Greetings to all visitors of the site Efestio. My name is Roman Gusev and in this article I’d like to share with you information about how I started investing in real estate in Thailand and getting a lot of mileage out of it.
So, it all started with our friends’ wedding gift – tour to Thailand. It was back in 2007. The trip lasted for three weeks, we’ve visited Bangkok, Pattaya and several places in Phuket. In Phuket we stayed in two different 5-star hotels, because for these terms the best hotels were sold out and there was none free for the whole period of our stay. But this was our benefit, we managed to see different beach resorts. I’d like to do justice to my friends, they really did not stint on hotels and bought the best ones!
In early December 2007, we arrived in Thailand for a holiday. The atmosphere is not comparable to ours. We left gloomy winter in Moscow, arrived at the airport and, as soon as we got out into the street, I was literally shocked by the tropical heat. The climate is just a wow! This is the first thing that impressed me! Well, and further – people’s smiles, cheapness of exotic fruits, excursions, beauty of the sea, diving, islands of amazing beauty, crocodile farms, aquariums, riding on an elephant, walking among palm trees, drinking a coconut … This is such exotic for us. For the first time, the impressions were fantastic. Moreover, I immediately got into a 5-star hotel, so I could appreciate the classy service, even your tuk-tuk driver admired the hotel we stayed in Pattaya.
In general, we fell in love with Thailand from the first trip. Since then, we visit it several times a year.
Of course, having understood all the benefits of Thailand, I was captured by the idea of buying real estate in this paradise. I’m not one of those people who think hard. Literally, during the first trip I began to learn all the details. The first thought was about a villa on the beach. A picture that was drawing in front of me resembled a movie – you sit under a palm tree beside a private pool and contemplate how the sun rolls over the sea horizon. However, very soon I found out that there are not enough places in Thailand where you can buy a villa on the first line. And if you find it, it will cost a fortune. I was possible, but I was not ready for such prices. So, I begun to find out what’s about apartments. And here there were some interesting offers.
Just so you understand: in 2007 in Thailand for 12 000 $ it was possible to buy a good apartment in a new building, while today there is no way to find something less than 900 000 baht (it is about 29,000 $). Can you imagine the rate of growth in property prices!? And there is more to come. The Asian region has not yet picked up steam.
I began to work over this issue. The main thing that stopped me is that according to the laws of Thailand, foreigners do not have the right to own real estate by 100%. As soon as I found it out, I decided not to get involved. A foreigner in Thailand has the right to own 49% of any property. The rest of it should belong to a Thai citizen or legal entity, where the same 51% of the share capital will belong to a Thai and 49% to a foreigner. Accordingly, in order to buy an apartment in a house that has already been built, one have to incorporate a firm (legal entity), enter it as a director, find the Thai co-founders, give them a 51% share, and leave 49% to yourself. Then, to get for a consideration refusal of a Thai citizen from any claims for all the property and material values of the firm, certified by a notary, and only after that you could feel yourself the owner of an apartment in Thailand! A firm may buy any amount of real estate. But, firstly, these are unnecessary troubles, and secondly, unnecessary costs for firm’s incorporation. Reports, balances, taxes, etc. In general, not very good conditions for the acquisition of real estate. Having weighed all the pros and cons, I decided to abandon these plans. Although, I continued to visit this well-loved by me country, Thailand, every year!
Once, on my nth visit, it was the end of 2013, I got on an excursion with the developers, where a young girl began to convince me that there is a possibility to acquire an apartment to my full ownership. I did not immediately believe her, but agreed to meet with their expert, I was curious enough. It turned out to be quite true. During the time when I was not interested in real estate, there were some changes, which from now on allowed to a foreigner to purchase legally real estate in 100% ownership.
I introduce a simple example. Let us assume, that there is an under-construction complex of 4 houses per 1000 apartments. 510 apartments are for sale to Thais, and 490 are reserved by foreign owners. It turns out that the law is the same: 51% – for local, 49% – for foreigners. But these 49% are allocated from the total number of apartments in the condominium, and not in a separate apartment, and due to this, you receive a specific property in full ownership.
Then I thought: why should I pay each time 150-200 thousand rubles for holidays in hotels, if I can buy my own?
It was 2013. By that time, I had already seen growing interest for Thailand, how quickly the country and the local real estate market were developing. I found out how many people there earn on apartments and realized that this is also an excellent investment option.
I gave my telephone number to the developer, explained what I want, we drove through the resorts, looked all the complexes. In several projects I chose good apartments, payed deposits and began repayments.
I was buying those properties that tugged my heartstrings, where I wanted to live by myself. Plus, I watched that the properties were in demand among tourists, which means that in the future they would bring me income. At the same time, I selected complexes for different tastes.
I bought several apartments in the resort complexes – Seven Seas Cote d’Azur in the area of Jomtien beach and Siam Oriental Plaza on the Pratumnak Hill. I really liked the Whale Marina Condo complex, where right in front of the windows of apartment you can park your yacht at the pier, for the owners it’s absolutely free. It will be impressive and, of course, such a place will only grow in price. I bought several apartments there too. Well, the last acquisition is an apartment on the island of Phuket in the Mai Khao Beach condo.
