5-6% rental yield in Bangkok

[kanwisher]

Last 6 months been looking hard for an upscale condo in Bangkok. However both looking at the rental and sales it appears across the city the yield is around 5-6% if you we're to pay full cash for a place. This is excluding any maintenance on the condo. So if an average person was getting a mortgage at 7% (local thai rates), it seems like there is negative cashflow on most condos in Bangkok. So this means either most people buying are doing it for their self or they are really banking on appreciation. Anyone notice similar results?

[trogers]

I believe newly built shoeboxes are getting less than 5% gross yield when you take vacancy period and agent's commission into consideration.

[smutcakes]

I think the highest % returns are from the millennium and Domus, but even then you are only looking at about 3-4% net.

[kanwisher]

Reading the translation of a thai real estate blog, they are actually happy at what is nearly a 0% cashflow cause of leverage. They are banking on using the income stream to pay off the loan then once the loan is paid off they start to make real profit. I guess that might make sense if you have no good options for investing money in a stock market of any sorts. Seems incredibly risky for such a small profit margin.

https://translate.google.com/translate?sl=th&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.kwamru.com%2F82&edit-text=&act=url

http://www.kwamru.com/82

[trogers]

Reading the translation of a thai real estate blog, they are actually happy at what is nearly a 0% cashflow cause of leverage. They are banking on using the income stream to pay off the loan then once the loan is paid off they start to make real profit. I guess that might make sense if you have no good options for investing money in a stock market of any sorts. Seems incredibly risky for such a small profit margin.

https://translate.google.com/translate?sl=th&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.kwamru.com%2F82&edit-text=&act=url

http://www.kwamru.com/82

Think of that 30-year loan...what profit? And Thais prefer to buy new. How much capital would be returned after 30 years, and what would that amount buy then?

[chiang mai]

Mortgage interest payments up to 100k per year are tax deductible.

Income from condo. rental is taxable at 10%

http://www.rd.go.th/publish/6045.0.html

[trogers]

I think the highest % returns are from the millennium and Domus, but even then you are only looking at about 3-4% net.

The highest rental yields are those bought through the secondary market where sales prices have little speculative froth.

[WorkingTourist]

looking hard for an upscale condo […] it seems like there is negative cashflow on most condos in Bangkok

That assumes that most upscale rental condos were bought by private individuals, at their current asking price, and financed by a 7% mortgage.

Because of the 49% foreigner quota I think many developers (of upscale condos) expect to sell only ~60% of the units and then turn the remaining ~40% into rentals. This could be handled by another Thai company (taking over the last units), but even then, I doubt they are paying the list price for these units, so you need to calculate the yield on the discounted price.

But even without a (significant) discount, there are certainly many people who have money they want to place somewhere, either for a diversified portfolio, or to “hide” them (and/or create a legitimate cash flow), for these people, I think an expected ~5% yield is perfectly acceptable, and placing your money in a Bangkok penthouse may also sound a bit more attractive to some types

[ozyjon]

Not for me

[F4UCorsair]

Rent! Rent!! Rent!!

[oxo1947]

Rent! Rent!! Rent!!

You seem to be missing the point F4UCorsair........possibly because you don't have any money to invest, in anything more than last nights bar bill.

They are not talking about buying Vs Renting they are talking about investment, in Real estate re stock market etc.

However ---"Rent! Rent!! Rent!!"--Quote, means that investing in condos is a safe bet with a lot of people around with your mentality, that will be renting for life..

Edited February 9, 2016 by oxo1947

[cheeryble]

Mortgage interest payments up to 100k per year are tax deductible.

Income from condo. rental is taxable at 10%

http://www.rd.go.th/publish/6045.0.html

Income tax depends on post-allowance income and is stepped.

[bangkapi]

Older small fixer-upper condos near the right universities can get nearly 10% annually if you buy selectively. You just need to buy a lot of them. And then management becomes an issue.

