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Buying a Condo with High Return on Investment in Hua Hin, Thailand

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condo, investment, hua hin, thailand

If you are contemplating investing in the booming real estate sector in Hua Hin Thailand, you might ask yourself: is buying a condo for investment a smart idea?

For those of you not familiar, a condo is like a hybrid between a house and an apartment; it is a property that a person can buy and own outright. Unlike houses which sit on land, there are no restrictions on foreigners owning them in the Land of Smiles. This alone makes them a highly attractive prospect for anyone looking for a primary home, weekend getaway spot, retirement base or investment property.

To find out if buying a condo with high return investment in Hua Hin, Thailand is a smart move; you must consider the pros and cons of such a move from every angle. And that is precisely what we are going to do now! Let us look at the top four benefits (pros) and drawbacks (cons) of buying a condo for investment in Thailand.

Pros of Buying a Condo for Investment in Hua Hin Thailand

1] Affordability

Generally speaking, it is cheaper to buy a beach side condo than other types of real estate in Thailand, such as a detached home or city apartment. However, you would do well to consider property values in the neighbourhood, the cost of living in the area, and HOA (Homeowners Association) fees when tallying up final costs.

2] Income

As mentioned above, condos as investment properties can potentially yield a good return on investment because they have the potential to generate monthly rental income. This is especially true if you invest in a real estate market with high demand for condos. For example, a beachfront condo in Hua Hin may fetch tens of thousands of baht per week during the summer as a vacation property. Smart investors will work in their projected monthly rental income into the cost forecast.

3] Location

Condos are hugely popular in seaside areas like Hua Hin, which are considered luxury locations in the Thai real estate investing business. In general, such properties provide an attractive lifestyle for residents and/or high return on investment. For example, buying a home in such a location might cost you millions of baht, and you would have to charge a pretty hefty monthly rental fee to break even (turning off prospective tenants in the process). However, a condo in the same location could cost a third of the price and, when setting a fair amount for rent, generate a reasonable monthly income.

4] Maintenance

For anyone busy with work, travel, raising children, illness or does not want the hassle of building maintenance, this is a significant benefit of buying a condo. Property owners are not directly responsible for maintaining the building, common areas or grounds. You do not have to worry about mowing the grass, cleaning the pool, fixing the roof, painting the exterior, etc. But, keep in mind that you will be subsidising these maintenance expenses in your HOA fees (more on this in the following section).

Cons of Buying a Condo for Investment

1] Fees

Condos offer residents amenities and services above and beyond those of ordinary homeowners – swimming pool, fitness centre, 24/7 security, libraries, games room, etc. However, as great as having these are, are you willing to pay for them? A condo owner has to pay, via monthly HOA fees, in order to become a member of the community. These fees can range from under Baht 5,000 to as much as Baht 50,000 per month depending on the quality, location and complexity of the project you buy into.

2] HOA’s Rules and Restrictions

HOAs wield considerable power. As such, make sure you become familiar with their rules and regulations before becoming part of the community. For example, check that your condo can indeed be rented out before you buy. Many HOAs have strict rules against renting (particularly via short-term rental sites like Airbnb) and do not allow it at all. Others have what is known as a “rental quota” – this controls the building’s ratio of rented condos vs owner-occupied ones.

3] Appreciation

As mentioned earlier, even though buying a condo for investment is cheaper than buying a detached house, keep in mind that they appreciate at a much slower rate. Why? Because condo owners only own the inside of the unit (living space) and not the land (public area) on which it sits. In the real estate business, the land is the critical ingredient in driving up (or down!) the value of a property.

This issue isn’t affected by location at all. So whether you’re planning on getting a unit in some new condos in Markham, all the way in Canada or some nearby condo communities in Hua Hin District, this might be a possible concern for you.

4] Financing

Also keep in mind that obtaining a bank loan to buy for a condo is much harder than a detached home. Lenders will typically require a 20-25% down payment, and some might even require that you live in the condo for at least one year before renting it out. In addition, lenders will not finance buying a condo for investment that is in a building currently undergoing litigation or not EIA approved.

Should You Invest in a Condo?

Overall, condos, particularly seaside ones in coveted locations like Hua Hin, do make good investment sense. However, you must proceed with caution. Be a smart real estate owner and perform an in-depth market analysis to evaluate the profitability of investing in a condo. Smart real estate investing is all about choosing the right investment to build your portfolio. A condo with high return investment in Hua Hin, Thailand could be the right move for you, but do your homework first.