Developers in Thailand offer very favorable terms of payment. Firstly, in order to «entrench» an apartment, you pay 20-25%. Then, during construction, you pay the remaining price. The building schedules of different developers differ: somewhere up to the end of construction you have to pay 80%, but, for example, in Whale Marina Condo, you have to pay immediately 20%, then 10% for the entire construction period, and 70% – only when you get the keys, so the risks are minimal.
I was buying apartments at the earliest stages of construction. In my experience, in Thailand it is very beneficial to «enter» to construction at the very beginning.
Firstly, you can choose the best apartments. Secondly, the prices for the first apartments are much lower. And thirdly, it is realistic to knock out any bonuses from the developer, from the schedule of payments to the furniture package as a gift.
In early 2017 and in 2019 the first complexes in which I bought apartments – Siam Oriental Plaza, Whale Marina Condo and Seven Seas Cote d’Azur – will be put into operation. And then I can start earning on a lease. I will write about this in the next article and share with you this experience.
Developers in Thailand have guaranteed payment programs. At the conclusion of the contract, the developer undertakes your apartment for management for different periods of 3 to 15 years, monthly or annually pays you from 7% to 10% per annum.
For example, when I bought property at Whale Marina Condo, I immediately signed a guaranteed tenancy agreement for three years. As soon as the complex is ready, the developer will pay me 7% of its price for the whole year in advance, at the lapse of a year, if the contract is renewed, the developer pays again 7% per annum for the year ahead … That’s how it works. But most importantly, the very cost of property has already grown.
Surely, the apartments are the most profitable to buy at an early stage of construction.
The square meter at the initial stages of construction costs from 60,000 baht. Depending on the area and proximity to the sea – there were options for 110,000 baht, and higher, but this is in elite skyscrapers. Price depends on the floor: usually, the higher the floor is, the more expensive, but in the class-resort complexes, where in first floor there is an outlet to the swimming pool, the prices of apartments on the first floor are much higher. In such houses, going out onto the balcony of your apartment, you can dip directly into the pool from the balcony, enjoying reading in the water, drinking a cocktail or just lying on your deck chair.
I invested in such complexes, because I saw their good potential. It was possible to buy those who approached the completion of construction, in order to lease them the next year. But just think…
When you buy at the initial stage, you pay a 20% initial payment. At an apartment price of 3 million baht, it’s only 600 thousand baht. You can extend payments for the entire construction period, two or three years. During this time, the price rises by 20-30% of the total cost, i.е. from three million. And you have invested yet 600 thousand baht, having bought a contract. That is, you can start selling the apartment, until the complex is not delivered, and you do not need to pay the entire amount. Six months before the end of construction, the developer will sell the same apartments for 3.6 million, and you will put them for 3.4 million, so that it will be more quickly bought.
For a couple of years, capital will be increased by almost 70%!
I bought properties to earn in the future on a lease, to receive a passive income. But I revised my priorities. Part of the apartments I leave for renting (today it is 3 apartments on Pratamnak in the condo Siam Oriental Plaza), and the other ones I will resell closer to the completion of construction.
The goal is the same: «don’t put all your eggs in one basket». And the released funds after the sale of apartments I will continue to invest in new promising facilities at the stage of design documentation.
For example, currently there is a chic option in Phuket, the Mai Khao Beach condo. I have no free money, but I could not resist buying an apartment there. I thought for a long time that right now the exchange rate of the baht to the ruble grew (it was one to one, and now it’s one to two), it became more expensive for us, and I still bought it, it’s too advantageous.
At the initial stage, an apartment, which by the end of the construction will cost 4 million, they sell for 2 million baht. This is current special offer.
Also, by purchase you can conclude an agreement with the developer, according to which they for 5 years undertake this apartment for management and guarantee the owner income of 10% per annum. In addition, the owner will be able to rest for 2 weeks a year free of charge.
In addition, this condominium has already received a hotel-type license, and a 15-year contract has been concluded with the American travel company. They will rent these apartments as rooms in a 5-star hotel. And when the 5-year contract with the developer is over, you can easily extend it with this management company.
But the main thing is that now you are investing 2 million, and by the end of construction – it is designed for a year and three months – you will sell for 4 million. There are no cheating and upcharges, this is the official price of the developer, which is even lower than in neighboring complexes.
Let assume that 100 000 baht you pay to the agency that will sell the apartment. Then, you’ll give discount at 100 000 baht, so that buyers prefer you, and not the developer. But all the same – this is a profit of 100%! Less than 2 years!!!
If you leave the apartment for yourself, then with a guaranteed income of 10% you get another million for five years.
