Why Invest in property? (English)

วันที่ 3 สิงหาคม 2551

Definition of an investor

An investor is a non-end user (a single person or several people) who wants to purchase shares, property, fixed interest and cash for a period of time and take the profit or value appreciation as a return on their investment. It's impossible to predict accurately how long is needed for an investment return but the investment return is always relative to the investment risk. Quite simply, the higher the risk, the higher the return and profit.

Part of the risk is in how much the value of an investment increases or decreases over a period of time. The return from an investment is the profit an investor makes from an increase in it's value.

Why Invest in property?
Tax Reduction Benefits (in some countries the interest paid on property will reduce the investor's personal income tax).
2. Property investment can give both rental yield and appreciation in value.
3. A property can be used as a second home or a holiday home
4. Property investment is a lower risk than most stock market investments

Types of return from property investment
1. Capital growth or capital gains
Capital growth is the increasing value of property over a period of time. It is believed that all property will increase in value over this period due to the economic status of the country and the location potential so these are the main factors to consider when deciding to invest. It is impossible to know how much the increase will be. It depends on several factors but the main advantage is that it's increasing no matter how fast or slow.
2. Rental income
Rental income is the monthly income a condo owner will receive from his tenant. Local rent prices are best researched by looking in newspaper classifieds, checking rental listings through agencies and by talking to local real estate agents.

What is 'Yield'?
Yield or rental yield is a term which is used to describe which property is a worthwhile investment primarily for rental income. Normally yield is the percentage of return with can be compared to an interest rate in a bank savings account. It is the percentage you get from the value of your property after expenses but before tax and can be a useful yardstick of whether property is over-valued or under-valued.

Yield is the gross annual rental income expressed as a percentage of the property purchase price. It can be calculated by dividing the annual rental income it generates by the price you paid for the property and multiplying that by 100 to get a percentage figure. This is what an investor can expect as a return on his investment.

The higher value of yield does not always mean that the property is a good investment as it may also bring with it risks. A potential property investor will have to carefully think about all factors before making a decision. If an investor is in doubt of the yield they will get they can compared it with other types of investments to make an actual comparison, or alternatively find a good property agent to take care of this.

The purpose of investing in property
1. To receive rental yield.
2. Purchase when not completed, and sell when completed.
3. Purchase to renovate and/or develop new projects such as investments in land, hotels, shops and other purpose built rentals.

What do investors buy?
There several types of properties foreigners can invest in but it has been our experience that most foreigners choose condominium investments, mainly because it is easy to find tenants and also because the maintenance fees are cheaper than those in a single townhouse or shop house. The benefit of buying a condominium is they often located in central Bangkok and it's easily let to foreigners and commuters and earn enough rent for the bank installments.

If you are a specialist investor you may want to invest in land development projects and build new apartments in good locations near local transportation hubs and universities, before selling it on to another investor. Alternatively an investor could build boutique hotels, or a resort near to a beach or tourist attraction and gain visitors seasonally. This may at first be a large investment but in the long term the asset value will be double or tripled depending on how well the investor chose the location.

Whether you are a condominium investor or a specialist investor Plus Property Agency can fulfill your requirements. We have a team that is expert in both residential and commercial business so please contact us to talk with one of our specialists in Thailand property investment. We will endeavour to find the most suitable investment for you with regards to your budget and your needs.

How to plan for a good property investment? What are the main considerations?

Whether you plan to purchase a property to let out or are buying real estate to renovate and sell later, you need to collect the relevant information, and complete your due diligence on your the investment. An investor needs to add up the costs from every single area of projected expenditure to be able to set up a realistic investment budget.

It is widely accepted that foreigners can invest in property abroad. Therefore it is crucial to study the market you will be investing capital into beforehand. Information can be found on the Internet as a secondary source, and good information can be gathered from local property agents but it is also advisable to visit the area and check the situation firsthand yourself. Please take your time when considering the factors related to property and also review the economic status in that particular market. It's worth learning and understanding the basic rules before making any decision