[statman78]

The right condo in the right location can give you a decent return. Also a little luck helps. We have a 1 bedroom condo in the Thong Lo area that has been leased for 5 consecutive years. Based on the rent we are getting minus the agency fee and the condo fees we are still getting a 8% return

[1FinickyOne]

Reading the translation of a thai real estate blog, they are actually happy at what is nearly a 0% cashflow cause of leverage. They are banking on using the income stream to pay off the loan then once the loan is paid off they start to make real profit. I guess that might make sense if you have no good options for investing money in a stock market of any sorts. Seems incredibly risky for such a small profit margin.

https://translate.google.com/translate?sl=th&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.kwamru.com%2F82&edit-text=&act=url

http://www.kwamru.com/82

Yes, it does seem risky - but so do equities at the moment too - and so, if you have the money, it might be a better place to stash the cash where you get some regular return that might be better than what a bank might offer. If you do not have the money to invest, then going out on margin and breaking even for 20 years until you own the unit is not the worst strategy... it is a difficult time for investors everywhere.

[trogers]

Reading the translation of a thai real estate blog, they are actually happy at what is nearly a 0% cashflow cause of leverage. They are banking on using the income stream to pay off the loan then once the loan is paid off they start to make real profit. I guess that might make sense if you have no good options for investing money in a stock market of any sorts. Seems incredibly risky for such a small profit margin.

https://translate.google.com/translate?sl=th&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.kwamru.com%2F82&edit-text=&act=url

http://www.kwamru.com/82

Yes, it does seem risky - but so do equities at the moment too - and so, if you have the money, it might be a better place to stash the cash where you get some regular return that might be better than what a bank might offer. If you do not have the money to invest, then going out on margin and breaking even for 20 years until you own the unit is not the worst strategy... it is a difficult time for investors everywhere.

Problem is in trying to break even, when rental yield is only half of the mortgage rate.

[mike324]

I don't think many people are taking out a mortgage to buy then rent out and taking a loss (not saying there are nobody doing it). I believe there are more speculative buyers who take out a loan to pay the deposit waiting for the building to be completed then sell off at a profit.

Most upscale condo buyers don't to take out mortgages, they buy for themselves. I think people have to understand in the past 10 years there was a buying boom, this is mainly due to younger folks wanting a place of their own, adopting western values of moving out. That is why we see so many condos popping out everywhere and people saying there will be a bubble.

But I have to say you see a lot people taking out mortgages for mid to low tier condos in hopes of making money, many of those folks simply don't know how to calculate their returns and make the grave mistake.

Edited February 10, 2016 by mike324

[user7643446845]

Buy my condo and then rent back to me.

Guaranteed 5.5% Return . Guaranteed no hassle. I pay all condo running costs including maintenance. No agent fees.

3M Baht. 77 meters (nominal) 8 year old 7 storey condo Cozy Beach -Pattaya. Share transfer costs

Contact me via Thai Visa

[cheeryble]

Buy my condo and then rent back to me.

Guaranteed 5.5% Return . Guaranteed no hassle. I pay all condo running costs including maintenance. No agent fees.

3M Baht. 77 meters (nominal) 8 year old 7 storey condo Cozy Beach -Pattaya. Share transfer costs

Contact me via Thai Visa

Enterprising!

[chiang mai]

Buy my condo and then rent back to me.

Guaranteed 5.5% Return . Guaranteed no hassle. I pay all condo running costs including maintenance. No agent fees.

3M Baht. 77 meters (nominal) 8 year old 7 storey condo Cozy Beach -Pattaya. Share transfer costs

Contact me via Thai Visa

I might do that myself but I may also increase your rent by 50%.

[F4UCorsair]

Rent! Rent!! Rent!!

You seem to be missing the point F4UCorsair........possibly because you don't have any money to invest, in anything more than last nights bar bill.

They are not talking about buying Vs Renting they are talking about investment, in Real estate re stock market etc.

However ---"Rent! Rent!! Rent!!"--Quote, means that investing in condos is a safe bet with a lot of people around with your mentality, that will be renting for life..

What an offensive twerp you are oxo. You would have no idea of my financial position, and I often wonder why a nobody chooses to wade in with an offensive comment.

I saw NO mention of real estate investment versus stock market, so perhaps you should be reading the OP again??

