Teach me the secrets

[TheCruncher]

I have removed money from the stock market and other investmets, due to bad returns, and intend to invest at least part of it in a few condo's to rent.

Previously I've had no experience in the real estate market.

When I look at the offers I can see new build and second hand properties.

I notice there is sometimes a huge difference in price/sqm depending on the floor, which wind direction they are facing and the view.

I understand that if you want to resell the best view and location in the building will be the easiest job, but does this also accounts in the case of rental yields?

It is no secret that a condo with sea view will fetch a higher rent price than the same one facing the garden, but is the higher sales price translate in a comparable higher rental yield?

Will the lets say 25% premium in sales price also guarantee me a 25% higher rental price, or will a perfect view condo ( priced at a perfect view rental price) also attract more candidates, or will the cheaper one give ne a higher chance on good returns?

Currently I'm looking at a new project that consists out of 2 high rises and 1 low rise building. The sales person tells me that the high rise mostly attracts investors ( flippers ) while the low rise mostly sells to people who live here. At the same time the low rise is 30% lower in price/sqm than the high rise.

Which one would be the best bet for my purpose?

I'm not looking for holiday makers but rather for long term renters, so which kind of condo's should I look for, and look forward to your advise.

[Kaymcdonnell]

Well best idea now is to look at buying a resale from someone that has previously bought and now come under hard times, a few good buys about.

[trogers]

Distress properties in good locations, meaning from the secondary market. Resale units are not on the secondary market. They are units that flippers abandoned which developers could not transfer.

Long-term rentals in holiday spots? Supply is too many and price war on rents is inevitable.

[fang37]

Go to the local casino & put all your $$$ on odds!

If evens comes up, you have no problems - no $$$.

[TheCruncher]

Distress properties in good locations, meaning from the secondary market. Resale units are not on the secondary market. They are units that flippers abandoned which developers could not transfer.

Long-term rentals in holiday spots? Supply is too many and price war on rents is inevitable.

Thanks, but I'm aware of this, so I probably wasn't clear in my question.

What will give the best yield in rental.

Will it be the unit with the ideal view and position in the building, which obviously will have a higher purchase price and according rental price, or will it be the less ideal located units in the same building which are offered at the lower sales price?

Will long time renters go for the higher priced rental in the high rise building, or rather prefer a same sized unit in the low rise building in the same project because it will fetch a lower rental price?

I understand that in a project some units are rented continuously, while others stay empty most of the time. Which of the above examples will attract long term renters the easiest?

I'm sure there are several members who have experience with this.

[PattayaPhom]

Where in Thailand are you looking, keep away from new builds. There are a few in Pattaya/Jomtien that will get you approx. 8% return after fees etc however rents seem to be dropping. If you want long term, why not look at the Thai market, 67 million people here need accommodation, cheap rooms or something near a university. It may not be as sexy as a smart condo but your rooms should be full almost always. I am still currently getting almost 14% on mine from what I spent and they are almost always full

[TheCruncher]

Where in Thailand are you looking, keep away from new builds. There are a few in Pattaya/Jomtien that will get you approx. 8% return after fees etc however rents seem to be dropping. If you want long term, why not look at the Thai market, 67 million people here need accommodation, cheap rooms or something near a university. It may not be as sexy as a smart condo but your rooms should be full almost always. I am still currently getting almost 14% on mine from what I spent and they are almost always full

That is indeed a good suggestion you make, and one I'm sure is correct, though not so easy for a foreigner to purchase or even locate.

I also assume that the ones you talk about can not be in foreign name, and I have questions with the legality of owning rental rooms through a company.

8% after returns is not the sky, but it is attractive enough compared with what you can get from a bank, and I would think that if you buy in the right location that rents will rise over time.

Care to share which buildings in Pattaya/Jomtien you have in mind?

[trogers]

Timing!

You are cashing out of the stockmarket in anticipation of a coming crash. If this really happens, the local stockmarket would also dip substantially making some property owners needing cash to support their stock trading accounts.

These are the distressed properties you want.

[fang37]

Timing is everything.

[TheCruncher]

Timing!

You are cashing out of the stockmarket in anticipation of a coming crash. If this really happens, the local stockmarket would also dip substantially making some property owners needing cash to support their stock trading accounts.

These are the distressed properties you want.

Again I am aware of those opportunities, but it doesn't answer my questions.

The distressed properties for sale will be split between all the options there are in a project.

