Property Rental Returns

[Regyai 415]

Just a quick question if anyone with experience/knowledge can respond

 

What is the usual %age rental return on on a small residential (town house) property in Pattaya 'burbs

 

Thinking of buying one with tenant returning currently 10% P.A. of the purchase price

 

Good, bad, average ?

 

 

Thanks in advance

 

 

 

 

.

[nam-thip 1]

Not a good time to buy property in Thailand with many expat’s having left and the 6 months a year regulars no longer coming.

Rental income is falling with too many available properties and too few expats or long term tourists.

 

The estate where i live on the Darkside (East Pattaya) almost every single property was leased out for the duration of the high season but the market is now that flat most of them stay empty all year round. I've lived in the area for six years and the same houses that were up for sale six years ago are still for sale so if you do buy be prepared for a long haul if you decide to sell.

And if you lease through an agent, be careful as there are a few horror stories floating around.

 

Don't forget that on rental income you’re supposed to pay tax at what i think is 12%.

Fall foul of an angry tenant and he could shop you to the taxman.

 

Town-house rentals vary depending on the condition of the property and quality of furniture.

Low end where i live: 6.500 baht per month

Top end: 10-12000 baht per month but few achieve 12000 baht.

 

It's a risky move in my opinion and not one i would wish to take in today’s market.

[Regyai 415]

Thank you

 

 

A plethora of questions answered that I never asked

 

 

Is 10% p.a. good, bad or average ?

 

 

 

.

[4niceight 32]

I'm no expert but I believe that 8% return on a condo is about what renters look for. I don't know if that would apply to other types of property, but, hell, 10% in this day and age is surely a good return....if it's likely to last a while.

[Gary 4,119]

I net about 6 percent and consider myself lucky. I have a very good renter so the rent is pretty cheap. I want to keep him there.

[JohnnyK 28]

I net about 6 percent and consider myself lucky. I have a very good renter so the rent is pretty cheap. I want to keep him there.

Absolutely, a good renter is gold! 6% net with a good renter is a real good return IMO.

Much rather have a responsible person I can discuss with than a bit more money from a series of drunks and fools trashing the place.

I'll take 52 weeks a year at a lower monthly anytime!

[Obsession 571]

I know someone with condos in Pattaya and Bkk. They have many void periods. That would obviously hammer the return.

[englishinsiam 15]

I'm currently toying with the idea of buying 2 offplan condo's but the only thing putting me off is I will bring the money in from the UK and obviously thats pretty dire right now.

 

My idea is I will try and rent them out but i don't need the rental income so it's not a major problem for me if they are empty. I'm thinking 10-20 years down the line when Pattaya prices will be through the roof.

 

You should achieve 8% on lower priced condo's IF YOU CAN RENT IT but those asking 3 million for a Studio (1 room) wont get the 20,000 a month to achieve the 8% goal. Then you'll be lucky to get 4% however that is way better than anything any bank is currently asking for. And even if prices stay fixed for the next 5 years it will eventually go up in price so you will have long term capital appreciation.

 

I used to sell property in Spain and I always told prospective buyers to look at a property purchase as a minimum 10 Year investment to see any type of decent return and Thailand is certainly no exception to that rule.

[bratpack 91]

Thank you

 

 

A plethora of questions answered that I never asked

 

 

Is 10% p.a. good, bad or average ?

 

 

 

.

 

 

GOOD

Especialy if the tenant is long term.Much better than stocks and shares,which i have lost over a million baht.Wish i had bought 4,500,000 bahts worth of condos instead investing

[Obsession 571]

I'm currently toying with the idea of buying 2 offplan condo's but the only thing putting me off is I will bring the money in from the UK and obviously thats pretty dire right now.

 

My idea is I will try and rent them out but i don't need the rental income so it's not a major problem for me if they are empty. I'm thinking 10-20 years down the line when Pattaya prices will be through the roof.

 

You should achieve 8% on lower priced condo's IF YOU CAN RENT IT but those asking 3 million for a Studio (1 room) wont get the 20,000 a month to achieve the 8% goal. Then you'll be lucky to get 4% however that is way better than anything any bank is currently asking for. And even if prices stay fixed for the next 5 years it will eventually go up in price so you will have long term capital appreciation.

 

I used to sell property in Spain and I always told prospective buyers to look at a property purchase as a minimum 10 Year investment to see any type of decent return and Thailand is certainly no exception to that rule.

 

No offence. That's a bit mental. What about after the ascen****. It's guesswork. Civil unrest? Ownership? Any country that refuses entry to an elected PM, is unpredictable for the average guy.

 

As Owen has pointed out. It's a new situation on world finances. You are merely guessing.

 

Now look at the UK. You can get property at bargain prices. With the welfare system. You could pretty much guarantee that it will be rented out permanently. No worries about ownership, ash clouds, strikes, civil unrest, airport closures. imho, investment in Thai propoerty , makes no sense, whatsoever.

------------------

It's sex that sells everything in los. If you can divorce that from your thinking. You wouldn't invest.

[saints 0]

I remember about 5 or 6 years ago I was thinking about investing 3 million baht in property to get an investment visa.

 

This was when the baht was 70 to the pound

 

I put up a thread on thaivisa asking if people thought it was good idea or not.

 

Of course most of the replies were very negative and in the end I didn't bother

 

I wished I never listened to the fookers as I would have been quids in

[Obsession 571]

Of course most of the replies were very negative and in the end I didn't bother

 

I wished I never listened to the fookers as I would have been quids in

 

You sure? Would it have sold today? Was it in Bkk?

