What is the principle of condo investment?

By condotiddoi

Nowadays, the new generation of people is increasingly investing in condos. Especially in the last 4-5 years, it is known as a popular trend. Which is not surprising because the price of a condo in Thailand in the last 10 years has increased to a very high level and still tend to rise more and more.

Dating back about 10 years ago, someone suggested in the condo investment that

"When we buy a condo for investment Yield return is important. If we borrow the bank, the worst case is the rents must be more than interest. So, we must choose a good location that easies to find rental and get a high rental price. Let the rental payment for the bank instead of us and ultimately, we will own the condo without having to invest by ourselves. In addition, if lucky we will gain profit from selling the condo at a higher price than we brought (Capital Gain) "

Because condo investment is a long-term investment, if missed, cannot sell at loss easily as selling shares. Because the condo is not a high liquidity asset.

When any condo with a good location matches with the right price, no matter what the price can be increased continuously. But much more depends on the conditions of that condos and economic in that time.

However, investing in condos by targeting different margins may be the wrong strategy. Because if you can't sell the condo before you transfer and if you do not have the potential to transfer. Then you have an opportunity to lose all the money invested in this condo.

Speculation from condo preemption which is in the process of making a profit from the capital gain. The condo that will be profitable in the short term like this must have a good location and condos with good location today are very high price. Many people who see the price on the front of the contract knowing firstly that they don’t have abilities to transfer at all. But just think that just book for now and then can sell it before transfer for sure. In fact, it's not that easy and may result in an investment mistake.

Therefore, good investing in a condo should be targeted to yield or return on rental. and don't forget to look at our financial position as if it has the ability to get a loan or not, what is the interest burden? and what is the rental price? To evaluate the investment ability and return on investment.

When the condo is completed We can use financial instruments like bank loans to transfer. Which most cases can borrow up to 100% if having good credit. As a result, we can get some part of the down payment back and use for decorating the room or used as an expense for the transfer. However, after April 1, 2019, the second credit control rule will be applied from the Bank of Thailand which may not be able to recover 100% of the loan, depending on the number of houses or condos that we have already borrowed.

Then we have a duty to pay installments to the bank. The long-term investment model is finding someone to rent a room to receive rent and use that money to pay installments with the bank. This type of investment is called leverage is the way that we use the loan to invest instead of our own cash.

Therefore, the analysis of the rental market is important. If you analyze correctly you can easily find a tenant and get a good rental fee. All of which are real investment models.

In terms of capital gain in the long term, we will receive a profit margin from the increasing condo price. (How much depends on the condition of the condo and economic conditions). On the way, there will be people who help us pay for the condo to reduce the principal amount.

For short-term resale is a model that occurred in the later. Impatient people who want to make a profit quickly. Ask if it is wrong? It ‘s not wrong, but there is a very high risk. Because if we get it wrong and may not be able to sell in the time as we expected. May cause financial problems.

Which if we set the investment goal as a long-term investment (Transfer rooms and rent out) well and analysis of location, rental cost and loan potential. If the long-term investment analysis results show that "it is possible", short-term sales (not transferring rooms and selling before transfer) is also possible. But if analyzing the long-term investments, we still feel that it is impossible, short-term sales do not have to mention at all.