Real estate investment in Thailand is a great way to get your money working for you. Get the best advice to help boost your income as a property investor in this article by PropertySights Real Estate.
14 Best Tips for Property Investment in Thailand
1. Set Your Investment Goals
Setting clear investment goals should be step one when planning a real estate investment. Often, this means assessing what kind of return you expect to make and what investment style is best suited to that goal.
One traditional investing strategy is based on capital appreciation while living in that property. In other words, watching the property value increases over time as you live in it. This is a sound strategy that can allow you to make use of the property as it appreciates with little volatility. You may open it up for use as a rental space, too.
Obtaining rental income from residential property can allow you to get even more from your appreciating asset. In this case, it’s important to have an idea of your potential rent (based on what you could charge now with simple changes to the property) and future rent (progression of rent increases based on factors like the room and decor improvements and updates to the surrounding neighborhood).
Flipping, or property speculation is another common approach. This requires an understanding of the larger market and building costs.
Some goals are less financial in nature, like those hoping to obtain Thai residency by investment visa. This visa can make life simpler for those wanting to reside in Thailand, but it requires at least a 10 million baht investment into any combination of the following 3 assets:
- Newly developed condominiums
- Thai government or Thai state enterprise bonds
- Fixed deposit Thai bank account deposit
2. Determine Your Budget
Once you know what your goal is, you can determine your budget based on factors like the type of real estate, and the location you want to purchase it in.
Certain locations will be more costly due to factors like demand and land cost, as will building types and construction materials. At this stage, it’s important to consider what you’re willing to invest in the project in order to reap the rewards. Set a firm number that you’re comfortable with and refer to it as you continue to conduct your due diligence.
3. Conduct Market Research on Different Locations and Sites
Conducting market research on different locations and sites is crucial when investing in property. This is because matching your investment style and desired real estate type to the location can make the difference between turning a profit and holding an underperforming asset.
At this stage, the importance of Thai property developers can’t be understated. They can help you determine 4 main factors that will impact your real estate investment:
- Trends in the wider real estate market like condominium prices dropping or rising.
- Area-specific pricing trends in a housing or rental market.
- Price comparison on the type of property you’re looking to invest in.
- What marketing strategies might work for your property. Each location has a different demographic and therefore will require a different strategy.
4. Consider the Proximity of Schools, Public Transportation, and Government Facilities
Considering the proximity of schools, public transportation, and government buildings can also strongly influence the potential return on investment for your Thai real estate.
According to 2015 research published in Urban Policy and Research, Sutee Anantsuksomsri and Nij Tontisirin found that there was a direct correlation between public transit location and residential land prices in the Bangkok metropolitan area. Schools, government facilities, and even commercial developments like shopping malls can also raise the value of your asset.
5. Network with Local Licensed Property Agencies
Networking with local licensed property agencies can be a big advantage because they’re more knowledgeable and well-connected to the local market. In many cases, these brokers can get you better deals on the real estate you’re after.
In the land of smiles, seeking out TREBA-licensed (Thai Real Estate Broker Association) agents ensures that your deals are being negotiated by brokers with a proven and reliable skill-set. PropertySights Real Estate holds this license, meaning that we’re held to higher standards for real estate practice.
Another benefit of TREBA licensing is that it provides a support network along with information and statistics that non-licensed brokers may not have access to.
6. Consult Experienced Professionals for Help
Consulting with experienced professionals for help is another way to ensure the safest and most reliable investment path. Some professionals to consider turning to are:
- Real estate lawyers. This may be particularly important for foreigners trying to determine what types of investment are possible for them along with more general zoning laws.
- Real estate professionals like PropertySights Real Estate who offer consulting services in Thailand that can help you navigate the local market.
- Property developers who can help coordinate the development of land.
- Quantity surveyors who can assess the pricing of construction materials and project cost.
- Architects who can design your property according to your vision.
7. Seek the Best Opportunities
Seeking the best opportunities when they present themselves is crucial because they can disappear or become overvalued quickly.
In Thailand, this might mean jumping on the purchase of a new condominium’s most desirable units as soon as they’re available. It could also mean seeking out property in an area with new developments such as a Thai shopping mall that could increase the value of surrounding land.
