Investing In Real Estate

[stef24]

does anyone have experience with buying a condo near the beach with the goal to rent it out to tourists, via a local and/or european agency? is this done alot? is there a big market for this? is it worth the hastle?

makes much more sense to buy something in thailand for $150K then back home, except for having to deal with dozens of tennants per year instead of one.

[londonthai]

I have read down some threads on this forum that there is a small return on investment in thailand.

however, if you are coming to thailand often or are thinking about retiring in the future than probably it's worth to buy a condo to stay there and rent it out to your friends and colleagues if you are not there.

agency would charge at least 10% and you might still be responsible for renovating the place from time to time.

myself I am trying to rent out for tourists 2 properties in Bangkok - and it's not as that easy as you would think.

[RAZZELL]

does anyone have experience with buying a condo near the beach with the goal to rent it out to tourists, via a local and/or european agency? is this done alot? is there a big market for this? is it worth the hastle?

makes much more sense to buy something in thailand for $150K then back home, except for having to deal with dozens of tennants per year instead of one.

Not worth the hassle...Or return...IMHO

Makes more sense to buy in your country (Belgium???) Where the ownership, rights and "market" are easier to understand.

In the UK...I think statistically, property doubles in value every 7 years...won't get that type of return in LOS...or the worth in "real money" eg. £ $ or €'s...

RAZZ

Edited January 4, 2007 by RAZZELL

[billaaa777]

I think statistically, property doubles in value every 7 years...won't get that type of return in LOS...or the worth in "real money" eg. £ $ or €'s...

I made 135% ROI investing in condos last year in Pattaya. But, what the hel_l do I know?

[RAZZELL]

I think statistically, property doubles in value every 7 years...won't get that type of return in LOS...or the worth in "real money" eg. £ $ or €'s...

I made 135% ROI investing in condos last year in Pattaya. But, what the hel_l do I know?

You might well have done...If you buy at the right price... there's always money in property...

But did you renovate them? Buy them at Auction? Distressed sale? How long have you been in Pattaya? Do you speak Thai? Do you know the market? Have industry contacts? etc etc etc

That's a LOT different from what I understand the OP is asking...basically paying a few million for a condo, sitting back and waiting for the money/profit/capital gain to role in

RAZZ

Edited January 4, 2007 by RAZZELL

[billaaa777]

But did you renovate them?

I bought and sold 7 condos last year. Six of them I renovated. I try to make the condos stunning keeping in mind the sales price level.

Buy them at Auction? Distressed sale?

No, I researched the market thoroughly and found the condos on my own.

How long have you been in Pattaya?

About 2 ½ years and I have been doing this for about 1 ½ years.

Do you speak Thai?

No. I am still working on English to tell you the truth.

Do you know the market?

Yes, I feel I understand the portion of the market I participate in as well as anybody and much better than most. I worked very hard at obtaining this knowledge and continue to attempt to gain more each day.

Have industry contacts? etc etc etc

I do now. When I started I did not have any. I have so many now the real estate agents are calling me asking if I know of condos that can be bought at a good price that I don’t want. Of course, I don’t tell them, just in case I will need it in a month or so.

[Lil_Jon]

"won't get that type of return in LOS"

so, what do ya people think the ROI on real estate in thailand is , 7% , 8%

[quiksilva]

"won't get that type of return in LOS"

so, what do ya people think the ROI on real estate in thailand is , 7% , 8%

Some properties might generate that much but I doubt that all of them do. I'd put average resi yields closer to about 6% by the time you factor in void periods, agents fees, maintenance and marketing.

Some vendors on new prime projects are even offering guaranteed yields at 6% for limited periods.

This is of course purely rental yields and not taking capital appreciation into account, which you shouldnt do here anyway as condos rarely increase in value beyond 18 months after its launch.

Unless you get into the refurb biz where returns could be much higher, but it is a riskier play. You can mitigate that risk though, as billaa has done, if you do plenty of homework. Older properties also benefit from established reputations and experienced property management, which can be extremely valuable, as anyone who has brought in The Lakes will tell you.

Edited January 5, 2007 by quiksilva

[samtam]

Not clear. What's the story with The Lakes' management? Good or bad? Who is managing?

[quiksilva]

I cant recall any specifics, save to say that I heard nothing but bad reports from co-owners there. I know several who are haing a hard time finding tenants and there are management issues too. Whether these stem from construction or the managers themselves I am not sure. CBRE used to manage it I think, but I am not sure if they still do.

However, the thing is it illustrates that with all of these new buildings coming on stream problems are only to be expected, because:

(1) capable Thai management staff are a finite resource in the LOS and

(2) new high rise buildings almost always have 'teething' problems

Which is why I think that if you are looking for rental return; well located, older, established buildings can represent a better investment opportunity than a new untested property.

Edited January 5, 2007 by quiksilva

[Lil_Jon]

This is of course purely rental yields and not taking capital appreciation into account, which you shouldnt do here anyway as condos rarely increase in value beyond 18 months after its launch.

but if you buy and hold for a reasonable period of time , you are bound to obtain satisfactory appreciation , aren't you?

