Buying a condo in a not-so-popular area with few foreigners

[jakow]

I'm saving to buy my first condo, with the intent of buying more in the future if finances permit. However, I have no interest in Bangkok, Pattaya, Phuket, or any of these popular areas. I much prefer the mainly-Thai, lesser known to foreigners, type of areas in Thailand. There are areas outside of these big cities that seem nice and ripe for investors, however I still prefer to be further away. Obviously the growth will be slower in these lesser known cities, but has anyone had success with buying in these types of areas? Could anybody recommend any resources that may help me educate myself as to whether this is a waste of money or if it could be profitable? Thanks.

[bino]

This is a "how long is a piece of string" type of question. What type of condo are you looking for? A cheap Thai style one, or more luxurious? Some indication or idea of the budget you are working with would go a long way to help people assess and make recommendations.

Understood that you don't want Bangkok, Pattaya, Phuket, but perhaps you could be more specific about the area, for the same reason. What are your expectations? What should be available in the vicinity? There is a big difference between Minburi and Mukdahan,

Lastly - you ask if it could be profitable. Since this is your first post, I will tell you the golden rule of Thailand: Do not invest any more than you are fully prepared to walk away from.

[Delight]

 If you buy in a not very popular area -then sell when the area is even less popular-then for certain you will lose money

[jakow]

1 minute ago, Delight said:

 If you buy in a not very popular area -then sell when the area is even less popular-then for certain you will lose money

I don't mean the areas aren't popular, I mean they're not popular areas for foreigners to buy property in.

[jakow]

22 minutes ago, bino said:

This is a "how long is a piece of string" type of question. What type of condo are you looking for? A cheap Thai style one, or more luxurious? Some indication or idea of the budget you are working with would go a long way to help people assess and make recommendations.

Understood that you don't want Bangkok, Pattaya, Phuket, but perhaps you could be more specific about the area, for the same reason. What are your expectations? What should be available in the vicinity? There is a big difference between Minburi and Mukdahan,

Lastly - you ask if it could be profitable. Since this is your first post, I will tell you the golden rule of Thailand: Do not invest any more than you are fully prepared to walk away from.

Thank you for the well thought out reply. I'm currently saving money, as this will be the first piece of property I'll have ever owned, but I'm looking for something in the 1-1.5mb range. Definitely not a cheap Thai style one, which in the areas I'm looking I could almost already afford one of those, but I want a new development that looks nice.

The locations I'm currently considering are along the eastern side of the gulf such as Rayong or Chanthaburi. I don't need shopping like you'd find in Pattaya, but I'd want Macro, Robinson, Big C, etc. I want to be within a reasonable distance to the ocean. Not oceanfront or even walking distance (although that would be nice), but within 10 minutes on a motorbike, preferably closer. Other than that I don't need too much. A pizza or burrito every now and then and I'm set.

This would be money that I cannot afford to lose. It wouldn't be the end of the world for me, but saving that much money takes quite a while for me and losing it would be a huge setback. However, this won't be exclusively an investment property. I would live there and once finances permit I would begin looking at acquiring more property.

[HampiK]

Hello,

First you should look if in the area where you wish to buy the Condominium Act exits. Because not everybuilding is build under the Condiminum act. And if not I think you are not allowed to buy an appartement in that building.

I not even sure, if every area is allowed to build under the condominium act.

 

[williamgeorgeallen]

you sound like you want to buy in an area where no other foreigners want to buy. is it because you have a limited budget? as a foreigner it will be very hard if you ever go to sell. there will not be many western buyers and thais prefer to buy new places. property investment is very hard in thailand. finance is very difficult to obtain so capital growth is very slow. the exception may be popular inner bangkok where some of my friends have done ok. i would always advise anyone against buying anything in thailand for many reasons. like another smart guy said already dont buy anything here you arent prepared to walk away from. also try living some where for 6 months before you buy.

Edited August 2, 2016 by williamgeorgeallen

[Briggsy]

Your budget will get you a 34 square metres apartment in Rayong. That is a new furnished apartment ready to move in.

How do you intend to be "profitable"? Buy to let, buy and sell at a profit, buy to save rent? Your post is very vague (and maybe just conjecture of some sort.)

[Minnehaha]

No.

Not profitable. 

Maybe you are thinking of Bill Heineke who bought (among a hundred other things) land in Golden Triangle and has the Four Seasons and other brands with him? Then, it is profitable. 

