Real estate question

[JameszBond]

Hey there.

I am considering investing 1-2M thb into real estate for the purpose of saving money and generating some passive income by renting out the properties bought.

Couple of questions in mind.

1. Is it a good idea to buy a 1M thb "shoebox" condo at all? At first glance it seems renting out cheap condo should be easier.

2. I am thinking of Pattaya and Bang Saen locations. Pattaya has lots of tourists which should provide good chances for my properties to be rented out during most of the year. There are also plenty of 1M condo options. Bangsaen has a lot of students and condos are cheap there as well which gives me reasons to assume i am also will be able to rent out properties in bangsaen relatively easy. The only drawback about bangsaen is it is less farang-friendly but i don't mind dealing with thai agents and have people to help solve any communication issues. Would be glad to hear some pros and cons regarding my way of thinking. I can also consider buying in another locations but it should be cheap and shouldn't be too far from Bangkok, so any recommendations are welcome. Thanks in advance.

Edited August 24, 2017 by JameszBond

[Peterw42]

If you are looking for rental return then 1-2 m baht condos appear to get the best return, 8-10% is possible. A cheaper rent condo can be rented to Thais and Westeners, but a higher asking price becomes only westerners renting, less customers.

As you said Bangsaen is very much a student market with lots of cheaper accommodation for them, keep in mind they go back home for a couple of months a year. 

You will get no end of "dont buy a condo" etc, but as you say its for passive income not capital gain and some enforced saving.

[JameszBond]

Thanks @Peterw42

Should i consider another locations? Huahin?

[Peterw42]

10 minutes ago, JameszBond said:

Thanks @Peterw42

Should i consider another locations? Huahin?

You could look around for the best return and occupancy etc but its always good to have rental property close to where you live, keep an eye on it, do repairs, kick out dud tenants etc.

I have heard people mention great returns around Laem Chabang and Siracha, the port north of Pattaya, lots of working Expats Japanese etc (petroleum and seafood) but always a shortage of accommodation.

[trogers]

3 minutes ago, Peterw42 said:

You could look around for the best return and occupancy etc but its always good to have rental property close to where you live, keep an eye on it, do repairs, kick out dud tenants etc.

I have heard people mention great returns around Laem Chabang and Siracha, the port north of Pattaya, lots of working Expats Japanese etc (petroleum and seafood) but always a shortage of accommodation.

There are two parts to total returns: rental income and capital appreciation.

 

What's capital appreciation are being enjoyed in Siracha and Laem Chabang?

[Peterw42]

18 minutes ago, trogers said:

There are two parts to total returns: rental income and capital appreciation.

 

What's capital appreciation are being enjoyed in Siracha and Laem Chabang?

Yes thats right but unfortunately you dont always get both. My way of thinking is it beats the same 1m baht sitting in the bank earning 3 % also with no capital gain. A good rental return should (in theory) mean the capital value stays in place, and logically if rents increase over time then capital value increases.

Edited August 24, 2017 by Peterw42

[JameszBond]

32 minutes ago, Peterw42 said:

You could look around for the best return and occupancy etc but its always good to have rental property close to where you live, keep an eye on it, do repairs, kick out dud tenants etc.

I have heard people mention great returns around Laem Chabang and Siracha, the port north of Pattaya, lots of working Expats Japanese etc (petroleum and seafood) but always a shortage of accommodation.

 

That's a good point. I am traveling around that area from time to time and noticed some decent looking new developments there. Need to check the prices...

 

[trogers]

42 minutes ago, Peterw42 said:

Yes thats right but unfortunately you dont always get both. My way of thinking is it beats the same 1m baht sitting in the bank earning 3 % also with no capital gain. A good rental return should (in theory) mean the capital value stays in place, and logically if rents increase over time then capital value increases.

Unfortunately, potential for rental increase would quickly dissipate with increase in supply, as happened in so many regions in Thailand.

[funandsuninbangkok]

Man, read a few stories here. One guy on this forum is about to throw two little kids into the street for 6000 baht. 

 

You want to live like that ?

 

buy google and hit the beach

Edited August 24, 2017 by funandsuninbangkok

[scubascuba3]

There are loads and loads of empty condos so you need to be smart, maybe very smart or lucky. What happens if you buy a condo or two and can't rent them or maybe only for xmas / new year period?

 

 

[KittenKong]

13 hours ago, JameszBond said:

I am considering investing 1-2M thb into real estate for the purpose of saving money and generating some passive income by renting out the properties bought.

 

Bear in mind that whilst it is very easy to buy a condo in Thailand it can take years to to sell one. So anything purchased as an investment or saving plan may end up to be something of a millstone or a capital loss.

 

I have a couple of simple rules here: I would never buy any property that I would not be prepared to live in myself, and basically I would only buy something for me to live in myself anyway. The other rule is more a state of mind: I mentally wrote off 100% of the value of my condo the day I bought it, on the assumption that it may be impossible to sell or the building may go so far south due to mismanagement or corruption that units in it drop in value hugely.

That said, if you are determined to buy something to rent out then the best % returns will be on the cheaper smaller places, as mentioned, though you may also have to factor in a lot of renovation costs after a few years.

 

[JameszBond]

13 hours ago, funandsuninbangkok said:

Man, read a few stories here. One guy on this forum is about to throw two little kids into the street for 6000 baht. 

 

You want to live like that ?

 

buy google and hit the beach

Source?

[JameszBond]

12 hours ago, scubascuba3 said:

There are loads and loads of empty condos so you need to be smart, maybe very smart or lucky. What happens if you buy a condo or two and can't rent them or maybe only for xmas / new year period?

 

 

Really? It is very hard to find decent condo during the high season so i assume i will have at least 6 months when my condo will be rented out. 

