Tips for Investors – is it just Location?

Before purchasing a property, your first question should be: why am I buying? Is it for my future primary residence? Or a vacation home? Or do I want to invest my money in a property?

If you consider purchasing a property solely as an investment, it’s important to “think with your head, not with your heart.” So, rational thinking? Yes and no. Base your decision on what you would personally buy for owner occupancy, but focus on numbers and location. 

One of the first things investors plan is their “exit strategy,” defining what they intend to do with the property in certain situations. This greatly influences the selection, or rather the type of property they wish to acquire.

Someone who aims to hold a property for an indefinite period and generate a regular income from it has different goals than an investor who is primarily interested in quick profit (such as through resale during the construction phase or shortly after completion).

You’re probably familiar with the old cliché about the three most important factors when buying a property: “location, location, location.” Cliché or not, it remains true. The location will have the greatest impact on the return from your investment.

Put yourself in the shoes of those interested in renting or purchasing your property. What decision factors will play the biggest role? Therefore, pay attention to the comfort the residential project offers, how prestigious and pleasant the surroundings are. Consider whether the city center is easily accessible, whether on foot, by car, or by public transport. This also applies to other conditions, such as proximity to hospitals, shopping centers, restaurants and other entertainment facilities, and, importantly for families with children, schools.

When investing in real estate, other factors also play an important role: proximity to the best beaches, sea views, or proximity to the city center and all the comfortable amenities.

You certainly know that the value of real estate is fundamentally subject to the laws of supply and demand. If demand is strong and supply is limited, prices are high. Conversely, in the case of weak demand with a large number of offers, low prices can be expected.

Therefore, it is always a wise investment strategy to invest in projects with unique features. In Pattaya and Hua Hin, it’s real estate projects with beachfront locations. In Bangkok, it’s projects that focus on a comfortable environment and proximity to business and entertainment districts, but also the limited availability of further land, which limits competition.

For investors looking to optimise their rental income, they should focus on the return that can be achieved with the property. The return can be simply calculated by dividing the net amount of annual rental income by the purchase price (yes, there are some extra expenses to consider). In general, it can be stated: all real estate properties in Thailand that have a rental yield of at least 5 to 6% can be considered a good investment. Based on my experiences in Hua Hin, 8% is definitely possible for excellent properties.

Building quality and facility maintenance are other important aspects for investors interested in long-term value appreciation. A high-quality and well-maintained property will consistently increase in value over decades. On the other hand, prices for properties built in inferior quality and giving an unkempt impression will stagnate and even fall at a certain point, especially when newly emerging projects appear more attractive to potential buyers and tenants.

Michael Vender
michael@immo-th.com
+66 61 525 9646

 

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