Thailand Short-Term Rentals 10.25% Yield
Member since 2023 · 26 posts · 13 votes
Thailand Short-Term Rentals 10.25% Yield
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 996 posts · 1k+ votesI don't always spend $80K with strangers on the internet from across the world, but when I do it's with a member that has only 11 posts, all of which are them trying to advertise.
No wait, that's not right.
Cosmic Vacations4.9177 Reviews
62 Replies
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @James Hamling:
Quote from @Priti Donnelly:
Because this is a commercial asset class, the appreciation of the suites is based on occupancy rates in the area. In this area in Thailand, the average annual capital gain from 2009 to 2020 sat at around 5.43%. What it will be upon completion is speculative, but not likely less than 5.43%. Yes, UK, US, Australia, Canada, would be better for those seeking capital gains, but again highly speculative. This market is more for affordability, higher yield and stable returns. These suites can be used for primary living and when the suite owner is not there, Ramada will rent it out to generate income. Buyers have been a combination of over 50 planning for retirement, average mom and pops, Australians, Japanese, Canadians, Russians. Chinese buying market is now opening up. Yes, it is more of a lifestyle purchase.
And protests, political upheaval.... So your just ignoring the MASSIVE political upheaval ongoing and just assuming appreciation? What about the PM issue ongoing? The former PM who just returned due to political upheaval was in exile for 15+ years after being ousted in a military coup in 2006. This does not sound like stability to my western ears.
Thailand is anything but stable, so projecting forward earnings and appreciation is ludicrous without HEAVILY weighing this factor to things. It's all in transition, BIG transition, so "results may vary".
LOL, there're more political upheaval in USA now rather than in Thailand or any other Asian country.
Also I feel lot more safer to walk in Bangkok at night compare if I walk in San Francisco or Minneapolis at night.
Many more Asian cities are now feel more like "first world country", while US feels more like downgraded into third world country. Even the US bond is downgraded by Fitch due to political stuffs. Asia is no longer like in the 1970s LOLThis seems like to be a long trend from now on.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Priti Donnelly:
Because this is a commercial asset class, the appreciation of the suites is based on occupancy rates in the area. In this area in Thailand, the average annual capital gain from 2009 to 2020 sat at around 5.43%. What it will be upon completion is speculative, but not likely less than 5.43%. Yes, UK, US, Australia, Canada, would be better for those seeking capital gains, but again highly speculative. This market is more for affordability, higher yield and stable returns. These suites can be used for primary living and when the suite owner is not there, Ramada will rent it out to generate income. Buyers have been a combination of over 50 planning for retirement, average mom and pops, Australians, Japanese, Canadians, Russians. Chinese buying market is now opening up. Yes, it is more of a lifestyle purchase.
And protests, political upheaval.... So your just ignoring the MASSIVE political upheaval ongoing and just assuming appreciation? What about the PM issue ongoing? The former PM who just returned due to political upheaval was in exile for 15+ years after being ousted in a military coup in 2006. This does not sound like stability to my western ears.
Thailand is anything but stable, so projecting forward earnings and appreciation is ludicrous without HEAVILY weighing this factor to things. It's all in transition, BIG transition, so "results may vary".
LOL, there're more political upheaval in USA now rather than in Thailand or any other Asian country.
Also I feel lot more safer to walk in Bangkok at night compare if I walk in San Francisco or Minneapolis at night.
Many more Asian cities are now feel more like "first world country", while US feels more like downgraded into third world country. Even the US bond is downgraded by Fitch due to political stuffs. Asia is no longer like in the 1970s LOLThis seems like to be a long trend from now on.
I like ya buddy, but I think you got this one pegged all wrong.
Thailand has a looming risk of yet another coup. N.Korea keeps lobbing more missiles and threats putting S.Korea into a state of "do we get nuked today?". Taiwan awaits a Chinese invasion. Japan and Russia at threat of armed conflict over who owns what island. Malaysia is in a protracted war with terrorists/rebels/ whatever want to call them. India and China at each others throats and occasionally fighting likes it 1695. Asia is anything but stable my friend.