[scubascuba3]

Man, read a few stories here. One guy on this forum is about to throw two little kids into the street for 6000 baht. 
 
You want to live like that ?
 
buy google and hit the beach

So you let them live rent free in your condo? I'm sure they can head back to Isaan for a while

[JameszBond]

5 hours ago, KittenKong said:

 

Bear in mind that whilst it is very easy to buy a condo in Thailand it can take years to to sell one. So anything purchased as an investment or saving plan may end up to be something of a millstone or a capital loss.

 

Yeah that's what i'm concerned about as well. Lots of new developments in popular areas so in 10 years my unit(s) may become very unattractive for second hand buyers. 

[KittenKong]

2 hours ago, JameszBond said:

Really? It is very hard to find decent condo during the high season so i assume i will have at least 6 months when my condo will be rented out. 

 

Half a year should not be hard to achieve and if you are satisfied with this then it should be OK. You will have costs to deduct from that, of course (common fees, agency fees, redecoration/repair/maintenance costs, possible taxes).

[JameszBond]

On 8/25/2017 at 1:34 PM, KittenKong said:

 

Half a year should not be hard to achieve and if you are satisfied with this then it should be OK. You will have costs to deduct from that, of course (common fees, agency fees, redecoration/repair/maintenance costs, possible taxes).

No i'm looking for full 1 year rental returns :)

But there obviously will be years when this won't happen. 

[trogers]

3 hours ago, JameszBond said:

No i'm looking for full 1 year rental returns :)

But there obviously will be years when this won't happen. 

Years when this won't happen?

 

More likely if it would ever happen, buying into a tourist town with high season of only 4 months a year.

 

The vacant supply now is probably more than 10x the number of retirees who settled there.

[inThailand]

Unless you find a real bargain with a superior location and a great unit realizing a good return will not materialise and as others stated capital appreciation may actually result in negative appreciation. Investing anywhere and especially here requires a thorough understanding of the market and potential lessees. You must do your homework or you and your wallet will be sorely disappointed. 

[KittenKong]

6 hours ago, JameszBond said:

i assume i will have at least 6 months when my condo will be rented out. 

 

6 hours ago, JameszBond said:

No i'm looking for full 1 year rental returns :)

 

Make your mind up. Do you want full or half occupancy?

 

Half should be doable with short-term holiday lets, full will be hard unless you keep the price low and find a yearly tenant. Somewhere in between may be your best bet, but there would be no guarantees for that.

[JameszBond]

On 8/27/2017 at 3:42 AM, KittenKong said:

Make your mind up. Do you want full or half occupancy?

Who will ever want to have half of the profits they might have? I was saying that i'm ok with half a year when i won't find tenants for 1 year contract. 

The advice i'm looking for is where to buy to have max chances of renting out for full year.

[trogers]

5 hours ago, JameszBond said:

Who will ever want to have half of the profits they might have? I was saying that i'm ok with half a year when i won't find tenants for 1 year contract. 

The advice i'm looking for is where to buy to have max chances of renting out for full year.

Where to not buy would be holiday places with high and low seasons.

 

What to not buy would be the very oversupply of shoebox units (25-35 sqm pseudo 1-bedrooms).

[KittenKong]

5 hours ago, JameszBond said:

Who will ever want to have half of the profits they might have?

 

It's not that simple. There are other differences between short-term and long-term rentals to take into account.

 

 

5 hours ago, JameszBond said:

The advice i'm looking for is where to buy to have max chances of renting out for full year.

 

To long-term or short-term tenants?

[JameszBond]

1 hour ago, KittenKong said:

To long-term or short-term tenants?

 

Long term of course.

[KittenKong]

On 24/08/2017 at 6:53 PM, JameszBond said:

I am considering investing 1-2M thb into real estate for the purpose of saving money and generating some passive income by renting out the properties bought.

 

On 25/08/2017 at 2:44 PM, JameszBond said:

Long term of course.

 

There are many condo units in that price range whose owners are looking for long-term tenants, and not many who are finding them.

 

Perhaps consider View Talay 1, 2 and at a pinch 5. All are in Jomtien.

[Senechal]

On 8/24/2017 at 1:59 PM, funandsuninbangkok said:

Man, read a few stories here. One guy on this forum is about to throw two little kids into the street for 6000 baht. 

 

You want to live like that ?

 

buy google and hit the beach

 

Yeah, buy GOOG and participate in a CIA spying operation which violates the privacy of every man woman and child. If you want to live like that.

 

https://medium.com/insurge-intelligence/how-the-cia-made-google-e836451a959e

 

Enough with the "holier than thou" crap, bro. Nobody asked for a sermon.

 

 

 

 

Edited August 29, 2017 by Senechal

[smutcakes]

On 8/25/2017 at 0:59 AM, funandsuninbangkok said:

Man, read a few stories here. One guy on this forum is about to throw two little kids into the street for 6000 baht. 

 

You want to live like that ?

 

buy google and hit the beach

Google is the thick end of $1000 a share. Be sensible.

[inThailand]

Before, the best rental returns were usually from renting to tourists even if not rented for the whole year. But exchange rates, a lack of good tourists, a lot of cheap competition, etc have sharply changed the rental market. Buying cheaper properties thus requiring lower rents for a good return is now the best option. But you must have an above average product to stand out. And at lower rents you typically don't the best renters. Imo, this not an attractive business, especially coupled with little liquidity and a chance for captial appreciation when you desire to sell.

[JameszBond]

This is interesting how most of the advices are "don't buy" and i was thinking i would get all sorts of detailed guides on location and types of condos instead :)

A friend of mine told me about the low liquidity as well but i never took it serious and now i have changed my mind.

Thanks everyone for all the replies, i'll keep looking for another options.