My question is specifically, in which section will I have the highest chance to create a good return.

Should I go for the higher priced units in a certain project or rather select the ones that nobody wants and therefor will be cheaper to purchase?

[trogers]

Timing!

You are cashing out of the stockmarket in anticipation of a coming crash. If this really happens, the local stockmarket would also dip substantially making some property owners needing cash to support their stock trading accounts.

These are the distressed properties you want.

Again I am aware of those opportunities, but it doesn't answer my questions.

The distressed properties for sale will be split between all the options there are in a project.

My question is specifically, in which section will I have the highest chance to create a good return.

Should I go for the higher priced units in a certain project or rather select the ones that nobody wants and therefor will be cheaper to purchase?

Why would the unit that nobody wants be easily rented out? If a unit with pool view is sold at substantial discount to one with seaview, I would choose pool view.

But a unit looking into the parking space of an adjacent building cannot be rented out without a 50% slash in rent. You calculate the yield.

[TheCruncher]

Timing!

You are cashing out of the stockmarket in anticipation of a coming crash. If this really happens, the local stockmarket would also dip substantially making some property owners needing cash to support their stock trading accounts.

These are the distressed properties you want.

Again I am aware of those opportunities, but it doesn't answer my questions.

The distressed properties for sale will be split between all the options there are in a project.

My question is specifically, in which section will I have the highest chance to create a good return.

Should I go for the higher priced units in a certain project or rather select the ones that nobody wants and therefor will be cheaper to purchase?

Why would the unit that nobody wants be easily rented out? If a unit with pool view is sold at substantial discount to one with seaview, I would choose pool view.

But a unit looking into the parking space of an adjacent building cannot be rented out without a 50% slash in rent. You calculate the yield.

Of course a unit looking into the parking space will need a 50% rental discount, but it will also fetch a similar purchase discount, so if it is rented out it will have the same return.

If it stays empty because of the view it will yield no return though, but that is what I try to figure out with this thread.

My believe is that buyers look different at a condo than renters. A buyer, especially a "flipper" will in my opinion always go for the ideal located unit, which will carry the highest sales price.

But does the average renter, keep in mind that we're talking about long term renters as I don't want the hassle to advertise year round to get a higher price from holiday goers, think the same way or will he go for the cheapest unit available regardless of the view?

[fang37]

These days people are very demanding. They want a high level room for the view, large condo, TV, Wi-Fi, protection from the elements, proximity to amenities, on-site laundry, office, gym, massage & office.

Max rent = B8000/mth!

[TheCruncher]

These days people are very demanding. They want a high level room for the view, large condo, TV, Wi-Fi, protection from the elements, proximity to amenities, on-site laundry, office, gym, massage & office.

Max rent = B8000/mth!

Dream on, there are no units like that available in Pattaya for that price.

[trogers]

Timing!

You are cashing out of the stockmarket in anticipation of a coming crash. If this really happens, the local stockmarket would also dip substantially making some property owners needing cash to support their stock trading accounts.

These are the distressed properties you want.

Again I am aware of those opportunities, but it doesn't answer my questions.

The distressed properties for sale will be split between all the options there are in a project.

My question is specifically, in which section will I have the highest chance to create a good return.

Should I go for the higher priced units in a certain project or rather select the ones that nobody wants and therefor will be cheaper to purchase?

Why would the unit that nobody wants be easily rented out? If a unit with pool view is sold at substantial discount to one with seaview, I would choose pool view.

But a unit looking into the parking space of an adjacent building cannot be rented out without a 50% slash in rent. You calculate the yield.

Of course a unit looking into the parking space will need a 50% rental discount, but it will also fetch a similar purchase discount, so if it is rented out it will have the same return.

If it stays empty because of the view it will yield no return though, but that is what I try to figure out with this thread.

My believe is that buyers look different at a condo than renters. A buyer, especially a "flipper" will in my opinion always go for the ideal located unit, which will carry the highest sales price.

But does the average renter, keep in mind that we're talking about long term renters as I don't want the hassle to advertise year round to get a higher price from holiday goers, think the same way or will he go for the cheapest unit available regardless of the view?

If I am a renter, I can be within your budget of the 50% discounted unit, but I would look for a unit in a nearby building with a better view.

Your competition is not only the units in one project.

[KNJ]

Timing is everything.

And you have a crystal ball?.................Time In the Market is everything

[TheCruncher]

Why would the unit that nobody wants be easily rented out? If a unit with pool view is sold at substantial discount to one with seaview, I would choose pool view.

