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

[jakow]

7 minutes ago, DipStick said:

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 

I never said the boondocks. I said a smaller city (relative to Bangkok, Pattaya, Phuket, etc.) that's not a tourist trap.

About gold... I'm currently investing in an index fund that's much more stable than gold. Gold is obviously a pretty safe long term investment, but I like not having quite so many swings.

[DipStick]

Listen to the advice. By the way are you in Thailand, do you understand the country, do you understand what you are being told ?

[jakow]

Just now, DipStick said:

Listen to the advice. By the way are you in Thailand, do you understand the country, do you understand what you are being told ?

 

I do listen to advice, but listening to all advice is just as bad of an idea as not listening to any advice. If I had listened to everybody telling me I need to invest in gold in 2012, I would have lost a lot of money. I've lived in Thailand for 6 years. I understand the country as well as someone can after living in mainly Thai towns for the last 6 years, but real estate and investing (for the most part) I do not understand.

[DipStick]

Ok  good luck 

[Mudcrab]

1 hour ago, jakow said:

 

I do listen to advice, but listening to all advice is just as bad of an idea as not listening to any advice. If I had listened to everybody telling me I need to invest in gold in 2012, I would have lost a lot of money. I've lived in Thailand for 6 years. I understand the country as well as someone can after living in mainly Thai towns for the last 6 years, but real estate and investing (for the most part) I do not understand.

You might want to do some research on the requirements of the purchasing monies being brought into Thailand from another country as well. From what I understand the money cannot be 'Thai' money as such.

[trogers]

Not popular with farangs, but still want it located in a holiday spot? Who would you be renting it out or reselling to then?

 

If Thai tenants, would it not make better sense to be near some university to target undergrads as tenants?

[neverdie]

10 hours ago, jakow said:

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.

 

 

Mate tie there's a really good post here by someone that knows what he's talking about, Global Guy.

 

im not trying to reign on your parade, far from it and do as you see best.

 

im not trying to suggest that if you bought a condo now for 1.5, that it wouldn't increase in value over a 25 year period, not at all.  I would suggest though, once you consider 'inflation' and other costs that the return wouldn't be very good.  As global guy said, it would be extremely risky to throw all your eggs in this sort of basket.

 

i have a little bit of experience but I won't pretend I was the brains behind it as that credit goes to my father.  After being involved with 'playing' with various types of property in LOS, I won't be tripping over in a hurry to get to anything else ATM.

 

im not going to throw loose numbers around as the market varies considerably depending on where you are within the country, but you already know that.

[neverdie]

11 hours ago, Peterw42 said:

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.

 

 

My guess, if it was worth 1.5 now (think that's what you said) then 25 years ago, something close to 800,000, give or take.

 

IMO condo's don't increase in value like real land holdings, especially in Thailand, let's face it, in a condo you only really hold a portion of the land your condo sits on and of course you can't sell your portion for redevelopment etc.

 

im not knocking it, I'm just suggesting one looks at 'all' of the situation, sometimes just numbers don't tell the entire story.

 

i think one of the good old rules for investment is to 'diversify' and I DEFINATELY would t stack my future on Thai condos, really just ask yourself, how easy is it for the government. Of the day to change the rules, already the odds are stacked against the foreigner"

[KittenKong]

It seems to me that most farangs who think they have had very good capital returns on Thai property bought with foreign money at a time when the Baht and property prices were depressed. This is fine if you can do it, but now does not appear to be the right time for either. And of course even if you can do it the capital appreciation will depend greatly on the relative value of your source currency.

 

I bought an off-plan house in the UK in the 70s that doubled in value within 6 years and is now worth nearly 15 times what I paid for it. I also bought a house in southern Europe that increased in value by 4 times in just over 20 years. These figures are in local prices which, as far as I am concerned, is the only valid way of calculating it. Any other calculation is really just exchange rate comparison.

[Briggsy]

13 hours ago, jakow said:

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.

My understanding is that selling prices of second-hand condos over several years old tend to remain fairly constant over time. However inflation reduces the value of money over time. This means that generally the sale of a second-hand condo in real terms (i.e. after the time cost of money has been factored in) is at a loss. However, the owner has had somewhere to live rent-free or has earned a rental income for the duration of their ownership.

 

This price behaviour is markedly different to land prices which may increase in value over and above the rate of inflation.

 

The reason for the failure of condo selling prices to keep pace with inflation seem to be a consumer preference for brand new condos, an over-supply of new condos, poor maintenance culture and possibly management committees not acting fully in the interest of the owners.

 

However feel free to post up your calculations as to how you intend to be profitable and create a passive income for your retirement and I, and I am sure many others, will be happy to look at your figures.

[12DrinkMore]

19 hours ago, Minnehaha said:

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. 

 

He has a Thai passport.

[jakow]

4 hours ago, Briggsy said:

My understanding is that selling prices of second-hand condos over several years old tend to remain fairly constant over time. However inflation reduces the value of money over time. This means that generally the sale of a second-hand condo in real terms (i.e. after the time cost of money has been factored in) is at a loss. However, the owner has had somewhere to live rent-free or has earned a rental income for the duration of their ownership.