The world today sit's as a tinder box just as it did pre-WWI. Take your pick of where to pull the thread and it all springs loose like some nightmarish jack-in-the-box.
There is a lot of scenarios where things completely melt down in Asia, and a very limited few which go against history because it means politics getting smart, and putting the middle-class first. This stands as true in Asia as it does Africa or the Americas. Only thing that changes is what the corrupt power brokers look like.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Priti Donnelly:
Because this is a commercial asset class, the appreciation of the suites is based on occupancy rates in the area. In this area in Thailand, the average annual capital gain from 2009 to 2020 sat at around 5.43%. What it will be upon completion is speculative, but not likely less than 5.43%. Yes, UK, US, Australia, Canada, would be better for those seeking capital gains, but again highly speculative. This market is more for affordability, higher yield and stable returns. These suites can be used for primary living and when the suite owner is not there, Ramada will rent it out to generate income. Buyers have been a combination of over 50 planning for retirement, average mom and pops, Australians, Japanese, Canadians, Russians. Chinese buying market is now opening up. Yes, it is more of a lifestyle purchase.
And protests, political upheaval.... So your just ignoring the MASSIVE political upheaval ongoing and just assuming appreciation? What about the PM issue ongoing? The former PM who just returned due to political upheaval was in exile for 15+ years after being ousted in a military coup in 2006. This does not sound like stability to my western ears.
Thailand is anything but stable, so projecting forward earnings and appreciation is ludicrous without HEAVILY weighing this factor to things. It's all in transition, BIG transition, so "results may vary".
LOL, there're more political upheaval in USA now rather than in Thailand or any other Asian country.
Also I feel lot more safer to walk in Bangkok at night compare if I walk in San Francisco or Minneapolis at night.
Many more Asian cities are now feel more like "first world country", while US feels more like downgraded into third world country. Even the US bond is downgraded by Fitch due to political stuffs. Asia is no longer like in the 1970s LOLThis seems like to be a long trend from now on.
I like ya buddy, but I think you got this one pegged all wrong.
Thailand has a looming risk of yet another coup. N.Korea keeps lobbing more missiles and threats putting S.Korea into a state of "do we get nuked today?". Taiwan awaits a Chinese invasion. Japan and Russia at threat of armed conflict over who owns what island. Malaysia is in a protracted war with terrorists/rebels/ whatever want to call them. India and China at each others throats and occasionally fighting likes it 1695. Asia is anything but stable my friend.
The world today sit's as a tinder box just as it did pre-WWI. Take your pick of where to pull the thread and it all springs loose like some nightmarish jack-in-the-box.
There is a lot of scenarios where things completely melt down in Asia, and a very limited few which go against history because it means politics getting smart, and putting the middle-class first. This stands as true in Asia as it does Africa or the Americas. Only thing that changes is what the corrupt power brokers look like.
hahahahaha I am laughing a lot, in the street of Hanoi or Bangkok nobody care about all that stuff James :) they are just still eat noodle nicely ; while in SF and Hollywood they have fentanyl-party in front of Federal building. Not too mention the California gov. created new young thieves generation since stealing is allowed now especially if it's done by small kid.
I would guess the Asia gov. still has some sort of "rationale" in their mind, not our local leftish gov LOL The 1980s era was way over ... maybe Bangkok is the new future LOL
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Priti Donnelly:
Because this is a commercial asset class, the appreciation of the suites is based on occupancy rates in the area. In this area in Thailand, the average annual capital gain from 2009 to 2020 sat at around 5.43%. What it will be upon completion is speculative, but not likely less than 5.43%. Yes, UK, US, Australia, Canada, would be better for those seeking capital gains, but again highly speculative. This market is more for affordability, higher yield and stable returns. These suites can be used for primary living and when the suite owner is not there, Ramada will rent it out to generate income. Buyers have been a combination of over 50 planning for retirement, average mom and pops, Australians, Japanese, Canadians, Russians. Chinese buying market is now opening up. Yes, it is more of a lifestyle purchase.