[nongsangcity]

So hard to make any money here....i live in the Sakon Area only a few westerners etc but i have western friends renting new house on nice so called estates one friend is paying 4000 baht a month for a brand new modern build single storie house and anothe paying 5000baht for a full size upstairs and down stairs new build modern house....and another friend has bought a shop and living space upstairs and he has turned the upstairs into a magnificent condo type accomadation and hes renting it out for 6000 baht a month....no point in building or buying a house etc just Rent....

[Peterw42]

I would agree with other posters. Outside of major expat areas, there will be less foreign title condos available. Less chance of a profitable rent or resale to an expat.

 

 

[jakow]

18 minutes ago, Briggsy said:

Your budget will get you a 34 square metres apartment in Rayong. That is a new furnished apartment ready to move in.

How do you intend to be "profitable"? Buy to let, buy and sell at a profit, buy to save rent? Your post is very vague (and maybe just conjecture of some sort.)

Sorry for being vague. It's definitely partly conjecture, this is all new to me. What I do want is a home for me to live in, so what I was thinking is I could live there until I could afford to buy another, then rent out one of the condos and try to repeat. I'm not trying to flip houses short term and make quick money. I'm hoping to live here a while (I've already lived here for 6 years) so I'm looking at putting my money somewhere that can make money long term.

[jakow]

27 minutes ago, williamgeorgeallen said:

you sound like you want to buy in an area where no other foreigners want to buy. is it because you have a limited budget? as a foreigner it will be very hard if you ever go to sell. there will not be many western buyers and thais prefer to buy new places. property investment is very hard in thailand. finance is very difficult to obtain so capital growth is very slow. the exception may be popular inner bangkok where some of my friends have done ok. i would always advise anyone against buying anything in thailand for many reasons. like another smart guy said already dont buy anything here you arent prepared to walk away from. also try living some where for 6 months before you buy.

I do have a limited budget (I'm still saving to buy a condo) but that's not why I want to live in a place like that. I guess saying "where not many foreigners live" wasn't the best choice of words. I can deal with lots of foreigners as long as there's a good mix of Thai culture. I just mean not somewhere that's a tourist destination or overly crowded, like downtown Pattaya and Bangkok, respectively. Also not somewhere I hear "hello welcome!" every time I drive down the road. That's why I'm thinking maybe Rayong is best. It still seems reasonably priced for nicer places located close to the beach. I'm still trying to decide exactly what I want, or even should do, so lots of these replies are great.

[Briggsy]

You need to do a "net present value" calculation to see if you are better off buying or renting.

Your initial negative cash flow will be, say, 1.3 million but then your only extra costs will be the building charge (700 a month?) and maintenance. When it comes to selling it, don't expect to get much more than the price you paid.

For renting you will have a monthly outlay on rent of around 5000 Baht.

Here's the calculator you need.

NPV calculator

I think you are personally looking at this the wrong way. The difference in long-term cost won't be much. You should prioritise your living requirements not the buying vs renting equation.

[jakow]

11 minutes ago, nongsangcity said:

So hard to make any money here....i live in the Sakon Area only a few westerners etc but i have western friends renting new house on nice so called estates one friend is paying 4000 baht a month for a brand new modern build single storie house and anothe paying 5000baht for a full size upstairs and down stairs new build modern house....and another friend has bought a shop and living space upstairs and he has turned the upstairs into a magnificent condo type accomadation and hes renting it out for 6000 baht a month....no point in building or buying a house etc just Rent....

Rent is definitely cheap here, especially in the areas I like to live. I just don't know what to do with my money and buying property seems like a good place to put it  Plus I like the idea of being able to remodel a place as much and as long as I like.

[12DrinkMore]

6 minutes ago, jakow said:

Sorry for being vague. It's definitely partly conjecture, this is all new to me. What I do want is a home for me to live in, so what I was thinking is I could live there until I could afford to buy another, then rent out one of the condos and try to repeat. I'm not trying to flip houses short term and make quick money. I'm hoping to live here a while (I've already lived here for 6 years) so I'm looking at putting my money somewhere that can make money long term.

It's a plan.

But you are putting your money in an illiquid probably depreciating unsellable asset in a country that will not give you any longer than a twelve extension of permission to stay. Jobs can dissappear, or new opportunities in another country open up.

Rent and stay free.

[jakow]

3 minutes ago, Briggsy said:

You need to do a "net present value" calculation to see if you are better off buying or renting.