But a unit looking into the parking space of an adjacent building cannot be rented out without a 50% slash in rent. You calculate the yield.

Of course a unit looking into the parking space will need a 50% rental discount, but it will also fetch a similar purchase discount, so if it is rented out it will have the same return.

If it stays empty because of the view it will yield no return though, but that is what I try to figure out with this thread.

My believe is that buyers look different at a condo than renters. A buyer, especially a "flipper" will in my opinion always go for the ideal located unit, which will carry the highest sales price.

But does the average renter, keep in mind that we're talking about long term renters as I don't want the hassle to advertise year round to get a higher price from holiday goers, think the same way or will he go for the cheapest unit available regardless of the view?

If I am a renter, I can be within your budget of the 50% discounted unit, but I would look for a unit in a nearby building with a better view.

Your competition is not only the units in one project.

Of course there are other projects available, but those have the same choices.

So you think that the unit that fetches the lowest rental price per sqm in a particular project, regardless of the view, will have the highest chance to find a long time renter?

[fang37]

Timing is everything.

And you have a crystal ball?.................Time In the Market is everything

In fact, I utilize several techniques including the movement of the planets, advice from Wall Street big hitters, witch-doctors, a quick call to Warren B & best of all the good ol' insider trading bribe.

[MaeJoMTB]

Best yield will be from a place in your home country.

One where you don't need a work permit to rent it out legally.

You clearly have no experience so will likely lose a lot of money. Its a hard market to break in to. Especially here.

Edited January 11, 2016 by MaeJoMTB

[TheCruncher]

Best yeild will be from a place in your home country.

One where you don't need a work permit to rent it out legally.

Unfortunately that is not the subject of this thread.

NEXT

[trogers]

Why would the unit that nobody wants be easily rented out? If a unit with pool view is sold at substantial discount to one with seaview, I would choose pool view.

But a unit looking into the parking space of an adjacent building cannot be rented out without a 50% slash in rent. You calculate the yield.

Of course a unit looking into the parking space will need a 50% rental discount, but it will also fetch a similar purchase discount, so if it is rented out it will have the same return.

If it stays empty because of the view it will yield no return though, but that is what I try to figure out with this thread.

My believe is that buyers look different at a condo than renters. A buyer, especially a "flipper" will in my opinion always go for the ideal located unit, which will carry the highest sales price.

But does the average renter, keep in mind that we're talking about long term renters as I don't want the hassle to advertise year round to get a higher price from holiday goers, think the same way or will he go for the cheapest unit available regardless of the view?

If I am a renter, I can be within your budget of the 50% discounted unit, but I would look for a unit in a nearby building with a better view.

Your competition is not only the units in one project.

Of course there are other projects available, but those have the same choices.

So you think that the unit that fetches the lowest rental price per sqm in a particular project, regardless of the view, will have the highest chance to find a long time renter?

No. In my experience, potential tenants have already a reasonable budget in mind and would look at the comfort level, location and conditions of the surroundings to make a decision. Cheap rent is not the prime consideration.

[Paul944]

Which yield you want to achieve?

What is the average rent in the neighborhood you want to buy?

If you aim for long time renters, you have more change if you offer a quality place with a reasonable rent. In a cheap area people tend to move more.

Example yield 5%, rent at 10,000 a month. Condo investment 2.4 Million (maintenance costs not included). But if this in an area with an average rent of 5,000 a month it will be hard to find someone.

You should add maintenance costs and furniture replacements to the yield. Probably the interior has to be renewed every 7 years.

[TheCruncher]

Which yield you want to achieve?

What is the average rent in the neighborhood you want to buy?

If you aim for long time renters, you have more change if you offer a quality place with a reasonable rent. In a cheap area people tend to move more.

Example yield 5%, rent at 10,000 a month. Condo investment 2.4 Million (maintenance costs not included). But if this in an area with an average rent of 5,000 a month it will be hard to find someone.

You should add maintenance costs and furniture replacements to the yield. Probably the interior has to be renewed every 7 years.

So in fact renting a 2.4 Million Baht place out at 10.000 Baht is far from 5% return, maintenance and interior renewal taken into account.

I'm not fixed on a certain area, since return is the only thing that is important to me, and if I can't get 8% after costs then it isn't worth the risk for me.

[swissie]

The condo-hype is reaching a boiling point. (sellers glad to get out and newcomers glad to get in).