Utilize online resources for updates and seek out expert tips to increase your odds of a healthy profit on your real estate investment.
8. Inspect Potential Properties
If an opportunity presents itself, inspect the potential property before you consider making a purchase. Don’t simply trust what you see in the pictures.
Check the following while you’re at a potential investment site:
- Water installations. Check to make sure the toilets flush, the instillations all have decent pressure, the hot water works, and that nothing leaks.
- Lighting. Ensure that all power points work and that lights turn on.
- Flooring. Make sure that there are no stains and that the floor is flush throughout the room, including corners.
- Windows. Ensure everything opens, closes, and seals properly.
- Walls, cupboards, and counters. Keep an eye out for any flaws in the craftsmanship or damage done during installation.
- Outside or shared area in the case of condominiums. Inspect for flaws or potential maintenance issues.
9. Find the Right Property – Essential for Success
Finding the right property is essential for success and involves striking a balance between budget, inspection findings, and investment upside. At this stage, the key is to not settle for real estate that you’re unsure of or developments that won’t fit your ideal investment timeline.
10. Analyze the Title Deed
Analyzing the title deed for conditions, covenants, or other potential ownership issues associated with the property is a crucial step in real estate investment.
There are several types of Thai title deeds, each with different rights connected to them. The Chanote, for example, gives full ownership rights. However, others may have less clear rights associated with them and can cause issues with building permits and registration down the line.
Another issue is that some deeds in Thailand have conditions written on the back that don’t allow for ownership transfer. If you’re uncertain of the rights and conditions associated with a title deed, consult a lawyer for confirmation.
11. Examine the Property Laws and Taxes
Examining the property laws and taxes associated with the area you’re considering investing in can help you determine costs, limitations on building and ownership rights, and necessary procedures.
It’s particularly important for foreigners to be aware of Thai tax and property law as the 2008 amendment to the Condominium Act outlines restrictions on ownership for non-Thai citizens. For example, at least 51% of the floor space of any condominium must be Thai-owned.
The Land Code Act provides other property ownership routes for foreigners via investment in Thai assets, too.
Taxes can’t be overlooked either, and anyone looking to invest in Thai real estate needs to be aware of the 4 taxes that can apply to property acquisitions:
- Specific Business Tax (SBT): 3.3% of sale or appraised price (whichever is higher) that applies to property sold within 5 years of purchase. Can be avoided if the property is listed as primary residence on the Tabien Baan (House Registration Book) for at least 1 year.
- Stamp duty. 0.5% of the property’s value applied when there’s no SBT.
- Transfer fees. 2% of official estimated price.
- Withholding tax. 1% of sale or appraised price (whichever is higher) for companies. Individuals are charged with a progressive levy that’s calculated based on the official appraised price, income tax level, and time the property was owned by the seller.
12. Prepare for Ownership Transfer at the Land Office
Any real estate investment in Thailand requires a transfer of ownership at the land office. This process involves the following:
- Payment of taxes. This will require communication between seller and buyer as the seller often pays the bulk of the fees.
- Preparing documents. The documents required for property ownership transfer in Thailand differ based on the buyer’s marital status, the property type, and the owner’s nationality.
- Transferring of the title deed.
- Register your name in the house registration book (Tabien Baan) if you choose to.
PropertySights Real Estate offers real estate ownership transfer services that smooth the entire process, ensuring nothing is left undone.
13. Consider Rental Management Services
If you don’t have the time or energy to deal with tenants, consider rental management services. They can turn your investment into more of a passive income stream that doesn’t require constant involvement from you.
There are plenty of property management services in Thailand that will handle things like lease contracts, rent collection, property upkeep, and even marketing.
14. Plan Your Property Marketing
If you’re handling your investment yourself, you’ll need to plan your property marketing strategy to find tenants and increase your return on investment. This might involve as little as simply listing the property on real estate brokerage sites.
A more involved plan will include digital marketing strategies like website design, a social media and ad campaign, written SEO (Search Engine Optimized) articles, client testimonials, and more. If that sounds overwhelming, there are marketing services in Thailand that can take care of things for you.
For more information on real estate investment opportunities and top-quality services, contact PropertySights Real Estate today.
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