Your initial negative cash flow will be, say, 1.3 million but then your only extra costs will be the building charge (700 a month?) and maintenance. When it comes to selling it, don't expect to get much more than the price you paid.

For renting you will have a monthly outlay on rent of around 5000 Baht.

Here's the calculator you need.

NPV calculator

I think you are personally looking at this the wrong way. The difference in long-term cost won't be much. You should prioritise your living requirements not the buying vs renting equation.

Nice one, thanks! Something else I didn't say (not intentionally) is the reason I'm thinking about all this is so I can have some sort of retirement plan, so that I can have passive income later on and not worry about having to work all the time. I can keep saving money and not buy property, since I currently put my money into a slow growth index fund, but I'm not sure if that's the right way.

[nongsangcity]

Buying property isnt a money making good idea....very very hard to sell any build ...it would be almost impossible to get your money back....i have been here a few years and i have friends around a lot of Thailand and i can only remember one friend selling property and that was in pattaya 10 years ago and he didnt get any where near the money back he had laid out to buy in the first place...

[neverdie]

31 minutes ago, jakow said:

Nice one, thanks! Something else I didn't say (not intentionally) is the reason I'm thinking about all this is so I can have some sort of retirement plan, so that I can have passive income later on and not worry about having to work all the time. I can keep saving money and not buy property, since I currently put my money into a slow growth index fund, but I'm not sure if that's the right way.

May I ask your age ?

Are you expecting to buy 1.5 m baht property

and expecting it to still be worth something in 25 years time?

go look at some old broken down 25y.o condos and see what they're renting for.

 

maintance is terrible here on older buildings sand there's a constant flow of newer modern buildings.

Edited August 2, 2016 by neverdie

[Peterw42]

2 minutes ago, neverdie said:

May I ask your age ?

Are you expecting to buy 1.5 m baht property

and expecting it to still be worth something in 25 years time?

go look at some old broken down 25y.o condos and see what they're renting for.

 

maintance is terrible here on older buildings sand there's a constant flow of newer modern buildings.

I was just looking at a condo today, built in 1991, 25 years old. Nice gardens and pool, buildings not run down. Condos in the complex are selling for 1-2 million.

I would imagine they were 200, 000 when new.

 

[neverdie]

8 minutes ago, Peterw42 said:

I was just looking at a condo today, built in 1991, 25 years old. Nice gardens and pool, buildings not run down. Condos in the complex are selling for 1-2 million.

I would imagine they were 200, 000 when new.

 

I'm not saying it can't happen but for every one like you describe there's many that ARNT like that.

 

are you sure they were 200,000 baht, 25 years ago?

 

doesnt sound right to me.

[Peterw42]

14 minutes ago, neverdie said:

I'm not saying it can't happen but for every one like you describe there's many that ARNT like that.

 

are you sure they were 200,000 baht, 25 years ago?

 

doesnt sound right to me.

200k is only a guess. I don't think the same condo was 1 million 25 years ago.

I would be interested if other posters know what prices were 25 years ago.

[jakow]

1 hour ago, neverdie said:

May I ask your age ?

Are you expecting to buy 1.5 m baht property

and expecting it to still be worth something in 25 years time?

go look at some old broken down 25y.o condos and see what they're renting for.

 

maintance is terrible here on older buildings sand there's a constant flow of newer modern buildings.

Maybe I don't understand condos, but I know prices for land and homes have gone way up in the last 15 years in many cities. Do condos not hold their value like land does? Obviously the place won't look the same in 25 years, but not being able to sell it for what you paid 25 years ago doesn't sound right.

[Global Guy]

Allow me to throw my two cents into the ring here. I apologize for the long post in advance.

My background in real estate in the West includes being a licensed real estate agent in commercial real estate, a property manager of a new 100+ apartment complex, tax lien investor and current investor in rental properties and real estate investment funds (in the West).

I came to Thailand as the lead of a small investment group to buy investment properties in Thailand. I'm a contrarian investor for most of my strategies and that is what allowed me to retire early and now live off of these and other asset class investments, so the point is I have a high risk tolerance.

I spent a few years researching and even negotiating some real estate projects here. But overall, I eventually put my investing in Thailand on hold. Real estate in general is a contract dependent industry. Contracts depend on rule of law.

I know it won't be like the West, but the rule of law in Thailand, especially for a foreigner, varies from weak to nonexistent. that's why so many people say only invest what you can lose without making you destitute. It's not really investing but more so speculating, and borderline gambling.