Why not follow Wifes/GF advice: Build 2 story house on "family-Land". Land is for free.

Who could refuse such a tempting offer, instead of shopping for a 32 square meter condo?

----------------------------------------------------------------------------------------------------------------------

PS: Forgot to mention. A mansion built on "Family Land", without land papers is basically worthless these days. By now, Thais know it. Farangs are still caught up in some sort "learning process", guided by the advice of Wife/GF.

Easy to buy, hard sell.

Cheers

.

[TheCruncher]

The condo-hype is reaching a boiling point. (sellers glad to get out and newcomers glad to get in).

Why not follow Wifes/GF advice: Build 2 story house on "family-Land". Land is for free.

Who could refuse such a tempting offer, instead of shopping for a 32 square meter condo?

----------------------------------------------------------------------------------------------------------------------

PS: Forgot to mention. A mansion built on "Family Land", without land papers is basically worthless these days. By now, Thais know it. Farangs are still caught up in some sort "learning process", guided by the advice of Wife/GF.

Easy to buy, hard sell.

Cheers

.

I have now seen a few posts of you, throwing up the same sour grapes, so I guess you were caught with your pants down isn't it?

Doesn't mean that it happens to all of us

[AlexRRR]

I think you need to get to know the type of people who your going to be renting to and there requirements, seems very close to a BTS or MRT station to start with if in BKK would be a starting point don't you think?

The guy who said renting to Thai/uni students wasn't wrong either, ex TGF an accountant came up with that one too.

[TheCruncher]

I think you need to get to know the type of people who your going to be renting to and there requirements, seems very close to a BTS or MRT station to start with if in BKK would be a starting point don't you think?

The guy who said renting to Thai/uni students wasn't wrong either, ex TGF an accountant came up with that one too.

Well I'm based in Pattaya, so I would like to keep my investments close to home. Plenty of rentals available over here, actually more than there are renters in my opinion, so a certain type of condo will attract more candidates than another.

And that is actually what this thread is about, but so far I haven't received much concrete advice than what I can read in any investment paper or website.

So your advice will be welcomed.

The Thai university rooms is indeed an opportunity I'm aware of, but I guess that needs involvement from a Thai or at least someone who speaks fluent Thai and knows the areas, to ever find those opportunities.

[Paul944]

8% yield

condo 2.5 million

yearly costs estimated 40,000

rent has to be 20,000 a month

The question is will you find a long time renter who wants to pay 20,000 a month for a 2.5 million condo? Also, every month no rent decreases the yield considerably.

The numbers above assume that the condo keeps its value. This requires the location to be in a popular area that has no free space left for new condo's. If you buy a condo in the center of a capital city in Europe you have the almost certainy the value increases.

Lets say Amsterdam

8% yield

condo 300,000 euro

yearly costs estimated 2,000 euro

rent has to be 2166 a month. However, the average rent for such condo will be 1500 a month, only a 6% yield. But with an estimated value increase of the condo of 2% a year you still get 8%.

Edited January 14, 2016 by Paul944

[trogers]

8% yield

condo 2.5 million

yearly costs estimated 40,000

rent has to be 20,000 a month

The question is will you find a long time renter who wants to pay 20,000 a month for a 2.5 million condo? Also, every month no rent decreases the yield considerably.

The numbers above assume that the condo keeps its value. This requires the location to be in a popular area that has no free space left for new condo's. If you buy a condo in the center of a capital city in Europe you have the almost certainy the value increases.

Lets say Amsterdam

8% yield

condo 300,000 euro

yearly costs estimated 2,000 euro

rent has to be 2166 a month. However, the average rent for such condo will be 1500 a month, only a 6% yield. But with an estimated value increase of the condo of 2% a year you still get 8%.

You can in Bangkok, but only by buying in the secondary market.

[Romeland]

Your question is very specific, yet the answer is not an exact science. I have worked in this business for 30 years and have spent a lot of time in Thailand also. Thailand is unique in so far as outside influences can effect almost everything. You need to understand the tax situation, realise it's easy to buy, not to sell, everything you do is a million times harder in reality, you are farang, farang and Thai ways of doing things are opposite ends of the spectrum. I have seen things go wrong with property here and you would not believe the legal minefield you can get yourself into. You will meet big talkers, it's easy to talk, not to do etc etc. In short, it all looks great on paper with the BTL yields .... but this is Thailand, not the UK and you are not on paper, you are in a very complicated country.