Is it Worth Buying a Condo in Pattaya

7 months ago

Risk and Reward, Rental Income, Real Estate, Property Management, Property Investment

Buying a condo in Pattaya can be an attractive opportunity for additional passive income. Condos can usually be bought at relatively low prices and owners won’t have to worry about many maintenance issues. However, some drawbacks need to be taken into consideration. For example, condos can have some monthly fees that have the potential to increase significantly and unpredictably. Also, financing for condos can be difficult to obtain.

This article is based on the Rental Return Analysis for buying a condo in Pattaya and then renting it. At the right time and in a perfect setting, condos can make very good investments. However, before investing, you need to know what you’re getting yourself into. Below is a guide that can help you determine if buying a condo is the right choice.

Why Are Condos Amongst the Best Investment Properties?

As mentioned, there are both positive and negative factors to consider when buying a condo property in Pattaya. Reasons to invest include:

Low Cost

In most real estate markets in Thailand, the prices of condos are much lower than the prices of single-family properties. For instance, you could find a rentable condo to buy in Pattaya for about $60,000, whereas a rentable single-family home would cost around $120,000. When it comes to real estate investments, you need to cross the first cost barrier, and buying a condo is one of the most affordable ways to get you started.

Good Locations

Most of the time, condos are found in areas with a shortage of multifamily and single-family rentals. Vacation destinations and downtown locations have many condos and fewer freestanding properties for residents. When doing your Rental Return Analysis, make sure to consider which locations provide the most value.

Low Maintenance

Condos usually come with some additional fees. However, they typically don’t have as many maintenance expenses as multifamily and single-family investment homes.

New condos in Thailand can be an investment opportunity.

New condos in Thailand can be an investment opportunity.

Fewer Individual Expenses

The fees for a condo usually cover the monthly or yearly expenses that need to be paid. Depending on where the unit is located, the fees or services might include garbage collection, pest control, building insurance, and other expenses.

What Are the Drawbacks to Investing in a Condo?

A Rental Return Analysis must include the negatives too, as every investment involves risk. Buying a condo in Pattaya is no exception to this rule. When the potential drawbacks outweigh the positives of buying, it may be best to look at other investments. Here are some of the negative aspects to consider:

Fees for Condo Association

Most condos are enrolled in a homeowners association (HOA). This association charges monthly fees, which can often be quite high. For example, condos in beach towns could have an $825 monthly association fee because of the popularity of the location. Such fees can be appropriate, but only when they cover something important, like regular maintenance or security. Large fees can shock the buyer, who might think they have covered all expenses. If there is a major renovation in the condo complex plans, such as new windows or additional landscaping, the condo association might impose a special assessment to cover this. This is aside from the usual fees.

Landlord handing roomkey to tenant.

Difficulties with Financing

Getting a mortgage to buy a condo in Pattaya can be much more difficult than financing multifamily or single-family properties. For instance, conventional lenders usually lend on the condition that the building is occupied at 50% minimum capacity. Also, possible conditions for lending include the property’s homeowner’s association having no litigation role and the property having a low delinquency rate. Some condos are sold at the lowest prices because it’s very difficult or impossible to get financing on them.

Rental Restrictions

If you have decided to buy a condo in Pattaya, ensure that you can rent it out in the way you intend. In some condos, renting is not allowed at all, whereas others come with some restrictions on renting. For example, some buildings only allow rental of condos to begin a minimum of one year after they are bought.

Slower Appreciation

Although condos are usually suitable for investors, their value usually appreciates slower than multifamily and single-family units. Don’t forget to consider appreciation when completing the Rental Return Analysis.

The Return Rental Analysis Will Help You to Decide

Responsible property investment requires analysis.

A Return Rental Analysis is necessary to determine if buying a condo in Pattaya makes sense. Making a property investment is an important decision, and you need to consider additional fees. You need to ensure that your acquisition will generate cash flow. You also need to take maintenance and other costs into consideration. There are no perfect guidelines for buying a condo, but if you set aside at least 10% of the rent, then you can cover the vacancies. Another 10% would help you with covering special assessments and any maintenance costs.

Here is a suggested Return Rental Analysis for your condo's potential for cash flow: Buying a condo priced at $100,000 and making a down payment of 20% on a mortgage for 30 years at the 4.5% interest rate would bring you a monthly association fee of $250. The unit should be expected to have a $1,100 monthly rent, and the insurance and property taxes expenses should be at $600 - $1,200 per year.

If the unit is occupied all the time, you won’t have to pay special assessments or maintenance expenses yourself, so your cash flow will be higher. When making the Return Rental Analysis for buying a condo, you must consider the future cash flow realistically. Don't only consider the ideal situations. Consider the best and worst-case scenarios in order to be well prepared.

Partner with Pearl Property Pattaya

If you’ve done your Return Rental Analysis and you feel that a condo for sale in Pattaya, Thailand, is the right investment opportunity for you, visit Pearl Property Pattaya to see the wide range of condos available and to answer any questions you may have.

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