If you had invested UK, all those years ago and sold 2 years ago, you would probably have made more, and the money wouldn't be stuck in los. Timing is everything. But those were boom years. Not so now. Time for safe havens.

[Gary 4,119]

You sure?

If you had invested UK, all those years ago and sold 2 years ago, you would probably have made more, and the money wouldn't be stuck in los. Timing is everything. But those were boom years. Not so now. Time for safe havens.

 

 

Hind sight is always accurate, however, if you would have bought a condo five years ago, due to the exchange rate, it's not likely you would lose any money selling it today. I got 40 baht to a dollar when I bought my condo. My condo is NOT for sale. I have had good offers. I could double dip. It has appreciated plus considering the exchange rate gain, I would do quite well.

 

I was told when I bought that I was stupid buying when rent was cheap. I was also told that I was paying way too much. Bar stool advice is seldom worth considering.

 

I wouldn't advise anyone to buy today unless they wanted a place to live and would not consider it as an investment. Even though mine is rented out, I still consider it as my safety net and security blanket.

[aras 4]

Now look at the UK. You can get property at bargain prices. With the welfare system. You could pretty much guarantee that it will be rented out permanently. No worries about ownership, ash clouds, strikes, civil unrest, airport closures. imho, investment in Thai propoerty , makes no sense, whatsoever.

------------------

It's sex that sells everything in los. If you can divorce that from your thinking. You wouldn't invest.

 

 

I agree

 

every man's situation is differen, but there are many things which are against buying condo's ass a investment in Pattaya. They are building like crazy in pattaya and well that doesn't sound to me.

[Owen` 2]

At this particular point in time, there might be merit in addressing the question in two parts, rather than one.

 

Rather than looking into "Is it a good idea to buy rental property in Pattaya?" maybe a different question might be better to ask, namely . . . "Will I know the answer to that question better one or two years from now?"

 

Meaning, investment decisions always have three answers. Not two. It's not Yes or No. It's Yes, No and maybe later.

Edited June 12, 2010 by Owen`

[jacko 8,822]

Thank you

 

 

A plethora of questions answered that I never asked

 

 

Is 10% p.a. good, bad or average ?

 

 

 

.

He gave you an idea what the rents might be.....

On a 2.5 million baht property 10% pa would be 20k/month. I would regard that as a very high rent for a little house on the darkside..... but it is achievable for a nice condo in town with a sea view.

 

If your tenant will be there for the long term, yes good return

If he moves on after 6 months, you lose.

Edited June 17, 2010 by jacko

[torrenova 644]

Town houses which look as though they came off the production line in a factory like the Chokchai huts are 10 a penny and they won't rent at all on some estates as they are just too tightly planned. I know some ones where the owners have spent loads with extensions and fully kitted out to very high standards and they get 8/10k. Regular ones would hardly fetch 6/8k.

 

House renters can stay longer but they are harder to find, thus depressing your yield. Also, you'll probably lose a month a year to an agent just to find you a tenant. It has been a renters market forever but top places do rent, just they cost much more to set up. Say over 24 months you lose 1.5 months to an agent for a 6 month and a 12 month lease and the rest is voids, you have only received 16.5 month's rent out of 24. It could well be less than that unless your price is very keen.

 

I'm not buying any more but we're not selling either. Of course, I'd buy or sell if the price was right.

 

What you might find is a depressed seller who can take a hit on the price because he has gained on the FX. Say someone paid 1m 4 years ago and got 70 to the £1, then he only paid £14,285. Now at 50 to the £1, he would only need to sell for 715k to get his original GBP investment back. That is your leverage but from looking at prices over the last couple of years, the agents are still trying to hawk properties way over true value, but that is part of their job, to give foreign buyers the impression that all is fine and dandy when the sky is caving in.

 

I wouldn't touch those Chokchai houses off Soi Khao Noi with a bargepole but I would not pay more than 700k for a 2 bed 2 bath one with decent F&F now, even on some of the better estates. Maybe up to a million for a corner plot and top F&F. A single house where I lived off Khao Talo was around 3m in 2006/7 and I would not pay 2m today and would be looking from someone desperate to sell and give them only 1.5-1.75m in cash that week to walk away. Even forgetting the FX, they used to rent all day at 15-18k a month but you'd be hard pushed to get 12/14k now. At 1.5m and 15k you'd get the magic 1% per month. That should be your ballpark figure.

[englishinsiam 15]

No offence. That's a bit mental. What about after the ascen****. It's guesswork. Civil unrest? Ownership? Any country that refuses entry to an elected PM, is unpredictable for the average guy.

 

As Owen has pointed out. It's a new situation on world finances. You are merely guessing.

 

Now look at the UK. You can get property at bargain prices. With the welfare system. You could pretty much guarantee that it will be rented out permanently. No worries about ownership, ash clouds, strikes, civil unrest, airport closures. imho, investment in Thai propoerty , makes no sense, whatsoever.

------------------

It's sex that sells everything in los. If you can divorce that from your thinking. You wouldn't invest.

 

Sorry only just saw this reply.

 

No offence taken everyone has their viewpoint.

 

Your right I am merely guessing on the future, but then ALL speculations are based on guesswork if we could do Hindsight for the future we'd all be millionaires..

 

I'm using money that would otherwise sit in a bank earning me nothing. I have a Thai wife I could put them in her name if I wanted, I live in Thailand so if I did sell in the future money being in Thailand is not a bad thing for me.

 

I don't need the rent to live on any rental income is a bonus to me. They wont be on a mortgage I will own them lock stock.