Buying a Condo in Thailand: 9 Questions You Must Ask!

Most expats have thought about buying a condo in Thailand at one time or another.

After all, it's one of the few things that can make one feel truly at home in a country with fairly strict laws on land and property ownership for foreign nationals.

Foreign nationals are permitted to buy a condo (freehold) without restriction, but only in a building where more than 51% of the total number of units are Thai owned, otherwise foreign nationals are restricted to a leasehold condo.

Moreover, many of us come from countries where ownership is the ultimate goal, and renting is seen as throwing money down the drain.

Indeed, buying a condo seems like the logical thing to do, especially if you are staying long term or visiting the same province three times a year and splashing out on hotels.

But only fools rush in, and I'd advise caution – because there's a bucket load of things you need to consider before signing on the dotted line for your slice of Thai pie.

Before we get started, it's worth me noting who this post isn't for.

This post isn't for anyone who has so much cash that throwing down 5-10 MB+ for a condo is a mere drip in their champagne glass.

If you don't give a monkey's bottom whether you see a return on your money, whether you're being blinded by marketing ploys, or whether unqualified builders built your condo, stop reading now. You're going to buy a condo regardless of my advice, and probably a speedboat, too.

This post is for those who have a modest amount of money, with the vision of having a future here, or at the very least a holiday home.

It's also for those who might be considering a condo as an investment.

Now that we're clear, let's start!

1. How Big is the Rabbit Hutch?

No one wants to live in a rabbit hutch. Image credit: nydailynews

It's no secret in the Thai property industry that a condo block close to public transport links, the beach or local nightlife tends to have smaller units at an inflated price.

People pay over the odds for convenience and often end up making sacrifices that later down the line they usually regret.

Just a few weeks ago a friend and I went to see a condo in Ekkamai, Bangkok. The said condo was 2-bedroom, approximately 60 sq. m., 35,000 Baht a month.

During the viewing, the landlord showing us around mentioned she had other condos, one of which was nearer a station (On Nut station). She explained that it was 41 sq. m, two bedrooms, for 30,000 Baht a month.

We'd already turned our noses up at the size of the one we were viewing, but 41 square meters! How do you fit two bedrooms in that?

The lady went on to explain the market and how developers were increasingly making condos near stations smaller to maximize profits and squeeze higher prices out of buyers/renters.

Land in premium locations is scarce and expensive, which means condo buildings are getting taller and the number of condos in a block is increasing to maximize space.

But here's the crazy thing: The condo we were viewing was only 6 or 7 minutes walk from the station.

So, just by making the sacrifice of having to walk an extra few minutes to the station, for not even £100 more a month, we could have 21 sq. m. more space.

If we were buyers, the difference could have been as much as 1.5 MB.

2. Would You Pay This Much Back Home?

Here's a simple technique to find a great condo in a suitable location.

Wherever it is you want to buy, start your search from the most convenient or attractive part of the area, be that the station, the beach, the shopping mall, wherever.

Gradually work your way backwards noting prices, until you get to a point where you say, “Hey, that's too far to walk”, or, “I can't be doing with that motorbike taxi ride every day”.

I know you're excited about living in Thailand or owning a holiday home, but as we all know, Thailand has a way of blinding us to certain realities.

Compare the equivalent to your home country.

For the UK I usually add 2/3 to the price. So if it costs 3 million Baht it would be about 9 million back home. Would you shed out the same money back home for an unfurnished apartment, that small?

Make sure you do the math. What often seems cheap in Thailand isn't all that cheap when you make a market comparison. Compare how much you are paying per sq.mt with what you'd pay back home.

Factor in the relative price. If you are paying 5 million Baht for a condo here, the same would be at least 10-15 million Baht in a major city in the UK or US.

Also consider the long-term ramifications:

• Will you and your partner be getting under each other's feet all the time in such a small place?
• It's big enough now but what if you decide to have a kid? Perhaps you have a baby now. They don't stay babies forever. Will this be enough space?
• If you're a singleton, is it big enough to rent a spare room or have people over to stay while they're on holiday?
• It looks spacious on the plans but how much stuff have you got and how much are you likely to accumulate while living here?
• Won't you want a bigger balcony to sit out on?
• Do you really want to look out at that main road every day?
• Having a gym upstairs is great, but will those 10kg dumbbells and two bikes really suffice?

3. Are You Buying a Condo Built by Mr O' Rilley?

“I thought you said a wall Mr Fawlty?”

