Where in Thailand Gives you Great Value for a Condo?

[TotallyOz]

I have been looking for Condos in LOS and I have found many.  But, the rates are really high for many of them and even a studio is costing near 100K USD in Bangkok and Pattaya.

 

If I wanted to spend 100K but wanted a nice unit larger than a studio and close to a gay area, any suggestions?

[Bob]

Hmmmm......you're confusing me with the word "rates."  You talking about buying or renting? 

 

I can only give you info about Chiangmai and you simply aren't going to find something real close or fancy or bigger than a studio for less than 3,000,000 baht to buy.  To rent....again guessing what I think would be your standard (a lot higher than most).....maybe 20,000 to 30,000 baht a month would be my guess.  Really nice (one of the new condo units and two bedrooms?).....more like 30,000 to 50,000 baht a month to rent and about 4.5-9 million baht to buy.  I suspect that Bangkok rates are higher.

[TotallyOz]

Thanks Bob.  Yes, I was talking to buy.

 

If you rent for say 30,000 per month for 10 years that is 3.6 million baht.  If the unit costs 4 million, are the owners just hoping to eventually make profit that far down the road?  I guess for me, I rented on place in Pattaya that was 50,000 per month.  That is 600,000 per year or 12,000,000 for 20 years.  But, the cost is 18.5 million. 

 

Doesn't renting make better sense in the long run? 

[Guest abang1961]

One question comes to mind:

Is it easy to sell off the property within 6 months?

I am asking this because the market here in Singapore is super soft - more sellers and buyers.

In fact, the number of transactions came almost to a halt in the past months.

 

Based on numbers alone, buying is obviously the better choice than renting.

However what are the maintenance fee in Thailand?

It is very costly here in Singapore.

But I may be comparing apples with oranges here (?)

 

Renting does have its merits - you pay a fixed amount and a little more for utilities.

The owner has to service choked pipes etc....

The only downside is the increment in rentals...

[Bob]

It's only my opinion but I think there's a property bubble here that will explode within the next year or two so, yes, I think it's smarter to rent now.   And I'd note that it's probably more of a bubble up here in Chiangmai (an article in the Bangkok Post a month or two ago mentioned that selling rates for new developments and the figure for our area was 39% or something like that (a bit dismal).  They've built the living shit out of this area - new condos, shop houses, etc. - and most of them are unoccupied.

 

In spite of the surplus, the rental rates have only dropped a little or stabilized the last year or two.  Most of the new units are owned by Thai investors (rich dudes parking their money in new condos) and, in my view, that's exactly the group that panics when prices either flatten out or start to drop (plus, if/when the property tax takes effect, that'll be another incentive for that group to quit parking so much money in real estate). And, so far, I haven't seen any significant evidence of selling prices dropping except for the very high end joints (one mega-home seller wanted 25 million baht but last I saw the price was down to 18 million baht - thanks, I'll take two of them....).  

 

I'm renting a three-bedroom, three-story, townhouse which was new when I first rented it (4 years ago) and in a location I like (access to everything I want). And just signed a lease last month for another year.  The owner of the townhouse next to me had it for sale a few months ago and he wanted 7.5 million baht.  I personally wouldn't pay him more than about 4-5 even if I was in the mood to buy but, then again, I'm a cheap bastard.

[anddy]

Thanks Bob.  Yes, I was talking to buy.

 

If you rent for say 30,000 per month for 10 years that is 3.6 million baht.  If the unit costs 4 million, are the owners just hoping to eventually make profit that far down the road?  I guess for me, I rented on place in Pattaya that was 50,000 per month.  That is 600,000 per year or 12,000,000 for 20 years.  But, the cost is 18.5 million. 

 

Doesn't renting make better sense in the long run? 

 

A property is not supposed to recover it's price in rental income in a certain number of years. The question is what is the yield earned from the rent and will there be a price appreciation at least in line with inflation. And the difference between renting and buying is, when you rent the money is out of the window, just gone. When you buy and finance it with a mortgage (cheap these days) you pay maybe roughly the same every month, but in the end you own the place. 

 

Having said that, I am totally in the rent camp too, especially in Thailand for a number of reasons:

 

1. I tend to agree with Bob on the bubble being in progress.

 

2. As for the value of the condo in the future when you may be willing to sell, even if there is no bubble and no downturn, will a 20 year old condo really be worth that much? Looking at existing, older condos versus brand new ones in Bangkok it appears obvious that the older ones are much less desirable and hence lower in price (makes sense to me). And besides, selling (at a decent price) is always more difficult than buying. 

