To Buy or Not to Buy – A question only you can answer

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Because I’ve bought, built, sold and rented out a variety of Thai properties … people often ask me this question:

 

“Should I buy property here?”

 

 

 

 

Rarely do I reply with anything remotely resembling a direct answer.

 

It’s not that I don’t have confidence in my opinion nor am I afraid to be wrong. I usually just don’t have enough information about the person asking the question. In my not-so-humble opinion, the motivation of the buyer is the most important factor in the property buying decision process.

 

If the idea of buying property in Thailand has crossed your mind you need to walk straight to a mirror ask yourself “what’s that all about?”

 

 

 

 

More importantly, you need to answer the question with candor. Figure out which kind of real estate investor you aspire to be and evaluate the Thai market based on the goals and expectations associated with that subset of investors.

 

Once you know the identity of your inner-investor, check the following to see if my answers are helpful.

 

Buyer #1, the guy who just got here

All crusty old expats were tourists at one point. We completely understand the thrill of discovering Thailand and the desire to own your own little slice of it. To you I say, “Don’t do it”.

 

Rent for at least one year and see how much your priorities change. Anybody who tells you otherwise probably has a condo to sell you.Trust me; make your decision once the honeymoon is over and you’ll be much happier.

 

Buyer #2, the snowbird

The second home buyer who comes to stay part of the year is called a “snow bird” because they are escaping the bitter winter somewhere further north and flocking to the warmth of a tropical climate. For this buyer, a place like Pattaya is tailor-made.

 

Developers have been building day and night for several years and there are literally thousands of easy to maintain condos in convenient locations at extremely friendly prices. What’s more it is easy to source a manager to rent your place out when you aren’t there thus getting a little income along the way.

 

These types of investments are fairly liquid should you decide to sell, but don’t expect a massive amount of capital appreciation as there are just too many on the market. My advice is to find a place that fits, pull the trigger and start enjoying it now.

 

 

 

 

Buyer #3, the buy-to-let passive income buyer

Buy some properties … rent them out … make some money … park your cash in a country other than your own.

 

It’s a sound plan if you know what kind of property to buy.Both Bangkok and Pattaya are fertile sources of rental income.

 

With Bangkok the target market is long term renters in the Central Business District (CBD) condos. Entry-level studio units are smallish and affordable.

 

 

 

 

High paying renters are plentiful.

 

Most importantly, annual returns hover at between 7% and 8% net.

 

Pattaya returns on average are a little lower at 6% to 7% and renter profiles vary from short-term holiday makers to long term expats. Buying houses to rent out generally nets less income due to unpredictable maintenance costs and legal fees associated with the company ownership structure required.

 

Some Pattaya owners book their rentals through web-based agents like Air B-n-B or Home Away with mixed results. Some buildings do not allow this kind of high turnover rental activity so it’s best to do your homework.

 

If 6% to 8% net returns sound good to you, by all means find some units and start buying.

 

A word of caution: if you buy more than 5 units for rental you’ll find yourself adhering to a brand new set of rules laid down by the Thai government this year. If you are going big I’d recommend consulting a lawyer to understand what’s what.

 

Buyer #4, the capital appreciation long player

This is the kind of buyer who isn’t concerned with near-term liquidity and who can wait out things like political turmoil and market downturns. Working expats with families or long stay resident expats just looking for a place to call home fall under this category. Just because you don’t consider yourself a real estate player doesn’t mean you shouldn’t think about things like property valuations and market trends when you buy.

 

Houses are good for long players as they are attached to land which always seems to go up in value. Also, premium condos that are purchased at discount prices pre-construction give investors a head start on what are sure to be profitable pieces of property for a long time.

 

My advice would be to find a spacious house on a large lot in East Pattaya as this region is staged to explode in value.

 

 

 

 

Reading up on new BTS Skytrain and MRT Subway routes in Bangkok could also give you some insight about which luxury condo projects may have the best long term upside. Do your homework, buy smart and relax.

 

 

 

 

Buyer #5, the buy-and-build investor

This kind of buyer is a bit of a visionary that can add more to land than just bricks and mortar.

 

 

 

 

This is probably the type of real estate investment with the most upside if it is done the right way.

 

Again I like the Eastern Seaboard from Pattaya all the way down to Rayong.

 

The Thai government has doubled down on its effort to make this region the pulsing heartbeat of the Thai economy with the Eastern Economic Corridor (EEC) initiative. Imagine a high-speed train running from Bangkok’s two international airports right down the Eastern Seaboard to Utapao International Airport between Pattaya and Rayong. Buying and building in this area could be a serious money maker over the next ten years. The corridor between Bangkok and Pattaya in places like Sriracha and Chachengsao are also poised for growth.

 

And for the more adventurous player, try looking at the frontier markets further north in KhonKaen, Buriram or Udon Thani. Land is cheap and development is rampant. Expats and retirees are quietly discovering these growing cities that are no longer sleepy little hamlets.

Buy-an-build investors should also think beyond the housing box and consider hotels, apartment buildings and business centers. Timing is the key with this type of investment and momentum seems to be in favor Thai prosperity. Apply a little cash and imagination and you could be a big winner.
So the real answer to the question, “Should I buy property in Thailand” is “it depends on who you are”.

 

A little self-reflection should reveal what your real motivation and expectation is.

 

Take those answers and set out to match them up with a property or two. It isn’t as easy as I’m making it sound. There are a lot of distractions out there; many with strong sales pitches. Stay focused and be honest with yourself.

 

Happy hunting!

 

Bart Walters

 

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