 

This price behaviour is markedly different to land prices which may increase in value over and above the rate of inflation.

 

The reason for the failure of condo selling prices to keep pace with inflation seem to be a consumer preference for brand new condos, an over-supply of new condos, poor maintenance culture and possibly management committees not acting fully in the interest of the owners.

 

However feel free to post up your calculations as to how you intend to be profitable and create a passive income for your retirement and I, and I am sure many others, will be happy to look at your figures.

Thanks for that info. I was assuming that a well-kept condo should at least keep the same value if you didn't pay an exorbitant price for it. Calculations... I have none. I was just looking for some recommended resources or people who have done this (bought condos in normal Thai towns) that could give me some info on it.

[bazza40]

15 hours ago, DipStick said:

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 

Gold is actually more difficult to purchase outside Thailand. I understand at one point Americans were actually prohibited from owning gold bullion. In Australia, there are only a couple of companies selling bullion. Contrast that with Thailand, where there are one or more gold shops in every shopping mall.

I can accept some people have made good money out of condos. However, i think the current level of market saturation and standards of construction and management are such that one would have to be very shrewd or very lucky.

[KittenKong]

12 hours ago, Briggsy said:

The reason for the failure of condo selling prices to keep pace with inflation seem to be a consumer preference for brand new condos, an over-supply of new condos, poor maintenance culture and possibly management committees not acting fully in the interest of the owners.

 

There's one other reason that is partly behind the oversupply: untold millions of acres of totally undeveloped land everywhere you look (with the possible exception of the very centre of Bangkok).

 

Shortage of land supply keeps property prices up. It will take decades for this to happen here.

[Berty100]

You can look below to have idea about the condo situation

 

In The Cliff on Pratumnak, which is not a bad location nor bad developer, are a total of 426 units. We all now that in the majority of the condo buildings in Pattaya only the foreign part is sold ever, so that makes some 200 units.

 

Of those 93 are for sale and 76 for rent. Do I need to make a drawing with it?

 

https://www.hipflat.co.th/en/pattaya/condo/the-cliff

[KittenKong]

3 hours ago, Berty100 said:

In The Cliff on Pratumnak, which is not a bad location nor bad developer, are a total of 426 units. We all now that in the majority of the condo buildings in Pattaya only the foreign part is sold ever, so that makes some 200 units.

 

Thai quota units do get sold in many buildings here. Some are sold to farangs via company structures, some are sold to wives and girlfriends of farangs, and some are just sold to Thais. There are even buildings that are nearly sold out yet farang ownership is well under 49% (Baan Plai Haad for example). There are also some nice older buildings that have farang ratio well short of 49%.

 

That said, it is true that in some buildings the remaining unsold units are probably Thai name, and may never be sold. It is also true that there seem to be lots of people who bought off-plan and who are now quite keen to be rid of their purchases.

[ozyjon]

I'm saving to buy my first condo, with the intent of buying more in the future if finances permit.

I'm sorry but that statement says it all.

 

Disaster looming.

[trogers]

5 hours ago, ozyjon said:

I'm saving to buy my first condo, with the intent of buying more in the future if finances permit.

I'm sorry but that statement says it all.

 

Disaster looming.

 

Why would this be a disaster?

 

I bought my first Condo as home in 1995 with a 10-year mortgage.

 

And then bought 5 more Condo units in 2007-8, and had been renting them out since.

 

The point is location and the type of community residing in that location that would determine ease in finding tenants and capital appreciation.

[Briggsy]

On 03/08/2016 at 0:08 PM, jakow said:

Calculations... I have none.

This was the clincher for me. No market research, projections or forecasts means nasty surprises and financial disappointment after your investment condo has been bought and your cash locked in.

[jakow]

10 minutes ago, Briggsy said:

This was the clincher for me. No market research, projections or forecasts means nasty surprises and financial disappointment after your investment condo has been bought and your cash locked in.

I came here with no experience asking for resources or advice. Funny how things get so skewed after 20 or so responses.

[Briggsy]

On 02/08/2016 at 3:47 PM, jakow said:

so I'm looking at putting my money somewhere that can make money long term.

You need to start putting together financial projections if this is what you want to do.

[jakow]

11 minutes ago, Briggsy said:

You need to start putting together financial projections if this is what you want to do.

 

Yep, but from what I've read here it seems like condos are pretty hit and miss unless you really know what you're doing. I'd love to be able to buy land, but I currently only have a girlfriend, not a wife, and even if she was my wife it's still obviously very risky putting anything in her name. And starting a company to buy the land is expensive and involved in itself. Right now I'm just saving money, so I have time to research options. Maybe just keeping my money in the stable mutual fund I have now is the way to go.