If you're a Fawlty Towers fan then you'll be familiar with the building work of the jolly Irish builder in the picture above, Mr O' Riley.

Humour aside, the build quality of condos in Thailand isn't always up to scratch.

Even those developer brands touting their work as “European standard” have a lot to answer for, particularly when you take a walk past the site and see the dubious hammer and chisel techniques on display.

I remember a friend visiting from the UK sometime ago. A roofer and plasterer by trade, he was gobsmacked by what he observed on the building site opposite his hotel.

At times he'd sit by the pool muttering, “What the?” “What is he doing?” “No, no, no, you can't do that”!

I don't blame the builders, though. In fact, I admire them.

The majority have no formal building education to speak of, the tools they are given to do the job are inadequate, and their lives are treated with such contempt that when it comes to safety standards and wages it's a wonder they manage to make it from one job to the next.

But let's get to the ethics of the Thai construction industry later.

Some, not all, condos experience build problems in the first few years of operation. If you're lucky you'll escape with the simple stuff:

• The low quality materials used for the facia of the building will fade under the glare of the sun.
• The cheap tiles used to lay the flooring in the hallways and your apartment will crack on poorly laid floors.
• Walls will crack due to poor plastering (can be due to movement and is not always something that can be helped).
• Fittings will wear quickly or break.
• Cheap paint will wear fast.
• Roof/window leaking issues during rainy season, as a result or poor workmanship or cheap materials.

If you're unlucky there could be more serious issues with subsidence.

An apartment project in Pathum Thani subsides.

Don't get me wrong, nearly all condo buildings stand the test of time (except the one above, of course) in that they don't fall down.

However, cheaply decorated condos will require on-going maintenance work that you may not have expected to carry out so early on.

Of course the advantage of renting is that this cost is picked up by the owner of the condo block or individual unit you are renting .

Don't get me wrong, not all condos are built will cheap materials. But have you researched the materials being used to build the condo you want to buy?

The fact is, if you're planning on paying 2.5MB for a 33 sq. m condo built with paper-thin walls, the cheapest floor tiles from HomePro, and a single kitchen hob, then you're getting shafted.

Cheap fittings don't last and break. They need replacing. It's not just the expense, either. It's annoying!

4. Are You Happy Paying an Inflated Market Rate?

Every real-estate agent in Thailand will be all over this post telling me that the market is booming and 6% yields on rental properties are common.

And you know what, they're right – if, that is, you are Thai and bought off plan with a heads-up from the developer.

Here's a quote from the NomadCapitalist who knows a fair thing or two about property markets and their “legal scams” in Asia:

Here’s one way Thais are playing the real estate market in Bangkok. Connected Thais will find “off-plan” condo projects in areas along the Skytrain line, such as Sukhumvit or Sathorn in Bangkok. Developers require ten percent of the condo price down at signing, which can be paid in installments over one to two years. That means a 500-square-foot, $200,000 condo can essentially be optioned for about $1,000 a month.

The plan in this scenario is to do an off-the-books sale of the purchase contrast to a longer-term investor (or sucker) once construction gets underway. Considering condo prices increase as much as few percentage points per quarter once it goes “on plan”, Thai investors can as much as double their out-of-pocket investment before they flip the property. And because it was off the books, they avoid taxes or much scrutiny.

Such opportunities are not as open to westerners. You have to be connected, and Thailand is very proud of the fact that it was never colonized by any European power. That means no foreigner is going to penetrate their inner circle.

(Quote source: Nomad Capitalist)

Ask yourself this simple question: why are there so many condos sitting empty in Thailand, particularly in Bangkok?

The owners would rather have them remain empty than drop the rental rate. Seems strange.

I will tell you:

Because, considering the points made above, these twilight investors are prepared to take a hit on a few units for the sake of keeping the market artificially inflated. The inflated prices enable their investments in off-plan condo blocks that get flipped off the books at double-bubble.

5. Is It Really a Good Investment?

I nearly did it once.

Five years ago, a friend and I slapped down a deposit on a condo in Koh Samui. It was to be a holiday home-cum-rental opportunity.

We justified our spontaneous purchase on the continual growth of the island's economy, and the fact that friends could rent it when they came out for a holiday.

Sadly my friend went home after his holiday, took off the rose-coloured glasses and figured that the cash would be safer in an ISA.

He was probably right.