 

3. Renting gives you so much mor flexibility to move for whatever reason. Maybe you finances have changed and you can afford a better one or only a cheaper one, maybe you want to change location, etc. etc....

 

4. Given the political situation, or uncertainty, rather, in Thailand I wouldn't want to own anything there. A certain event may lead to even more political division and unrest, the extent of which may depend on who is in power at that inevitable time. That could lead to a sharp economic downturn and market decline or collapse for property (at best) or even the need to leave the country in a hurry at worst.

[Guest]

The question is what is the yield earned from the rent and will there be a price appreciation at least in line with inflation.

 

That's one question. 

My preferred question would be what will probably give the best investment return, after tax, over the next 10~20 years ?   With some consideration for risk profile.   So other asset classes should be considered as well.

 

If purchased at an attractive price, with leverage, property can give good pre-tax returns.   Of curse, at least 2 people above have alluded to a bubble, so if that is the case, leverage could lead to a 100% loss. (Should we presume Michael could buy half of Chang Mai with no leverage? )

The Thai tax situation also would need to be considered -would there be capital gains taxes payable in case of an investment profit?

 

Another option is to go for stock market investment.  That way you can get exposure to the region, the prospect of good long term returns and the possibility to diversify your money around several countries.   You are not tied down to an appartment in one city and can sell your stocks any time you like.  Again, your tax situation needs to be considered.

 

Finally, I see any number of 10~30 year old apartment buildings that are in a poor state of repair & looking scruffy. With that kind of maintenance, loss of value must be a distinct possibility?

[firecat69]

Rent Rent Rent.  Kind of pad you need will be at least 6 million and even that won't be up to your standards.

[Guest shamahan]

If somebody plans to live in Thaland permanently, one should buy. Not, of course, as an investment (yes, there is probably a bubble in real estate but it will not pop anytime soon). It is simply a question of convenience and certain degree of stablity in terms of currency exchange  rates fluctuatios etc. One should have pretty good idea about what one wants in terms of location etc. It should be a condo on foreign name and a new one. Simply because  the quality of construction and maintanance is not great and older buildings relatively quickly deteriorate. Besides, older condos are subject to permanent renovations by owners and one runs (uncontrollable) risk of living under conditions of constant constructtion noise. In terms of political instability , there is a risk but powers that be come and go but foreign ownership rules (for condos) remain the same, since they have been introduced (by Thaksin government by the way). Here, in Pattaya moving from one place to another is pretty annoying (deposits, their recovery,

what kind of TV and internet avalable in various locations etc). Thus, in my view, renting is a bad idea.

[firecat69]

Could not disagree more.  Unless someone has been permanent resident for at least 2 years he has no basis to make an informed decision.

 

There will always be plenty of stuff to buy or rent and when you are sure where in Thailand you want to live then you can considers facts such as area size , building construction  etc etc etc .

 

 

Big difference visiting as a tourist and taking up permanent residence!!

[Bob]

Over the very long haul, it'd certainly make sense to purchase rather than to rent; however, there are some caveats there that seem to apply especially here in Thailand:

 

(1)  First and foremost is the issue of your neighbors' activities and resulting noise.  The zoning rules here - such things as attempting to separate residential from business activities let alone the notion of set-back rules which actually require somebody to not build to (or over) their property line - are pretty much non-existent.  I lived for a while in a rather upscale condo on the west side here in Chiangmai only to discover that a bar built in a tin shed (my description) about 200 yards away caused unbelievable noise - causing even our windows and sliders to rattle until 2 in the morning.  It was really bad and the main reason I moved.  If you ever do choose to buy or rent just about anywhere here, do make sure you go to the proposed location a couple of evenings just to make sure you're not going to encounter a surprise noise nightmare.  You'll want to kill somebody if your neighbor opens up a karaoke joint!

And even though I did in fact do that (check the evening noises) when I moved to this townhouse several years back, I wasn't anticipating two 8-story condo buildings being built within 120 yards of here or the construction of the 4-story townhouse block no more than 4 meters immediately behind me.  Thankfully, those are almost 100% finished and have actually improved the neighborhood....but the 2-years of noise was rather bad.  Then again, the shoddy construction (single-pane windows, no insulation, etc.) simply invites noise to invade your residences here.  And, for me, I have to consider maiming a Thai neighbor who lives three townhouses down who last week decided to acquire a motorsy which sounds like a B-52 with bad ball bearings.  Oh well, I'll survive (he may not).