The project is magnificent – it’s first line, surrounded by nature reserve and five-star hotels, on the territory there are 12 swimming pools and all delights. The only problem is that it is necessary to act very quickly. On September 19th, they went to the construction site – the cost was at 1.99 million baht. As soon as the piles are driven, and the first floor is flooded, the price immediately increases by 10%. And with each stage there will be another increase.
There is another one schtick at this developer upon purchase from him for the amount of $ 290 000. The developer helps to get a lifetime investment visa to the buyer and all members of his family. Admit it, this is an excellent bonus. I am very well understood by those who studied this issue of obtaining citizenship or long-term visas.
If I had now free money, I would have bought a few apartments in this complex. Not even for sale – this can be done at any time – but for guaranteed rent.
There’s no catch. The developer uses your money as an investment. It is more profitable for him than taking a loan in a bank at 12-15%.
Yes, there are long construction projects in Thailand. But before I invest myself and offer something to another people, I find out everything about the developer – how many projects he has built, what they are, their location, whether he has ever broken the deadlines, fulfilled all the conditions, how quickly he responded to comments when accepting apartments, and many other factors. And only after that I make a decision. Even if the prices are very profitable, I will not invest in such project, and even more so I will not offer to buy it to my clients if the developer has ever been made a slip.
Thank God, I was never mistaken in the developers I invested in! And until now all goes according to the plan.
Apart from one project Seven Seas Cote d’Azur. Due to amendments in the Thai law on the employment of foreign citizens, the construction was suspended and slightly out of schedule. But there is no cause for concern.
Thai developers value their reputation just for this – to attract money in the early stages with no doubts in whether they will be able to complete construction.
I opened the company literally once I understood that it is possible to earn on this. I investigated this market, invested in various projects, talked to the developers, they offered a commission for the promotion of their complexes. Then I opened my company Tayinvest.
All our services for buyers are free. It is beneficial for the developer that I promote his projects. Clients are pleased that they but at the developer’s price or even cheaper.
Some buyers see our advertising, and then go directly to the developer. There is no point in this – the price will be the same, they will not benefit from it, but will only lose. For our clients we provide additional services – we meet them in Thailand, help with opening an account, inform them how to transfer money correctly, ride them around in best places and facilities, help settle disputed issues, reduce the amount of payment for booking an apartment. Under all circumstances, our representative in Thailand is always in touch. We help to bargain with the developer.
For outside buyers, the developer will not offer him additional bonuses, while we do know from which company to require bonuses: discount, installation of washing machines, additional TV or something else. Plus, in the future, if you delay payment, the developer will just write you out a fine. And when cooperate through us, we can arrange it. The developer is interested in maintaining good relations with us, and therefore our clients will be treated more generously.
Three ways to earn on real estate are really working currently in Thailand. The first is buying at an early stage of construction and selling at the end of construction or in the later stages. The second is the conclusion of a contract with the management companies of the developer for a guaranteed lease. There are some nuances there, in this case, you can live in an apartment for a limited period (usually 2-3 weeks per year). If you want to spend 2-3 months in Thailand, and in the remaining time to rent it out, you can choose the third option – self-organized rent. This is what we are helping with.
In fact, I had to create a rental office to receive income from my own apartments in Pattaya. We can rent out and flats to customers who bought them with our assistance.
But we will not work with a guaranteed rate of 7-10%, as developers, but according to the actual result – how much the apartment was rented out, what income received by owner. The result can be extended to the low level, but also to the higher level, depending on how many months the concrete apartment will be rented. You determine the price, we do advertising, find clients, settle them and monitor the safety of property, serviceability of equipment and utility payments.
Plus, if a person does not want someone to live in his apartment, we can simply look after it: visit, check whether everything is in order, add water in the sewer drains, because it quickly dries up and the apartment starts to fill with unpleasant odors, declare the meters’ data in time, make easy cleaning. The price for these services will be scanty, while the owner will be calm
Our company often conducts very interesting and profitable actions:
For example, our constant action is «Apartment at a price lower than the one of the developer». There are always private investors who buy property in the early stages. When it comes to sell, they reduce the price in order to be preferred, rather than the developer. Even with dumping, investors still win, receiving an excellent profit. Now we have a half and a dozen complexes in our base with apartments at a lower price than the developers’. But even if none will be liked, we will choose another option.
Another action is «Live in an apartment for 14 days and make a decision, buy or not to buy it». It helps very much to find out whether this resort suits you well, what about the infrastructure, what kind of recreation is there. This applies to already ready complexes. But if you choose a property under construction, we can pick up an apartment nearby, in the most similar building.
There is an action «Receive as a gift a 3-year payment of utility bills», we present discounts to our clients for purchases in addition to those that we managed to «squeeze out» from the developer, and many other pleasant moments.
For example, I have a birthday soon, and in honor of this occasion I present for all the options for foreign quota transactions in the Whale Marina Condo project a discount from me personally – 200,000 rubles – to everyone who paid the deposit to purchase an apartment or studio from November 20th to November 30th. There will also be New Year discounts. So, plenty more where that came from!!