Jump to content
BANGKOK
snoop1130

Buying condos to rent can offer path to riches

Recommended Posts

Buying condos to rent can offer path to riches

By Somluck Srimalee
The Nation

 

800_9d78ec719fdeaff.jpg

Perspective of Reserve Sathorn by Pruksa Real Estate Plc. Sathorn is one of popular location for condominium for rental, Plus Property said.--Photo by Pruksa Real Estate Plc

 

While the interest rate on savings remains stuck below 1.5 per cent, investing in property – and particularly in condominiums for rent –will be top choice for some investors who want to manage their money given that the return on investment for residential still generates a yearly return average of 5-10 per cent.

 

Wipa, 48, bought her first condominium to rent out in the year 2004 at Ratchada road at a cost of Bt990,000 for 30 square metres of unit size. 

 

She opened for rent at the price of Bt10,000 per month for the first two years after the condominium completion, while continuing to pay Bt6,500 monthly instalments to the bank. That left her with Bt3,500 per month in extra income that she put against the mortgage. Now the condominium unit already belongs to her, and provides her with Bt7,000 per month in income.

 

She then expanded her investment to buy two new condominium units. The first at Phetchaburi-Thong Lor road was a one-bedroom unit of 32 square metres and cost Bt2.5 million. The room is renting for Bt15,000 monthly, higher than her Bt11,000 monthly mortgage payment to the bank.

 

The second unit is located at Soi Lasan on Sukhumvit Road and cost Bt1.3 million. It is already renting at Bt6,500 monthly, equal to her monthly Bt6,500 payment to the bank.

 

“I decided to invest in condominiums when I saw the business opportunity to generate recurring income for the long term in a period of rising residential prices, especially in those locations close to the mass transit system,” Wipa said.

 

She added that when investing in a condominium, she selects the location by focusing on its proximity to office buildings and education institutes that will create a strong demand for condominium housing.

 

Vasin Mahaphon, 37, received an offer of Bt12.5 million for a 26-square-wah townhouse he had bought in Ekkamai Soi 28 for Bt5 million in 2012 – a surge of over 100 per cent in six years. The property was renovated at a cost of Bt1 million. 

 

“I moved to Ekkamai Soi 12 from Nonthaburi province six years ago after purchasing a 35-square-wah townhouse for Bt5.2 million plus a renovation cost of Bt400,000,” said Vasin in an interview with The Nation.

 

The strong demand for homes in the area later led to the idea of buying and renovating existing properties for sale, he said, adding that he had worked in Thong Lor for 15 years before moving to the location. 

 

Vasin began with the purchase of a 35-square-wah twin house for Bt8.2 million, followed by a Bt400,000 renovation. A year after, the house was sold for Bt12.5 million – a 45-per-cent price increase in 12 months.

 

As the rise in residential prices continued, Vasin turned to renting out his properties. Two units have now been taken up by tenants for monthly rentals of Bt60,000 and Bt70,000. 

 

“Rents rise in line with market prices. Besides, the sale price of my units will also be much higher,” he added. 

 

“The Thong Lor-Ekkamai area offers a range of facilities that sit well with my lifestyle. It offers many commercial premises, a vibrant night scene and easy access to the central business district. The area is usually quiet on weekends when I jog with my dog in the mornings,” Vasin said. 

 

Property agency firm Nexus Property Marketing Co Ltd (NEXUS) points out that the return on investments by those who buy condominiums to rent them out, records an average of 4-7 per cent a year depending on the location and the number of condominium units for rent around the area.

 

The company’s managing director Nalinrat Chareonsuphong said the three main factors for projects to make a high yield at 5-6 per cent are the right location, service and maintenance.

 

The first consideration of tenants is location. The project should be easily accessed, near public transport, linked to main roads and surrounded by convenience stores and restaurants.

 

Available services also have a strong impact on the purchasing decision. If projects can provide extra services such as a shuttle or private taxi, coordination with a room-keeping service, car wash or repair service agents, those projects are likely to gain more attention from tenants.

 

Maintenance helps sustain a good image for condominiums. If a project has been operating for a while with good maintenance, tenants feel confident and stay longer. At this point, investors will see higher returns from long-staying tenants than they would from newly-launched projects which that must be bought a higher average price.

 

Finding a condominium to invest in for a high yield goes beyond being located near the BTS or MRT. Success also depends on those other factors mentioned, Nalinrat said.

 

According to a survey conducted by the property agency arm of Sansiri Plc, Plus Property Co Ltd, the top three locations for investment in condominiums for rent are Silom-Sathon, Phaholyothin-Lat Phrao, and Phra Khanong-On Nuj. 

 

At Silom-Sathon records show rental prices average between Bt700 and Bt1,000 per square metre per month, an average return on investment of about 5 per cent a year.

 

Phaholyothin-Lat Phrao records show rental prices average between Bt520 and Bt542 per square metre per month, an average return on investment about 5 per cent yearly.

 

Phra Khanong-On Nuj offers a return on investment of 5-7 per cent a year by offering an average price between Bt500 and Bt600 per square metre monthly.

 

Although the investment in property sometimes generates a return on investment lower than investing in the capital market, the investment in property generates a sustainable return on investment when you succeed in selecting the right locations, the property agency found.

 

logo2.jpg

-- © Copyright The Nation Thailand  2019-07-23

Share this post


Link to post
Share on other sites
42 minutes ago, Maverell said:

Ridiculous - there are so many mid to low end empty condos at the moment if you buy one with the idea of renting it out quickly and for a profit you are mistaken. There are not enough prospective tenants to go round unless you are in the very high end market.

If you look at the high end market, you’ll notice that the PE ratios are consistently worse than the mid to low end market.  Many units asking 300-400 times monthly rent and that’s before factoring in the holding costs that come with ownership.  I have found that even in the US, in cities that I have lived (Seattle, L.A.) the higher end condos generally have much worse investment returns (either via rent or appreciation) than the lower end units.

 

You are correct regarding the glut of mid range condos.  My building is at 20% vacancy (per the management office), and I doubt that includes the owner occupied units that are listed for sale.

Share this post


Link to post
Share on other sites

So many dummies claiming that keeping cash locked up in the west is the path to riches 

bahaha idiots losing exchange rate by the minute against the mighty baht

 

The only winners were those that sold up everything and "burned bridges" to catch onto the mighty mighty baht. The rest are losers there is no disputing that fact

  • Confused 4
  • Sad 1

Share this post


Link to post
Share on other sites

So which real estate agent wrote this piece? Or rather provided "research material" for the journalist.

  • Like 2

Share this post


Link to post
Share on other sites

I thought it was ilegal for foreigners to rent out apartments.  

  • Haha 2

Share this post


Link to post
Share on other sites
10 hours ago, madmen said:

So many dummies claiming that keeping cash locked up in the west is the path to riches 

bahaha idiots losing exchange rate by the minute against the mighty baht

 

The only winners were those that sold up everything and "burned bridges" to catch onto the mighty mighty baht. The rest are losers there is no disputing that fact

Wow, instead showing where to succeed, you instead took the low road.  There was a moment where I thought we were about to pick out drapes and take long walks on the beach together.

 

It is a good idea to diversify and invest in parts of Asia. 

  • Haha 2

Share this post


Link to post
Share on other sites

And meanwhile, you are running backwards and forwards to immigration with TM30,s and the whole exercise starts getting tedious 😞

Share this post


Link to post
Share on other sites

That's all fine and well as long as you have them rented out, if they arent that's when you have problems same anywhere else in the world

  • Like 2

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...