Yes, there are foreigners who make money here in real estate. But they are rarer here than in the West. So, you really have to adjust your investment mindset away from investment strategies of the West and replace that with "Thai strategies." Whatever that means. Your investment strategy sounds great in the West, but not so great in Thailand. Again, it can work, but is less likely than in the West and even so, your life might be more problem laden than it is worth it.

Because renting is so cheap in Thailand, many people who would buy a house/condo in the West choose to rent here instead. You never know what the neighborhood where you live will turn out to be like and buying an illiquid asset can force you to stay somewhere you might not want to. Read horror stories on this site about bad neighbors and you'll see what I mean. People have little respect for others in that regard here. This is a bigger trend here than in the West. Also, in the West either police or property managers would fix the problem with neighbors. But in Thailand, for the most part, they won't.

If investing in real estate is something you want to do long-term but with less risk, you might want to consider an investment fund. PM me if you want info on that. BTW, I am NOT affiliated with anything I send your way. It's just another thing to think about. I invest in around eight different asset classes, give or take. I like real estate but not where the deck is stacked against me like in Thailand.

Edited August 2, 2016 by Global Guy

[KittenKong]

Anyone who buys in an area not popular with farangs and wants to rent out is, presumably, looking at Thai tenants with everything that entails. I would not want to do this.

For the same 1.5MB you can buy a 30+sqm condo in Jomtien that has a proven rental demand from farangs. If I wanted to invest in Thai property (which I dont), I would prefer to do this.

[Rod Gold]

Do not be surprised if the locals do not accept you right away, or possibly ever.

You may need to accept that you will be surrounded by people who may resent your presence.

Rent first!

[DipStick]

Let me throw in my experience. I came to work for a large company in BKK 2002 era, in 2004 I met a Chinese lady who was running a very profitable Thai company. In 2005 we moved in together. Her office was located in the Chaeng  Wattana area of north Bangkok.

in 2007 we married and got to know the area as a married couple. We found out that in 1995 (?) a HK developer (Li Ka Shing) had built approximately 25 tower blocks each of 30 floors, the smallest being 85sqm . These were aimed at the HK residents who wanted to escape HK after the Chinese 1997 hand over. Located just off the Impact exhibition area. 

his plan backfired and 30% of these tower blocks remained unsold. We investigated deeper and found that many apartments were on the market for almost 1m baht each, a bargain. We bought two next to each other on the 27th floor. Initially as an investment , but this last year realised that we were being stupid as we were paying over 20k a month to rent our office / house in Chaeng Wattana.

we turned one of the of our apartments into our registered Thai office and are now renovating and furnishing the apartment next door for our living space.  After only two months slowly renovating, we  have  been offered  3m Baht for the apartment.

this is a fantastic area there is no need to buy out in the sticks.

if you want more info please PM me .

                                                     

[bazza40]

If the OP wants to preserve capital in Thailand, he should buy gold. Instantly tradeable. A condo can take anywhere between 3 months and never to sell. Renting avoids all the ownership hassles.

With every nation in the world engaged in a race to the bottom in terms of devaluing their currencies with money printing, gold is making more and more sense.

[DipStick]

5 minutes ago, bazza40 said:

If the OP wants to preserve capital in Thailand, he should buy gold. Instantly tradeable. A condo can take anywhere between 3 months and never to sell. Renting avoids all the ownership hassles.

With every nation in the world engaged in a race to the bottom in terms of devaluing their currencies with money printing, gold is making more and more sense.

bazza40 your comments make sense but the op said he was looking to buy his first condo (and then maybe more ) he stipulated condo, which to me indicated he wanted a concrete building investment, but what I cannot fathom is why he wants in the boondocks. Wherever he is in the world he could buy gold, but to me he appears to want concrete in Thailand. Let's see if he responds 

[GOLDBUGGY]

I think the problem you will more likely run up against isn't so much being outside of the Main Stream Locations for Farangs, but rather finding Suitable Condos in those locations. For example and about 5 years ago in a city of a Million People, Udon Thani, you could not find Suitable Condos for sale or rent. Only houses! It has been only recently they built some their, and even then I understand they are at an inflated price.

Most Thais in Thailand live in houses, and since you legally can't own a house per say, this will be a problem for you. In short, you just can't buy a house or condo outside of the Farang Community, and even in larger cities. If you could find a great Condo in a city like Udon Thani, and at a great price, then you would have no problem selling it. The trick is to find one first.