[RAZZELL]

This is of course purely rental yields and not taking capital appreciation into account, which you shouldnt do here anyway as condos rarely increase in value beyond 18 months after its launch.

but if you buy and hold for a reasonable period of time , you are bound to obtain satisfactory appreciation , aren't you?

IMHO...NO...

The market dynamics here are not the same as in the west...

[RAZZELL]

But did you renovate them?

I bought and sold 7 condos last year. Six of them I renovated. I try to make the condos stunning keeping in mind the sales price level.

Buy them at Auction? Distressed sale?

No, I researched the market thoroughly and found the condos on my own.

How long have you been in Pattaya?

About 2 ½ years and I have been doing this for about 1 ½ years.

Do you speak Thai?

No. I am still working on English to tell you the truth.

Do you know the market?

Yes, I feel I understand the portion of the market I participate in as well as anybody and much better than most. I worked very hard at obtaining this knowledge and continue to attempt to gain more each day.

Have industry contacts? etc etc etc

I do now. When I started I did not have any. I have so many now the real estate agents are calling me asking if I know of condos that can be bought at a good price that I don’t want. Of course, I don’t tell them, just in case I will need it in a month or so.

Have you got a work permit...paying tax??? I'm JOKING

Good to hear a success story...I think the way to making money is "think differently"...

Just another quick example...Most "farangs" think, right I'll open a bar/hotel/shop...I'll sell cheap stuff made in Thailand in my home country...etc etc

Last year I met the British guy who imports "Tetley Bitter" into LOS. He thought what do people have at "home" but haven't got here??? I'm sure in a few years he'll be raking it in or sell-out to a multinational...He spotted a gap in the market and a demand for a product...Just like you bilaaa777

I'm just hoping I can do the same

All the best to everyone trying to earn an honest buck!

RAZZ

[quiksilva]

Well I personally am quite skeptical about condos increasing in value here (except as previosuly stated)

Condos in President Park are trading at approximately the same price as they were 9-10 years ago, (approximately 55-58K / sq m if memory serves me, correct me if Im wrong though), okay they certainly havent fallen but how long is a reasonable period to wait to see satisfactory capital appreciation and what excatly is satisfactory capital appreciation?

When stats are released in research papers stating that average condo prices are increasing, you have to be careful in how you analyse those figures. Can you discern whether the researchers have really used true Open Market Values or just Average Condo Prices?

There is an important difference, because average prices are being propped up by new supply entering the market at higher prices. This is to do with increased development costs, steel prices, land appreciation, shortage of labour etc.

Lets look at it another way. If we assume that investors expectations for yields have not really decreased that much, why hasnt the average condo landlord, increased the rent recently?

If your landlord sold the 10 year old unit that you are leasing today at a considerably higher price to a new investor, would you be willing to agree to pay a higher rent (so he can achieve the same return) with no questions asked?

If you left would it even lease out to another tenant at a much higher rate? What if the new investor refurbed?

If you answered no, then investment values have not truly appreciated have they?

Some buildings have increased, some will with a refurb. They tend to be in great locations, with good reputations, pro-active property management, and a high proportion of resident co-owners (so as to ensure that common fees and sinking funds have been regularly collected etc).

How many condo projects do you know fit that bill in Thailand? Some do, I know a few, and I'd hazard a guess that bilaa knows a few too, because they are the rare ones that appreciate, the others just stagnate.

Edited January 5, 2007 by quiksilva

[stef24]

here in europe it is the case that you can buy a place, stick in a new kitchen and bathroom and rent it out immediately at a rate that covers your mortgage + beer money. by the time the first tennant leaves after 3-4 yrs, you jack your rent up 20% and you have yourselves a second income. my old flat was owned by a turkish guy who owned 6-7 small apts and lived off it. i guess its foolish to think you could do the same in thailand but just less capital to start off

[mark lamai]

quite a few thais around lamai are doing from well to extremely well,

by building cheap houses/shophouses and renting to farangs like me for 10k a month.

coz they already owned the land and didnt have to pay the absurd current prices,

they are probably getting a good return.

one couple i rented from had gradually had built 5 x 2 bed "villas' (? small stand alone house)

on their 1 rai (approx) , so now they have a nestegg producing 50k a month,

subtract bank loan payments and they have a good income for life.

i wish them good luck,

as opposed to the really nasty greedy ones here (farang and thai) who i hope get really badly burnt asap.

personally i will never put money into investment property here,

somewhere to live is a different story.

but sometimes wondered about knocking up a thai style apartment block,

20-30 apartments that rent at 3-4000 a month.

all over bangkok as soon as they go up they are full it seems and hardly ever have a vacanccy.

very low maintenance and running costs.......

[yoshiwara]

some people have an aptitude and enthusiasm for property development...but others are just looking for 'something to do.....' and can come unstuck if they overreach on loss of financial liquidity...however it is a better bet than bars etc which I think is a total gamble for those without experience in the hospitality business........