The point I make is that anybody who invests in a foreign country, with few, or NO safeguards, for foreign investors is a mug, and to rent is the only way to go. That goes for whether you are deciding whether to rent versus buy, or buy and lease.

I suggest you take a course in interpersonal relations, and perhaps you will make less, uninformed, mindless, offensive comments, and ridiculous assumptions to, and about, people whom who do not know..

[smutcakes]

Rent! Rent!! Rent!!

You seem to be missing the point F4UCorsair........possibly because you don't have any money to invest, in anything more than last nights bar bill.

They are not talking about buying Vs Renting they are talking about investment, in Real estate re stock market etc.

However ---"Rent! Rent!! Rent!!"--Quote, means that investing in condos is a safe bet with a lot of people around with your mentality, that will be renting for life..

What an offensive twerp you are oxo. You would have no idea of my financial position, and I often wonder why a nobody chooses to wade in with an offensive comment.

I saw NO mention of real estate investment versus stock market, so perhaps you should be reading the OP again??

The point I make is that anybody who invests in a foreign country, with few, or NO safeguards, for foreign investors is a mug, and to rent is the only way to go. That goes for whether you are deciding whether to rent versus buy, or buy and lease.

I suggest you take a course in interpersonal relations, and perhaps you will make less, uninformed, mindless, offensive comments, and ridiculous assumptions to, and about, people whom who do not know..

Have you informed Honda, Toyota and all the masses of other foreign companies that they are mugs?

Everyone's situation is different as well as peoples ability to protect themselves. Pretty far reaching comment that anyone here is a mug who does not rent.

[chrisandsu]

Rent! Rent!! Rent!!

You seem to be missing the point F4UCorsair........possibly because you don't have any money to invest, in anything more than last nights bar bill.

They are not talking about buying Vs Renting they are talking about investment, in Real estate re stock market etc.

However ---"Rent! Rent!! Rent!!"--Quote, means that investing in condos is a safe bet with a lot of people around with your mentality, that will be renting for life..

What an offensive twerp you are oxo. You would have no idea of my financial position, and I often wonder why a nobody chooses to wade in with an offensive comment.

I saw NO mention of real estate investment versus stock market, so perhaps you should be reading the OP again??

The point I make is that anybody who invests in a foreign country, with few, or NO safeguards, for foreign investors is a mug, and to rent is the only way to go. That goes for whether you are deciding whether to rent versus buy, or buy and lease.

I suggest you take a course in interpersonal relations, and perhaps you will make less, uninformed, mindless, offensive comments, and ridiculous assumptions to, and about, people whom who do not know..

Have you informed Honda, Toyota and all the masses of other foreign companies that they are mugs?

Everyone's situation is different as well as peoples ability to protect themselves. Pretty far reaching comment that anyone here is a mug who does not rent.

Toyota has gone . Honda will

Probably follow , also do you think

Honda and Toyota gave away 51% of their company to the Thais so they could invest here ? What do you think either company owns here ?

[chiang mai]

You seem to be missing the point F4UCorsair........possibly because you don't have any money to invest, in anything more than last nights bar bill.

They are not talking about buying Vs Renting they are talking about investment, in Real estate re stock market etc.

However ---"Rent! Rent!! Rent!!"--Quote, means that investing in condos is a safe bet with a lot of people around with your mentality, that will be renting for life..

What an offensive twerp you are oxo. You would have no idea of my financial position, and I often wonder why a nobody chooses to wade in with an offensive comment.

I saw NO mention of real estate investment versus stock market, so perhaps you should be reading the OP again??

The point I make is that anybody who invests in a foreign country, with few, or NO safeguards, for foreign investors is a mug, and to rent is the only way to go. That goes for whether you are deciding whether to rent versus buy, or buy and lease.

I suggest you take a course in interpersonal relations, and perhaps you will make less, uninformed, mindless, offensive comments, and ridiculous assumptions to, and about, people whom who do not know..

Have you informed Honda, Toyota and all the masses of other foreign companies that they are mugs?

Everyone's situation is different as well as peoples ability to protect themselves. Pretty far reaching comment that anyone here is a mug who does not rent.

Toyota has gone . Honda will

Probably follow , also do you think

Honda and Toyota gave away 51% of their company to the Thais so they could invest here ? What do you think either company owns here ?

