Getting good profits for renting condo
It's now accepted that investing in real estate provides high returns and long-term stability, and it's safer than other types of investments like gold, stocks, and mutual funds, due to their high volatility. However, to achieve long-term profits, there are some key tips. This starts with selecting the property, especially a condominium.
It must be in good condition and ready to move into.
It must not be too dilapidated to warrant expensive renovations.
The location must be attractive.
The environment must be good.
High security.
Good parking availability.
Excellent building services.
Convenience is important.
First, investing in a condo requires "the property." Whether you've lived in an old condo for a long time and want to move to a single-family home or relocate, you'll often have an advantage. Once your installments are paid off or nearly paid off, you can rent it out. Rents should be similar to or higher than your bank installments. Before renting out, you should compare land appraisals and nearby units to see how much they're renting per month.
If you're an investor with idle cash, it's better than depositing it in a bank. Even if interest rates fluctuate, it won't grow significantly. This is like taking money sitting idle in the bank and investing in a condo in a location that only "has customers and is profitable." Otherwise, it won't be worth it. Now, let's look at some interesting locations.
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Near universities and large schools
University areas often see many condo projects, especially those in affordable locations. However, rental rates are smooth and the rent per unit is relatively high. Universities with well-known condo brands have set up locations to attract investors, who buy and rent them out, and parents who buy for their children to live in while they study. After graduation, they can re-rent the units.
For example, Rangsit University and Thammasat University, Rangsit Center, rents start at 7,000 baht per month. The interior must be fully furnished and equipped with amenities, including a closet, desk, bed, and air conditioner. Importantly, condos must have common area fees. Rents are also included, so tenants can pay for them. However, if you want long-term customers, you have to pay for them yourself. These are some of the tricks to attracting tenants.
Condos near universities and large schools are typically priced low, typically around 1 million baht or less. However, profits can be substantial if you pay the bank installments. For less than 5,000 baht, but with rental rates starting at 7,000 baht or more, this is a good investment. A good location to consider is the northern part of Bangkok, where there are many large universities.
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Close to work areas
To catch fish in a big pond, you need to find a location that attracts tenants. This means that you can invest and sell quickly. There must be a high concentration of jobs. Buying a condo for investment can be a second-hand property, with a little renovation and furniture, and you'll attract tenants.
Currently, workplaces are spread out across many areas, especially government offices, which have relocated from the city center. For example, Bangkok's second office in Din Daeng, the Ministry of Interior is now in Charoen Nakhon, the Nonthaburi Provincial Government Center, and the Chaeng Watthana Government Center. This presents a golden opportunity for developers and small investors, such as the middle-class, low-income earners.
I emphasize again that condos for rent must be priced at or below 1 million baht to generate good returns. I believe that tenants prefer smaller units for relaxing after work, perhaps returning to their primary residences or the provinces on weekends.
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Targeting the high-end market - foreigners, perhaps?
For a high-return investment with sufficient capital, or an existing property in the central business district, rent it out. However, it must be renovated and have hotel-like amenities, as foreigners prefer it. Alternatively, for those working and studying in the city center, renting it out as a second home can be a good option. Renting out for 25,000-50,000 baht per month won't hurt if the tenants are satisfied, and it may even be cheaper than a serviced apartment. A previously purchased unit may have already paid off its investment. For example, if you buy a unit for 3-5 million baht, with a monthly payment of 10,000-20,000 baht, the rent should be profitable. However, you need to entice them to stay with you for a long time.
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Commuting must be convenient.
Commuting is crucial. If the condo you're looking to rent out is popular, has long-term tenants, and can compete with other apartments in the same area, you should choose a location on a main road or perhaps a small alleyway, near a train station. Condo residents typically don't want to stay solely in their apartment, especially with schools or work. They may also need convenience when meeting friends or running errands in the city, especially if they don't have a car.
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Near a large community and shopping mall
In addition to transportation, choosing a condo in a large community near a shopping mall and key amenities will meet the needs of renters. It's attractive because it's not quiet, easy to find food and other necessities, and ideal for walking and meeting friends. As mentioned, choosing a condo doesn't have to be too expensive. A small room with a limited usable area of 28 square meters is ideal, perfect for living alone or with two people.
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The environment must be good.
When looking for a place to live, many people desire a high quality of life in an open, safe environment. This includes the issue of toxic dust, which is currently a health concern. Being near expressways or main roads with 24-hour traffic also has its drawbacks, not just advantages: the spread of toxic dust. Choosing a condo with plenty of green space will help filter dust and create a shady atmosphere for tenants. Choosing a condo for investment requires careful consideration.
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Use idle money to invest.
The key to investing for good returns and long-term profits is using idle money in the bank or savings that won't cause financial hardship. Buying a whole building or entire floor of a condo, renting it out with cash or relying on minimal interest, can generate impressive long-term returns.
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The returns must be worthwhile, but not stressful.
When renting out a condo, many people dream of high returns overnight. Consider the rental rates for similar units of similar grades and sizes. Then, calculate the monthly rental rate. A 7-8% return is considered very high, but there's currently a lot of competition. A 5-6% interest rate, with an average loan interest rate of around 2%-3% for the first three years, would be beneficial. Alternatively, you can compare interest rates with the best available from various banks if you need to borrow from a bank.
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You must choose your tenants.
There are increasing and frequent reports of condominium tenants creating chaos and property damage, including theft, leaving the room dirty, defaulting on rent, leaving the unit unpaid, and even letting the unit deteriorate. These all create problems. Therefore, it's important to choose your tenants and be willing to terminate the lease if you notice these behaviors early on.
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Source of this article: Thansettakij
