What puts you off investing in real estate?

[Bassosa]

Just doing some research for my own sake and was pondering the following:

 

Investing in property in Thailand can be tricky business, yet there are success stories as well. During the buying/decision-making process, what exactly puts you off and prevents you from spending your hard earned cash on property here? This question obviously intended for those hesitant to buy. I've gone ahead and already pinpointed a few potential reasons. It would be great to compile a exhaustive list of potential threats/concerns to someone in the market for a house/condo.

 

- The fact that you technically can't own the land 

- The worry about Home Owner Fees not being allocated properly, or paid by others. Poor building management, corruption etc.

- Thai Baht exchange rate fluctuations

- The unsteady Thai economy in general

- Premature deterioration of the structure due to shoddy workmanship, poor materials used.

- Lack of transparency in the decision-making process. Personally I find it nearly impossible to get satisfactory answers to my question when researching a property (and I like to ask many), partly due to language barriers.

 

Anything else to add?

Edited November 17, 2016 by Bassosa

[zorro1]

I would be far more worried about the rest of the world's exchange rate fluctuations. Baht is rock solid

Also in what way is the economy unsteady?

[Bassosa]

Zorro1, these are generalisations. Not everyone will agree but these are commonly heard concerns.

[zorro1]

They are generally mantras repeated a million times until they become "fact" an unsteady economy would reflect in the Baht so they are joined at the hip.
Who are you asking about property, if it's real estate agents then I agree. I had to close my own deal and lead the agent through the selling process lol

[Bassosa]

As in poor performance from the real estate agents is a deterrent from buying a property?

[trogers]

Besides the all important location,

 

I look at two points: the mentality of majority of the owners, and the gross rental yield.

 

The former affects capital value, and the latter the return for the risk.

[blackcab]

4 hours ago, trogers said:

I look at two points: the mentality of majority of the owners...

 

Or the lack of mentality.

[trogers]

31 minutes ago, blackcab said:

 

Or the lack of mentality.

 

The lack of mentality and/or a low gross rental yield would puts me off investing in that project

[chiang mai]

Typically it's lack of funds on the part of the wannabe foreign investor, at last as far as this thread is concerned.

[swissie]

Not sure if it was Donald Duck or Donald Trump that said:

 

- As a foreigner, don't invest in a country where there is no "legal certainty".

Cheers.

[KittenKong]

11 hours ago, Bassosa said:

Anything else to add?

 

The general deceit, corruption and lawlessness.

 

The fact that I only have temporary permission to stay here which can be rescinded at any time or simply not renewed.

 

I own one condo here in which I live, a car that I drive,  and I have a few years spending money on deposit in a bank here. And that's it. In total it's well under 10% of my net worth and if necessary I can afford to walk away from it. Everything else is elsewhere.

[wprime]

The fact that city property in Bangkok is as expensive as many major western hubs now.

[1FinickyOne]

I already have a home here in my wife's village - though I have considered a condo... language is not a problem for me, but should not be for you either as there are plenty of English speaking agents...

 

What has deterred me:

 

Depreciation

Unstable [not trustworthy] property management

No multiple listings and comparables [tough to gauge real value of a property]

Untrustworthy agents - [this is a world wide issue, I am sure... What A Lovely Kitchen!!! - - you have a hotplate and all!!]

Seemingly no ease in selling - [ does no ease = dis-ease]

Concern over neighbors, which would not be visible before purchase. Noise factor. 

 

Add in that though yes, some people do profit from these ventures, others seem stuck and cannot sell and with a tremendous glut in properties and an easy rental market if I were inclined, my money seems better invested in other ways... 

 

[madmax2]

Over valuing of property by real estate agents who never do a proper valuation and do not know how to on a property but just list for what the owner wishes they could get which is normally well over the properties value

 

Only reasonably priced properties are when the owners are forced to sell for health or financial reasons or they just want to return to their home country and are realistic with their pricing, these properties usually sell fairly quickly if value for money and the potential buyer likes the property

 

Its no good dropping your asking price by sometimes millions of baht if all the potential buyers have looked at the property are not interested and bought or are looking at other properties, buyers will rarely return to a property they have already looked at and made a offer on which was not excepted

[trogers]

11 minutes ago, madmax2 said:

Over valuing of property by real estate agents who never do a proper valuation and do not know how to on a property but just list for what the owner wishes they could get which is normally well over the properties value

 

Only reasonably priced properties are when the owners are forced to sell for health or financial reasons or they just want to return to their home country and are realistic with their pricing, these properties usually sell fairly quickly if value for money and the potential buyer likes the property

 

Its no good dropping your asking price by sometimes millions of baht if all the potential buyers have looked at the property are not interested and bought or are looking at other properties, buyers will rarely return to a property they have already looked at and made a offer on which was not excepted

 

I only use the Investment Method of valuation. The Comparative Method is a victim of the property cycle.