Has anyone told Toyota this news?

[chrisandsu]

I was talking about one of their plants in Rayong . So again would you please tell me what Honda or Toyota owns in this country ? Do you think they own the land their plants are on ? Do you think they are stupid enough to put everything in a Thais name ? They RENT!! Which makes your point very mute .

Edited February 15, 2016 by chrisandsu

[chiang mai]

The likes of Honda and Toyota don't need to own the land their factories sit on, in fact that would likely be a very bad business deal if they did. Simply, how they make their profits and control their expense has absolutely nothing to do with whether they own land or rent it. As for what they might own I suspect they own the leases to the land their factories sit on, the equipment inside those factories, the supply of components to them, the assembly and manufacturing processes and the brand, that's enough for them!

Anyway, my post was simply to refute yours which stated that "Toyota has gone", they haven't and they wont!

[smutcakes]

I was talking about one of their plants in Rayong . So again would you please tell me what Honda or Toyota owns in this country ? Do you think they own the land their plants are on ? Do you think they are stupid enough to put everything in a Thais name ? They RENT!! Which makes your point very mute .

Honda & Toyota own thousands and thousands of Rai of land throughout the country. They have lots of different companies, some local, some Thai. Honda particulalry has a very large Thai % owner. Honda also just bought up to a 1000 Rai in Rojana IE in Pranchinburi. And as you will be aware Foregn companies can buy outright in Indistrial Estates.

They also have BOI which includes the right to purchase. I would be interested if you could point me to any of their properties which they rent? It makes zero financial sense for them.

Are you sure Toyota had a plant in Rayong?

[chrisandsu]

No I wouldn't know that companies can buy land within industrial estates . i was always of the belief that foreign owned companies could not own any land in Thailand , if they can then I just learned something new there . Maybe it's just a rule reserved for huge businesses as what's stopping any of us from

Buying land and turning it into an industrial park and then renting the units out legally ? Are you sure your not talking about small parts companies that provide materials to said businesses ?

Edited February 15, 2016 by chrisandsu

[smutcakes]

No I wouldn't know that companies can buy land within industrial estates . i was always of the belief that foreign owned companies could not own any land in Thailand , if they can then I just learned something new there . Maybe it's just a rule reserved for huge businesses as what's stopping any of us from

Buying land and turning it into an industrial park and then renting the units out legally ? Are you sure your not talking about small parts companies that provide materials to said businesses ?

No, any foreign company can buy land freehold in Industrial estates which are Governed by the Industrial Estate Authority of Thailand (IEAT). Some Industrial areas are known as zones, parks (eg Nava Nakorn) etc this is because they are not under the IEAT.

IEAT used to develop and manage their own Estates, but over recent times, they normally go along with private developers like Amata & Hemeraj. Land on these estates is not for rent, only sale.

In most Industrial Estates, the developers of them normally build Ready Built Factories. These can be leased out, normally by companies that manafacturer components for the large industrial users that act as the anchors to the estates.

[chrisandsu]

No I wouldn't know that companies can buy land within industrial estates . i was always of the belief that foreign owned companies could not own any land in Thailand , if they can then I just learned something new there . Maybe it's just a rule reserved for huge businesses as what's stopping any of us from

Buying land and turning it into an industrial park and then renting the units out legally ? Are you sure your not talking about small parts companies that provide materials to said businesses ?

No, any foreign company can buy land freehold in Industrial estates which are Governed by the Industrial Estate Authority of Thailand (IEAT). Some Industrial areas are known as zones, parks (eg Nava Nakorn) etc this is because they are not under the IEAT.

IEAT used to develop and manage their own Estates, but over recent times, they normally go along with private developers like Amata & Hemeraj. Land on these estates is not for rent, only sale.

In most Industrial Estates, the developers of them normally build Ready Built Factories. These can be leased out, normally by companies that manafacturer components for the large industrial users that act as the anchors to the estates.

I had no idea this was the case ! Thanks for putting me right .

How did Honda and Toyota buy 1000s of rai ? Would all this land be within an industrial park ? So many questions sorry this is all new to me .