal bought 2 condos for investment 6 months back.

Both 2 room condos, both sitting empty for 6 months.

(1.2M 80m2, 900k 70M2)

No viewings so far.

All the long stay western people have gone.

VISA tightening, Junta, bad economy in the west.

Not a good time to buy, unless you want to live in it.

Edited January 17, 2015 by AnotherOneAmerican

[KittenKong]

My pal bought 2 condos for investment 6 months back.

Both 2 room condos, both sitting empty for 6 months.

(1.2M 80m2, 900k 70M2)

At least he didn't pay much per sqm. At those prices I dont suppose they are in a popular location though.