In some ways I wish we'd gone ahead, not least because I'd have a cool little escape in Samui and because market prices have increased since then.

Looking back, I think we would have made our money back eventually by renting it out, especially with the rise of AirBnB and online rental platforms.

However, the reality is that we probably wouldn't have been able to resell it.

The sheer abundance of new builds means the rental market is highly competitive and you need to offer up a cheap deal to make sure your gaff is full all year round.

Not to mention that I can book a decent hotel on a deal from Agoda or Hotel.com for 1, 500 Baht a night if I do want to go there for a holiday, hassle free.

Consider this scenario…

When you buy a property in the UK, even if the market crashes post buy, if you hold on for 10 years, you'll still end up getting more than you paid for it, and in most cases make a profit.

Moreover, you will be able to rent the property and make a good yield, regardless of resale market conditions. The crash and climb of the 90s and of the mid 2000s has proven this to be true.

This is not the case for condos in Thailand.

As mentioned above, the money is in knowing the man who knows the man, in investing off-plan before the project is announced and flipping off the books.

Buying a condo to rent out for profit is risky at best, unless of course you have a contract with a multinational company that wants to rent your place for staff, or a similar scenario.

And here's why:

Condos for rent are two a penny. The sheer abundance of choice makes it a renter's market.

While your condo might be a popular rent when it's brand new, when ten new blocks go up in the same square mile over the next few years, you'll have to reduce your rental price to compete with the fancy new kids on the block.

Once your air-con unit starts looking shabby and building facia has faded, your condo will be way down on the list of units that would-be renters favour.

Of course, there are exceptions.

For example, buy a 38 million Baht penthouse on Soi Ruamrudee in Bangkok and you might get 250k+ a month for as long as the big banks and embassies are still in the area – even when the block is a little dated.

But I don't have that sort of cash to shed out, do you?

On an average condo it is far more risky.

Let's say I buy a 3 million Baht 1-bedroom condo, fairly near a BTS station in Bangkok. I rent it out for 20k a month and it's always occupied.

It would take me 12.5 years to make my money back, let alone a profit.

Now, tell me, what are the chances of always having a tenant?

And when those 12.5 years are up, what are the chances of being able to sell the condo for more than I paid for it?

And if I did get my 3 million Baht back, the value of that money will have depreciated anyway.

Oh, and you have to pick up all the maintenance fees, too.

Some would argue that I'm wrong.

If I continued renting out the condo for another 12.5 years, even at a reduced price and low occupancy, I could make around 2 million Baht over 25 years, and still own the condo at the end of the term.

That's around £45,000 at the current exchange rate. Surely that's not bad, for one investment. Moreover, even if I sold the condo after 12.5 years for 2 million Baht, that's still a good return.

What do you think?

6. Are You Being Blinded by Furnishings You Won't Get?

The showroom condo might look like this, but you'll probably need another 1MB+ for this level of furnishing.

I'll never forget the time I accompanied a condo-buying friend to a showroom in Tong Lor, Bangkok.

We were given free smoothies and chocolates, just for looking around.

It was five-star treatment that made you feel like you'd won the lottery, and that “buying one of these condos is the missing piece of your life”.

We were showed around a beautifully decorated condo. It was small but felt cosy and looked really well-finished.

Then it struck me to ask the sales lady, “So which type of unit comes decorated like this”.

“None sir. This is just for show”.

I'm not kidding. From the kitchen units down to the silver plug sockets, you didn't get any of this decor for your 6 MB.

I finished my smoothie, drinking down the realization that the entire setup was an oasis.

They'd used a European fitted kitchen and other high-end furnishings that would cost the price of the condo itself to buy and fit (properly) in Thailand.

Without this stuff, it was a mere hamster cage, without the pretty running wheel and drinking bowl.

So, before you put that deposit down, make sure you fully understand what, if any, furniture and fittings you will be getting. And at what price the top-end stuff in the show home will set you back post-purchase.

7. Is Your Deposit Refundable?

Question: Name a way to make money out of building a condo block other than selling the units?

Answer: Get truckloads of people to be so overwhelmed at the prospect of a free iPad and “special price today only” that they leave deposits with your commission-hungry sales staff.

Believe or not, condo developers in Thailand make millions of Baht every year from non-refundable deposits.

First they lure you in with as much free water as you can drink and a few snacks and smiles from some extremely attractive “pretties” (before the feminists hang me for using that word, it's not something I made up. This is a real term used in Thailand for women who stand at sales events looking pretty).