 

(2)  One question which is relevant for some (those who are adept/lucky enough to do well on the stock market or via other investments) is whether, given how cheap the rents are, you can do better with your money elsewhere. I have but maybe I've been lucky.

 

(3)  And just how "long-term" does it have to be to justify buying in the long term.  For many expat falang, they don't come over here until they retire (often 65 years or older) and the question is just how long do they plan on living in that location (or even living at all) for it make sense to purchase something?  10 years, 15 years, 20 years?  And I've known more than a few foreigners who moved here with the intention of making their permanent home here and then, due to medical issues or simply disenchantment, moved elsewhere (most often back to their home countries) within 4-6 years.  Friends that I know who've done that didn't make any money whatsoever on the places they purchased (in fact, after taking a long while to sell their places and paying all the interim and closing fees, they lost a chunk of change).

 

So it's a crap shoot, I suppose.  Just like if/when property prices take a tumble here.

[williewillie]

Bob hits the proverbial nail on the head.

It's a crap shoot.

[Guest shamahan]

  

 You are talking about cheap rent and I cannot vouch for Chiang Mai. But in Pattaya the place like yours (depending on location) could easily cost you 3K US per month or more. As for the noise, yes I agree it is difficult to guarantee anything but here in Pattaya, there are a number of high rises in the making. So (at least in terms of noise on the ground) it is not of so much concern. Once again, it is absurd to think about real estate in Thailand in terms of investment.  It is overpriced but the only way the price may go down if they introduce  meaningful real estate and land taxation (and despite the talk of many years it is hardly going to happen any time soon). It is really a matter of convenience and long-term stability ( I mean 10-15 years).

[Guest shamahan]

I deviate somewhat from the topic. But for me availability of good and reliable internet connection is a factor in choosing where to live here in Pattaya. I do not want to generalize but DTAC just introduced 4G data services in Pattaya and the speed of internet is excellent (at least on my Sumsung S Galaxy 6 Edge). To the point that I watch all movies this way. This is a great improvement vis a vis their 3G services ( and universally available everywhere in Pattaya area).

[Bob]

Shamahan says: "You are talking about cheap rent and I cannot vouch for Chiang Mai.  But in Pattaya the place like yours (depending on location) could easily cost you 3k US per month or more."

 

Folks, $3,000.00 (US) is currently 96,000+ baht a month.  Rather than saying what I am thinking, I'll simply ask the question: Anyone know anybody in Pattaya that's paying even half that amount a month for a two-bedroom, two-bath, ocean-side condo?   

[Guest]

Bob has listed all sorts of reasons why renting makes sense in Thailand.  If your rented property is blighted by construction, excessive noise of general deterioration of the building, it is possible to move.

Even as a tourist, I've seen most of these issues, so when I try living in Thailand, longer term renting seems very tempting.

 

Of course one advantage of buying is that you could replace those single glazed windows with double glazed units that have 2 layers of 10mm thick glass.   THAT should cut the noise down.  

 

Getting back to the original post, what is your interest in the best value property in Thailand Michael? 

Are you intending to live in it, or would this be for investment purposes ?   If it's to reside in, the main thing must be to pick a location that you like?

[anddy]

Of course one advantage of buying is that you could replace those single glazed windows with double glazed units that have 2 layers of 10mm thick glass.   THAT should cut the noise down.  

new, modern and upscale condos already have that. mine does, at least.

[Guest shamahan]

 

I'm renting a three-bedroom, three-story, townhouse which was new when I first rented it (4 years ago) and in a location I like (access to everything I want). And just signed a lease last month for another year.  The owner of the townhouse next to me had it for sale a few months ago and he wanted 7.5 million baht.  I personally wouldn't pay him more than about 4-5 even if I was in the mood to buy but, then again, I'm a cheap bastard.

I do not know what are you thinking but in Pattaya depending on location the rent for the place like yours can be easily 3k US per month or more. At least I do not pretend that I know well real estate market in Chiang Mai. But it is definitely much cheaper than in Pattaya. It would be nice (at least once for a change) that you stop pretending that you know everything.

[Guest abang1961]

Just like everywhere in China and South East Asia, the good old days of making money in property is over.

The future is bleak with too many empty apartments waiting for dumping ..

And what's worst, another financial crisis is looming...

 

Will the Feds increase the rates by this year'end..everyone guess...