[Paul944]

There are people making money with condo's and there are people losing money on condo's. Skills and luck determine the outcome. I like to earn money using my skills and not so the influence of luck on it. But again the formula: 

 

Savings account: 1M baht with 2% interest gives 20,000 baht a year

 

1M baht condo, rent 5,000 gives  60,000 baht a year

 

tax, condo fees, maintenance, no tenant periods and tenant acquisition can easily exceed 40,000 baht

 

Skills and luck  highly influences this. Maybe you pay 1M for a 2M condo and can get 15,000 baht a month rent. Maybe the elevator brakes down and does not get repaired so you do not find a tenant for your condo on the 16th floor.

 

My reasons to buy a condo would be:

- Emotional value of the feeling owning your own place.

- Freedom of home decoration

- The intention to stay at the same place for over 10 years at least. 

 

 

[Berty100]

Go take a look at Lumpini Beach in Jomtien, they have a promotion, buy 1 condo get 1 free.

 

Business must be great.

 

Saw an bilboard for Centric sea on second road also the other day, offering big discounts.

[DipStick]

15 minutes ago, Berty100 said:

Go take a look at Lumpini Beach in Jomtien, they have a promotion, buy 1 condo get 1 free.

 

Business must be great.

 

Saw an bilboard for Centric sea on second road also the other day, offering big discounts.

Listen to the advice. By the way are you in Thailand, do you understand the country, do you understand what you are being told ?

 

link to the Lumpini Beach promo please 

[Berty100]

1 minute ago, DipStick said:

Listen to the advice. By the way are you in Thailand, do you understand the country, do you understand what you are being told ?

 

link to the Lumpini Beach promo please 

 

Because you ask it so nice, find it yourself dipshit dipstick.

 

If you were in Thailand you would have seen the billboards beside the roads all over Pattaya, including the huge one in front of lumpini.

[jakow]

7 minutes ago, DipStick said:

Listen to the advice. By the way are you in Thailand, do you understand the country, do you understand what you are being told ?

 

link to the Lumpini Beach promo please 

 

That first sentence was sent to me yesterday. He must have accidentally sent it again. Not all people here have been so polite with my asking for resources and advice.

[trogers]

13 hours ago, Paul944 said:

There are people making money with condo's and there are people losing money on condo's. Skills and luck determine the outcome. I like to earn money using my skills and not so the influence of luck on it. But again the formula: 

 

Savings account: 1M baht with 2% interest gives 20,000 baht a year

 

1M baht condo, rent 5,000 gives  60,000 baht a year

 

tax, condo fees, maintenance, no tenant periods and tenant acquisition can easily exceed 40,000 baht

 

Skills and luck  highly influences this. Maybe you pay 1M for a 2M condo and can get 15,000 baht a month rent. Maybe the elevator brakes down and does not get repaired so you do not find a tenant for your condo on the 16th floor.

 

My reasons to buy a condo would be:

- Emotional value of the feeling owning your own place.

- Freedom of home decoration

- The intention to stay at the same place for over 10 years at least. 

 

 

 

The trick is to avoid new developments that carry high speculative asking prices. There are so many reasonably priced condo units in the secondary market at half to two thirds of those asking prices.

 

Look at locations and the community residing there. Are tenants in that building primarily long term? Do owners collectively upkeep the development?

[DipStick]

16 hours ago, Berty100 said:

 

Because you ask it so nice, find it yourself dipshit dipstick.

 

If you were in Thailand you would have seen the billboards beside the roads all over Pattaya, including the huge one in front of lumpini.

What a strange comment, there is a lot more to Thailand than Pattaya, so what you were trying to say but failed miserably is that if one was in the Pattaya area then these billboards can easily be seen. But for those not in Pattaya, and there are very many, they would not be able to see these locally placed billboards.

hence the request for a link. It really isn't rocket science is it ? 

[Briggsy]

22 hours ago, Paul944 said:

There are people making money with condo's and there are people losing money on condo's. Skills and luck determine the outcome. I like to earn money using my skills and not so the influence of luck on it. But again the formula: 

 

Savings account: 1M baht with 2% interest gives 20,000 baht a year

 

1M baht condo, rent 5,000 gives  60,000 baht a year

 

tax, condo fees, maintenance, no tenant periods and tenant acquisition can easily exceed 40,000 baht

 

Skills and luck  highly influences this. Maybe you pay 1M for a 2M condo and can get 15,000 baht a month rent. Maybe the elevator brakes down and does not get repaired so you do not find a tenant for your condo on the 16th floor.

 

My reasons to buy a condo would be:

- Emotional value of the feeling owning your own place.

- Freedom of home decoration

- The intention to stay at the same place for over 10 years at least. 

 

 

 

Indeed, and just to add 3 further points that favour investing in some form of bank account or marketable security over being a landlord.

 

1. A bank account or certificate of deposit, etc. (depending on conditions) is liquid. If you need the cash, you can close the account or sell the certificate on the market. A condo is illiquid. The best you can do is borrow against it, maybe.

 

2. Guarantee of return of capital. Will you sell the condo for what you paid for it? Will you be able to sell it at all?

 

3. Renting out a condo is not a passive investment like a bank account? You will need to invest time into furnishing it, chasing up tenants, repairs, advertising, etc. Admittedly you can pass much of this work to a management company but they will of course charge you and with only 1 condo, you have no economies of scale.