And protests, political upheaval.... So your just ignoring the MASSIVE political upheaval ongoing and just assuming appreciation? What about the PM issue ongoing? The former PM who just returned due to political upheaval was in exile for 15+ years after being ousted in a military coup in 2006. This does not sound like stability to my western ears.
Thailand is anything but stable, so projecting forward earnings and appreciation is ludicrous without HEAVILY weighing this factor to things. It's all in transition, BIG transition, so "results may vary".
LOL, there're more political upheaval in USA now rather than in Thailand or any other Asian country.
Also I feel lot more safer to walk in Bangkok at night compare if I walk in San Francisco or Minneapolis at night.
Many more Asian cities are now feel more like "first world country", while US feels more like downgraded into third world country. Even the US bond is downgraded by Fitch due to political stuffs. Asia is no longer like in the 1970s LOLThis seems like to be a long trend from now on.
I like ya buddy, but I think you got this one pegged all wrong.
Thailand has a looming risk of yet another coup. N.Korea keeps lobbing more missiles and threats putting S.Korea into a state of "do we get nuked today?". Taiwan awaits a Chinese invasion. Japan and Russia at threat of armed conflict over who owns what island. Malaysia is in a protracted war with terrorists/rebels/ whatever want to call them. India and China at each others throats and occasionally fighting likes it 1695. Asia is anything but stable my friend.
The world today sit's as a tinder box just as it did pre-WWI. Take your pick of where to pull the thread and it all springs loose like some nightmarish jack-in-the-box.
There is a lot of scenarios where things completely melt down in Asia, and a very limited few which go against history because it means politics getting smart, and putting the middle-class first. This stands as true in Asia as it does Africa or the Americas. Only thing that changes is what the corrupt power brokers look like.
hahahahaha I am laughing a lot, in the street of Hanoi or Bangkok nobody care about all that stuff James :) they are just still eat noodle nicely ; while in SF and Hollywood they have fentanyl-party in front of Federal building. Not too mention the California gov. created new young thieves generation since stealing is allowed now especially if it's done by small kid.
I would guess the Asia gov. still has some sort of "rationale" in their mind, not our local leftish gov LOL The 1980s era was way over ... maybe Bangkok is the new future LOL
I mean, come on, we both know CA is basically the toilet of the Americas, dotted with some "safe zones". So yeah, if we want to talk apples to apples with San Fran or LA I guess we got to go to what, Sau Paulo....
The vast majority of the US is not like CA and especially not like San Fran..
- 3yAlex ScattareggiaPro MemberInvestor · Cabo San Lucas, Mexico · Member since 2023 · 150 posts · 139 votes
Lol I have somehow missed out on this very entertaining thread.
As a fellow international investor, I can promise you that there are much lower risk options, with substantially higher yield, closer to the States.... where you actually own the asset.
To weigh in on the lease vs own option; My primary market had a several areas which were exclusively leaseholds when I started out. Be very leery of any promise of appreciation on these kinds of deals. I have no prior experience with any Asian market but the idea that these can be sold at a profit are in my experience untrue. Every year the property will depreciate in correspondence with the length of the lease. Yes, this might be somewhat offset by inflation, market appreciation. but what you are buying is the hope of cash flow. The majority of RE ownership benefits are generally not a part of lease deals.
- 3yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
As @Alex Scattareggia mentioned, this has become an entertaining thread but, beyond that, it shows the brilliance of the BiggerPockets community coming together as a whole.
This whole thread started as an against-the-rules sales pitched. Instead of reporting the post, we all individually and collectively managed to turn this thread into an educational one. Ironically, this should ensure that the rules are respected better than if we'd reported the post as anybody who wants to pitch a deal against the rules might reconsider after going through this thread.
It seems that the promoting party (after talking to the developer?) has finally confirmed that we're talking about a 60-year lease and that what you're buying is actually an income stream, nothing else. I still don't understand how anybody can entertain the existence of a capital gain when you don't own the asset, as much as using the term "ownership" for a lease is misleading . The reality is that the value of a lease goes down to 0 as the expiry date approaches.