Next they show you the amazing decor you won't be getting. And lastly, they tell you that the “today only” price is yours for a small 20,000 Baht deposit – if you “just sign here, sir”.

Do yourself a favour and make sure the deposit is refundable within 14 days (or other negotiated period). Get this in writing. Or, if you can afford to throw away 20k, go ahead and enjoy another free bottle of water.

8. Is Your Dream Condo Part of a Condotel?

A condo hotel, also known as a hotel-condo or a Contel, is a building, which is legally a condominium but which is operated as a hotel, offering short term rentals, and which maintains a Front Desk.

This little detail often comes as a post-build shock to those buying in the early stages of construction. It should be stipulated in the contract but is easily missed or conveniently left out.

So what's the problem?

Well, unless you fancy herds of tourists around the pool, coach parties gathering for trips in the lobby, sex tourists shaking the floorboards at all hours and the perpetual feeling of staying in a hotel, I'd enquire as to how many, if any, of the condos in your block are to be set aside as hotel/short rent rooms.

Maybe you aren't bothered about living in a condotel, but it's worth asking about, and you really should be told if units are to be allocated for this purpose.

9. How Do You Feel About the Thai Construction Industry?

Low pay, poor safety standards, lack of equipment = sub-standard building

Thus far, this post has been all about the reddies, the wonga, the Benjamins, the best bang for your buck and how to make sure you don't waste your hard-earned money on a condo that's not right for you.

But what of the workers who build the condos?

What about the unscrupulous developers who cut every possible corner, including worker safety and paying below the minimum wage to unregistered immigrant workers?

It's rife.

I've been observing the building of a massive condo development near my home for the last year.

Every day I see the workers shipped in from their campsite/worker digs in what look like WW2 trucks, stuffed over capacity and the workers forced to endure the black smoke pouring out of the exhaust.

It's a painful sight.

To their credit, these men and women have built an amazing two building complex with very few power tools.

Usually armed with little more than a hammer and chisel, they scale the structure dangerously, day and night, rain come shine, to erect condos they themselves will never be able to afford – not that they'd want to pay such an extortionate amount of money for a tiny space in the middle of the sky.

Thinking about it, knowing what the materials cost and what they get paid, they're probably having a good laugh at us for paying so much!

But seriously…

When you employ the cheapest labour you can get, based solely on the fact that the workers don't have the qualifications to ask for more, or the voice to be treated fairly, and you give them the bare minimum of tools, making it extremely difficult to do the job, it is, in my opinion, slave labour.

As for worker safety, you only need to look at the flip-flop-blessed feet navigating the wooden scaffolding to make a judgement on how much the Thai construction industry values the lives of its workers.

I'm not trying to start some sort of “farang union” here, but I believe in fair.

The workers should be given better training, better tools, more money and be better protected by health and safety standards.

I don't know about you but it makes me feel uncomfortable seeing people treated this way, and a free Samsung Galaxy and a couple of bottles of water won't make me forget these facts.

In Summary

Buying a condo isn't a bad thing. If you know exactly where you want to live in Thailand and have the cash, then why not.

If you're buying with a view to living in it for the next 25 years, then you will likely make good on the investment versus what you would have paid in rent.

It could be difficult to sell, though. Always bear that in mind.

It's a buyer's market and you probably won't make a profit. If you suddenly need to leave Thailand, or want to move area, a quick sale will likely be to an investor at a below market rate.

The key takeaway is to not rush in. Renting is cheap in Thailand, and you're spoilt for choice when it comes to condos. Take your time. Rent a while and live in a few different areas before making a decision.

Whether you're looking to buy or rent a property, I recommend using PropertyScout.

There are other websites where you can search for property, but PS offers an international service, provided in English with Western standards. They don't charge a finder's fee, either. They take their fee from the landlord/seller.

They have over 270,000 properties on their books.

+ View property on PropertyScout here

——

Got a condo-buying experience to share? I'd love to hear about it below in the comments section.

GET MY NEWSLETTER

Join thousands of others who receive my monthly roundup of content & insider tips on how to survive & thrive in Thailand.

• Share it
• Tweet it
• Pin it
• Email it

Last Updated on August 30, 2022

• 

  Buying Property in Thailand: A Straight-Talking Guide

• 

  How to Lease Land in Thailand: A Foreigner's Guide to the…

• 

  The Tabien Baan (Yellow Book) Guide for Expats in Thailand