Several investment opportunities are possible in Thailand such as stocks, bonds, and real estate. Of all the investment opportunities you may have considered, there is none as lucrative as real estate property investment. But, it could also lead to great losses if you do not hire or consult professional real estate expert like Home Finder Bangkok because there are pros and cons to investing in real estate. We will be giving you free professional tips for making successful and lucrative property investments in Thailand as of 2022. For the sake of newbies, what is real estate property investment?
Real Estate Property Investment
Real estate property investment is the process whereby a person acquires/buys a landed property with the hope of making a decent profit by either selling it or renting/leasing it out for a certain rental/lease fee. Some may go as far as taking out a mortgage plan just to acquire the property. As a result, there are two major types of real estate property investment opportunities – rental property investment and property flipping. What exactly is the difference between the two? And which might probably bring in the most money?
- Rental Property Investment
Rental property investment is the process whereby an investor purchases a land/building or housing unit with the sole aim of renting/leasing it out for a particular sum. Such an investor automatically becomes the landlord. Since the landlord may have possibly taken a mortgage to secure the property, he/she would often charge a certain rental fee sufficient to cover the regular repayment of the mortgage. Upon the full repayment of the mortgage, continued rental fees become a lucrative source of income. However, the profit to be made depends on the value of the property, damages incurred on the property by the tenant, cost of maintenance and/or renovations, vacancy period, and the location of the property. Conduct adequate research or hire a professional real estate manager to avoid buying property in the wrong location which could result in negative cash flow (losses) and inability to repay mortgages.
Another factor you should consider before engaging in rental property investment is that you become a landlord saddled with the maintenance of the property. You may however hire a property manager for a fee if you don’t want the hassle of having to attend to maintenance now and again. An alternative to hiring property manager(s) is that you may purchase your property from real estate investment groups/developers that would cater for the costs of maintaining the property, also for a fee.
Example Of Rental Property Group Investment
A good example of this is purchasing condos. Though you own your condo unit which you may rent out, the developer of the condo project caters to the maintenance of your unit as well as the facilities which you and other unit holders/landlords own jointly. You simply have to pay a pre-agreed developmental fee which might be a certain percentage of the rental fee you charge your tenant(s).
- Property/Real Estate Flipping
Real estate property flipping is the process whereby an investor buys a property with the eventual aim of reselling the same property for a profit. Unlike rental property investment which is often a long-term investment, property flipping is often on a short-term basis. The property to be ‘flipped’ or sold has to have appreciated over time so that the investor can recover the capital or initial amount spent in purchasing/acquiring the real estate property and earning profit. So, how do you increase the value of your property?
Strategies of Property Flippers to Ensure Proper Appreciates in Value
Since the principal aim of real estate property flipping is to ensure that the investor(s) make a profit upon reselling the property, how then do these property flippers ensure that they do not run at a loss knowing that real estate may be just as volatile as many other types of investment? Well, there are three basic ways of ensuring this and they are briefly discussed below.
- Natural Appreciation By Making Informed Property Purchase Decisions
Landed property may increase in value naturally. This is often self-evident when there is an increase in demand for such property. Based on a professional analysis of Thailand’s real estate, properties that easily increase in value are those located in metropolitan cities such as Bangkok. Another natural appreciation factor is properties/residential or office buildings located in busy business districts. Yet another is when a property is located close to convenient public transportation such as BTS (sky train) and MRT (subway). These are key indicators to watch out for when buying a property with the sole purpose of flipping it.
- Repairs And Renovations
To increase the value of a property, property flippers would often repair and renovate properties for it to be more appealing to potential buyers
Rather than simply repairing, you may decide to completely upgrade the property such as by converting a spacious two bedrooms unit into a 3 or 4 bedroom unit, introducing a swimming pool, etc.
Whatever it is you do, it all still boils down to choosing the right property, in the right location, for the right price, and that may require professional help.