Real estate annual yield spreadsheet model

[WorkingTourist]

Let’s say I buy a condo at 5.8m and sell it 3 years later at 7m. Did I make a profit of 21%?

Depends on how you look at it: After stamp duty (0.5%), transfer fee (2%), withholding tax (complex), and agent fee (3%), my annual yield is only 3.71%. So not really as impressive sounding as the 21% profit above.

I made a spreadsheet model that takes a purchase price, market price (sold at), and years of ownership, and then calculates the annual yield which I have published here: https://docs.google.com/spreadsheets/d/1IKzWj7WN0h-iddofRP5DuBVWtv5mRWsJcb9NtwQUPS8

I wanted to just upload the spreadsheet, but it seems that this file type is not allowed in this forum. So you will need to make a copy of the spreadsheet if you want to play with the numbers.

In my model I assume a 50/50 split of the transfer fee, so seller paid 1% of purchase price and 1% of sale price. I calculate this based on the market price rather than the assessed value, since I have no idea about assessed real estate values in Thailand.

I got my information and numbers from http://usa.siam-legal.com/property-thailand/transfer-taxes.php

[Halfaboy]

To be included is the expected fx-rate in case money needs to be transferred from- (and later backwards to-) your country.

Modify the spreadsheet so that any number for fx-rate (buying and selling) can be included. Another modification I suggest is the option to play with the period. Also do not forget the initial settling costs. These are the costs to make your condo your home (art, pots and pans etc).

Not sure what you mean with 'real estate fee'. Is this the maintenance fee ?

Good luck !

[WorkingTourist]

Thanks for the feedback.

I renamed the “real estate fee” to “sales commission”. It’s the 3% commission you normally pay the real estate agent when selling.

The number of years is already an editable field and the annual yield will update accordingly. I have since split out the annual yield into gross and net (so it’s more clear how much the fees and taxes eat of the appreciation).

As for the price for pots and plants, I don’t think this is relevant for the model, as it’s only meant to expose how much taxes and fees affect the net annual yield of condo ownership (in a market with rising prices). And presumably these items can be taken with you when you sell or you could have them from your previous place and/or some items will need to be replaced during the ownership period.

An exchange rate multiplier could be interesting for foreigners, but it would only be relevant for historic dates, as future rates are unpredictable.

It would probably be more useful for prospective condo owners to incorporate CAM fees, but then I think we should do another model, one that shows the true monthly price of being a condo owner (given an estimated annual appreciation rate and opportunity cost of putting the money in a bond).

[trogers]

Total returns = rental yield + capital gain.

Your spreadsheet considers only capital gain.

[WorkingTourist]

Total returns = rental yield + capital gain.

Your spreadsheet considers only capital gain.

The model came about after reading the thread Condos don't appreciate in value where part 2 of the linked article says that the guy’s condo did appreciate in value, but he lost 500k due to withholding tax. Additionally the thread Analyzing the Bangkok Condo Market where a commenter says “everyone I know in Thailand who bought 10 or more years ago has a property worth more than they paid for it.”

So it’s not about total profit for buying and then renting out a condo, such model would need to know about occupancy rate, rental price, CAM fees (and how they change over the years), taxes on rental income, expenses due to wear and tear, etc. All of this is speculative and can to some degree be adjusted during the ownership period (based on demand and experiences).

The model is meant for people who buy a condo to live in, or has already bought one, and want to know how the Thai taxation scheme affects you, as I think these expenses are fairly opaque to most real estate owners, at least the withholding tax, as it requires multiple lookup tables.

[Rocketsurgeon]

As a buyer, I would never pay the 1%. You might want to adjust that as well unless this isban absolute term of sale on your end.

Your property, your sale, your problem.

One million condos,I'm sure I could find another.

[WorkingTourist]

As a buyer, I would never pay the 1%. You might want to adjust that as well unless this isban absolute term of sale on your end.

Your property, your sale, your problem.

One million condos,I'm sure I could find another.

I believe it is normal to split the transfer fee 50/50. You want the deed? You pay half the cost of getting it into your name…

But you’re free to make a copy of the spreadsheet and change the fee to be 2% of the sale price and maybe also add a 10% discount as an expense because there a million condos, so why would anyone pay full price?

[PattayaPhom]

Is a spreadsheet really needed...or even a calculator. Am sure most with a C.S.E. in maths could work this out in their head. Not regarding any rental return makes the outcome a moot point anyway. You could add extra fields to the existing spreadsheet to incorporate this so would offer a realistic outcome.

[WorkingTourist]

Is a spreadsheet really needed...or even a calculator. Am sure most with a C.S.E. in maths could work this out in their head. Not regarding any rental return makes the outcome a moot point anyway. You could add extra fields to the existing spreadsheet to incorporate this so would offer a realistic outcome.

Yes, a spreadsheet is needed, because to do the calculation you need to use two lookup tables, so there is no way to express this as a single formula.

As for rental income, see post #5.

[WorkingTourist]

Since a few posts mentioned rental income, I added a second sheet that shows the annual yield including rental income for the first 40 years.

For the example values I put in (based on an actual listing which is now available for rent, where I gave it an occupancy rate of 80%) the annual yield tops after 10 years at 5.33% and then decreases.

I didn’t include agent commission for managing the rental nor wear and tear, so this annual yield is probably optimistic (for this particular unit).

Still, if we decrease appreciation to 1.5% and occupancy rate to 40%, it’s still net positive after 2 years, and the annual yield is 2% after five years, slowly moving toward (but never reaching) 3%.

[hhgz]

How about maintenance - not the monthly condo fee, but the normal costs of maintaining a household (painting, or AC repair as examples).

How about appliances you buy, and leave - a refrigerator, for example. If you take the appliance with you, how do you handle depreciation?

There are many speadsheets online that provide significantly more detail that affects housing costs and profits. It seems as though, with the simplicity of your spreadsheet, you've never owned a home.

[WorkingTourist]

How about maintenance - not the monthly condo fee, but the normal costs of maintaining a household (painting, or AC repair as examples).

How about appliances you buy, and leave - a refrigerator, for example. If you take the appliance with you, how do you handle depreciation?

There are many speadsheets online that provide significantly more detail that affects housing costs and profits. It seems as though, with the simplicity of your spreadsheet, you've never owned a home.

Please see post #5.

[mike324]

If you buy a new condo, don't forget the one time sinking fund fee! That is a big one!