What type of condo is suitable for buying to rent out?
While buying a condo to rent out is a reliable and consistent investment option, achieving the desired success depends on how well-chosen the condo is. If the condo isn't of good quality, the chances of finding tenants will be low and inconsistent, potentially leading to problems. Here are some guidelines for choosing the right condo for consistent rental income:
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1. Location must meet the target audience's needs
Many people, when considering condo locations for rental, focus primarily on proximity to the BTS/MRT. While this isn't entirely wrong, a good location doesn't necessarily have to be near a BTS/MRT. Condos near universities, even if not directly connected to a BTS/MRT, are also highly desirable, as they target a large and growing student population. Therefore, a quality location means one that meets the needs and convenience of the target audience. We should choose a location based on the target audience's needs. For example, if the target audience is students, a condo near a university is ideal, even if it's not directly connected to a BTS/MRT.
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2. Parking and complete amenities
Even for condos near BTS/MRT, there are differences between ready-to-move-in condos and condos still under construction. Prices vary greatly, so if you don't need to move in immediately or require a place to live right away, considering buying a condo near a BTS/MRT line that's still under construction can save you a significant amount of money. However, this requires choosing a reliable project to ensure completion on schedule, avoiding delays that could disrupt your plans. When buying an unfinished condo, considering the land price index before development, and identifying which BTS/MRT lines have increasing land prices, is crucial. This allows you to plan for a condo that will appreciate in value in the future, leading to better rental or resale returns.
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3. The number, size, and layout of the rooms must meet your needs.
Attractive condos for renters are those with spacious rooms that don't feel cramped. Even if the rooms aren't huge, a well-designed and functional layout is appealing. The number of units per floor is also a factor. High occupancy rates can raise concerns about privacy and noise, making the decision more difficult. Conversely, a condo with fewer units per floor can be a key selling point, attracting renters effectively.
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4. The condo must be within your budget and offer a suitable return on investment.
A crucial aspect of investing in rental condos is having the financial means to purchase the property without financial hardship. You must be able to manage the rental income without negative consequences if there's a lack of tenants. The rental rate must also be acceptable to potential tenants and provide a worthwhile return on investment. The average return should be at least 6-7%, exceeding the loan interest rate. Otherwise, your rental condo investment will become a risk rather than an opportunity for stable income.
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The demand for rental condos remains constant, but how many you find depends on how clearly you target your audience. Knowing your target audience makes choosing the right condo to meet their needs and increase your chances of finding tenants easier. However, when deciding to buy a condo for rental purposes, choosing one that suits your financial situation is paramount to minimizing risk and maximizing the chances of successful and sustainable investment.
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(Thank you for the valuable information from REIC)