[mcfish]

The fact that city property in Bangkok is as expensive as many major western hubs now.

That's why I bought smack in the middle of Asoke and Nana bts 12 years ago . I would never buy there now, the prices are off the charts.

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[madmax2]

We are looking at present for 1 or 2 investment properties and found agents very misleading in what they tell you, and buyers have no one they can go to here if a agent misleads or lies to you

 

The property has to be what we like not what the agents like but they do not seem to understand this, I am sure some of the properties we have been shown by agents they have increased the asking price on for their own benefit

 

Currently thousands of properties for sale but very few buyers we just keep looking and change agents

[jpinx]

Buying property is like buying a used car.  If you don't know what you're looking at, don't buy it.  If you want to "invest" in property, use a property investment broker, preferably in your own country where there will be 2 major advantages -- no language barrier and a legal framework that you are familiar with.  Buying anything in a place like Thailand needs a lot of hands-on work on your own part.-- or -- you put some cash into something you can use for a year or 2 and then walk away from it. 

[blackcab]

33 minutes ago, madmax2 said:

We are looking at present for 1 or 2 investment properties and found agents very misleading in what they tell you, and buyers have no one they can go to here if a agent misleads or lies to you

 

The property has to be what we like not what the agents like but they do not seem to understand this, I am sure some of the properties we have been shown by agents they have increased the asking price on for their own benefit

 

Currently thousands of properties for sale but very few buyers we just keep looking and change agents

 

I work for a company that invests in property. We never, ever, use an agent. 

 

We find property we like and that we want to buy. Then we go directly to the owner. The benefit of this is that we can ask for a discount, knowing the seller won't be paying agent's fees.

[Bassosa]

How do you find the property? Through agent listings?

[blackcab]

25 minutes ago, Bassosa said:

How do you find the property? Through agent listings?

 

We tend to identify an area then send in the Thai staff. We have one lady who is fantastic. She speaks Thai and Isaan and had an ability to get on with people extremely well.

 

If we want to know about a condo building she will go talk with the maids, maintenance guys and the management.

 

For land she will ask around the neighbourhood. The information she comes back with sometimes makes me smile. Not just what is for sale, but why, including all the gossip.

 

Once we find something we are interested in we obtain the owner's contact details and approach them directly.

 

I should add that this process is invaluable because she often comes back with other prices of property that had been sold in the area. The real price, that is - not the asking price.

Edited November 18, 2016 by blackcab

[lkn]

One strategy is to buy old unmaintained condos, fix them up, and then either sell or make them into rentals. In terms of ROI this is probably what gives the highest yield, but it requires some work as you have to scout for good bargains, plan and oversee the renovation, and then handle the rental or go through a sales process.

 

The problem from my POV is that while you may get a good ROI it doesn’t really scale, e.g. if I have 20 million to invest then I would probably have to go through the above for 5-10 condos, which seems like a lot of work.

 

What I hear from some people is that the way to run a successful rental business is to invest in quality real estate because there is scarcity in this market, and only do long-term rentals, to limit the overhead.

 

This scales a little better because the prices are higher, but from the things I have looked at, the yield is just not there for someone only investing in a few condos (rather than an entire building).

 

So the way I see it is that if you have limited funds, bargain hunting and putting in the hours to renovate etc. can give you a nice ROI, but if you have a small fortune, you’re much better off investing in securities, whereas if you have a large fortune, you may consider going in big, as in, buy a plot of land, build condos, and sell them. I would expect at least a 20% profit from such investment, but if you build the same budget condos as everybody else, you might have a challenge getting them sold.

 

That said, it does seem like foreigners are currently more hesitant to buy in Thailand, most likely due to recent events.

[madmax2]

4 hours ago, jpinx said:

Buying property is like buying a used car.  If you don't know what you're looking at, don't buy it.  If you want to "invest" in property, use a property investment broker, preferably in your own country where there will be 2 major advantages -- no language barrier and a legal framework that you are familiar with.  Buying anything in a place like Thailand needs a lot of hands-on work on your own part.-- or -- you put some cash into something you can use for a year or 2 and then walk away from it. 

We agree to disagree it seems, Why use a so called investment for anything you can find out for yourself anywhere but especially in Thailand, the land of farang conmen

You would not be a so called investment broker by any chance, i have met more than a few conmen in my time here and guess what, they are mainly foreigners who could not work in their home country without major problems with the authorities  

[jpinx]

I understand your view, but one reason why the ROI is eroded is because - if you don't get you own hands dirty - you end up using the services of some perfectly reasonable and legitimate agents see post #comment-11342148 above.  That's only for the purchase, then there's the legal ownership trail, the odd-jobbing building works guy, plumber, electrician and last but not least, the agency fee's and advertising to sell it in a flooded market.

 

I have done the property investment thing when I was younger and I did very well indeed, but they were niche markets with a queue of prospective buyers, almost literally banging on my door asking when I would take their money.  Not in Thailand, I was in NZ and Peru, and looking around casually here in Thailand I don't see niche markets of that nature, or I might be tempted again.

 

BTW - take comfort from the fact that farang conmen are not confined to Thailand, they're all over the place.  Never pay up-front and never sign a contract, buy all the materials yourself. 

Edited November 18, 2016 by jpinx

[madmax2]

Never put a deposit on property here , to many people have been conned and lost their deposit

Pay the full amount in cash at settlement and have the chanote/title deed signed over to you at the same time, if people get a bank loan that is only paid at settlement by the bank involved and the bank has a mortgage  on the property if they are involved in the transaction 

If furniture etc is included in the sale have a full inventory of the items involved signed by the owner and witnessed to make sure you receive all items involved in the sale

Basically buyer beware when purchasing anything here and do not trust anybody in the property business because its quite possible you could regret doing it

Forget legal action it will only cost you more money and be drawn out forever until you eventually give up and write the money of as a lesson learnt 

Edited November 18, 2016 by madmax2

[mcfish]

Never put a deposit on property here , to many people have been conned and lost their deposit

Pay the full amount in cash at settlement and have the chanote/title deed signed over to you at the same time, if people get a bank loan that is only paid at settlement by the bank involved and the bank has a mortgage  on the property if they are involved in the transaction 

If furniture etc is included in the sale have a full inventory of the items involved signed by the owner and witnessed to make sure you receive all items involved in the sale

Basically buyer beware when purchasing anything here and do not trust anybody in the property business because its quite possible you could regret doing it

Forget legal action it will only cost you more money and be drawn out forever until you eventually give up and write the money of as a lesson learnt 

Totall rubbish. Millions of thais and countless farang leave deposits every year without a hiccup.

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[KittenKong]

In the west deposits are generally made to ensure that the property comes off the market and to cover the often prolonged and potentially expensive process of selling the house if the buyer backs out. In fact where I lived in Europe deposits of 10% held by an official lawyer/registrar were common and both parties would be subject to penalties of 10% if they backed out.

 

Here neither applies as there are rarely many people interested in the same property and sales can be arranged and completed within just a day or two.

 

So I see little reason for a deposit here, and several reasons not to pay one. The main reason being the potential for scams.

[madmax2]

12 hours ago, mcfish said:

Totall rubbish. Millions of thais and countless farang leave deposits every year without a hiccup.

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You mean like all the people who put deposits on Ace Condos in Patong, supposed to be finish last January and the project has not even started or been approved, Are these among the millions  and countless people you are talking about

You sound like someone trying to sell overpriced, poorly constructed condos to newby expats

Who tells people not to trust Thai salespersons   

[mcfish]

You mean like all the people who put deposits on Ace Condos in Patong, supposed to be finish last January and the project has not even started or been approved, Are these among the millions  and countless people you are talking about
You sound like someone trying to sell overpriced, poorly constructed condos to newby expats
Who tells people not to trust Thai salespersons   

Good try but where did I say "everyone" I said millions
There is dud real estate deals and bankrupt developments in every country on the planet
Got to say you don't come across as being very bright

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[madmax2]

1 hour ago, KittenKong said:

In the west deposits are generally made to ensure that the property comes off the market and to cover the often prolonged and potentially expensive process of selling the house if the buyer backs out. In fact where I lived in Europe deposits of 10% held by an official lawyer/registrar were common and both parties would be subject to penalties of 10% if they backed out.

 

Here neither applies as there are rarely many people interested in the same property and sales can be arranged and completed within just a day or two.

 

So I see little reason for a deposit here, and several reasons not to pay one. The main reason being the potential for scams.

In Australia a $1 deposit makes a contract legal  on both buyer and seller

Also the deposit goes into a trust fund not accessible by the agent or seller

And has to be returned to the buyer if the contract conditions are not met