Therefore, the 10.25% return is misleading. I did a quick and dirty calculation earlier in this thread and, assuming constant hotel rates throughout, I got a 1.69% return so you'd even have a negative inflation-adjusted return. Why would you make such an investment when you can buy hassle-free a US 30 year treasury bond and make 4.373% as we speak?
The people who buy these leases probably genuinely believe they're buying a property and they're gonna make a 10.25% return if they're not told otherwise by the developer, which they probably won't. The fact that the value of their investment goes to 0 as the lease expiry date approaches is probably not part of the developer's marketing material. They sadly aren't on BiggerPockets and won't think of doing the digging that we did.
@Carlos Ptriawan obviously, I'm not in your shoes but I still don't understand your interest in investing in Thailand in general for the following reasons:
1. Because you can't own land by law as a foreigner, any investment you make there will eventually go to 0, whereby it can only be low return.
2. Why would you want to "own" property there for investment anyway, even if you want to live there? If you think like an investor, you want to rent in a place where renting is much cheaper than owning (like Thailand) and own property where owning is cheaper than renting.
3. I'm not going to go into the debate about whether the US or Thailand/Asia is "better". Both you and @James Hamling brought some interesting points. One thing I know is that, since I was born, I've heard the story of Asia surpassing the US and, as things stand today, it's not likely to happen anytime soon. And especially, since American and Canadian corporations are moving their factories from Asia to Mexico as part of a huge trend called nearshoring. While a country like Singapore has done pretty well for itself, Thailand hasn't been living up to this potential, partly because of corruption and political instability. Oh and have we forgotten about the crash of the Thai Baht in 1998 that wreaked havoc on the local economy? Yes, Bangkok and Hanoi look shiny at first glance but do you really think that the lifestyle is better in the countryside in Thailand or Vietnam than in the US?
4. Another impediment to Thailand's development is the fact that money goes where it's treated best. Why would you want to invest your money in a country the legal system of which considers foreigners as second-class if you don't have to? If you ever have to go to court against a Thai individual or entity, do you think you have any chance of winning?
- Member since 2023 · 26 posts · 13 votes3y
Thanks everyone for your input. Your various perspectives, questions, concerns have been eye-opening and appreciated, given my post shouldn’t have even been here in the first place. I won’t be contributing further to this thread. You are welcome to contact me directly.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Mike Lambert:
As @Alex Scattareggia mentioned, this has become an entertaining thread but, beyond that, it shows the brilliance of the BiggerPockets community coming together as a whole.
The people who buy these leases probably genuinely believe they're buying a property and they're gonna make a 10.25% return if they're not told otherwise by the developer, which they probably won't. The fact that the value of their investment goes to 0 as the lease expiry date approaches is probably not part of the developer's marketing material. They sadly aren't on BiggerPockets and won't think of doing the digging that we did.
@Carlos Ptriawan obviously, I'm not in your shoes but I still don't understand your interest in investing in Thailand in general for the following reasons:
1. Because you can't own land by law as a foreigner, any investment you make there will eventually go to 0, whereby it can only be low return.
Basically that's my core question, I also wondering if Priti can decipher the Thailand market structure, but obviously it's not that too enticing. In Thai neighbors, some country already offered some new program like a property that can be sold for leasehold or for Fee Simple usage, with different pricing tier structure. There's also package offering granting citizenship when one invest real estate into some countries. - Member since 2023 · 4 posts · 1 vote3y
Blatant sales efforts (+nondisclosure aside) - I am curious about the findability of these types of international assets. Who provides financing for something like this? local banks? intl banks with branches in both the US and Thailand?
- 3yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
This isn't specific to Thailand but applies worldwide:
1. You won't get a mortgage for a property in one country granted by a bank in another country. So no mortgage from a US bank in a foreign country.
2. Only local banks will provide a mortgage. A branch of a US bank overseas isn't a separate entity so it won't grant a mortgage. A subsidiary of a US bank could in theory do it provided that they legally can and have been approved. It's not in their interest to be in the local mortgage business so they won't do it. There are notable exceptions like Canada-based Scotia Bank in certain locations across the world but these subsidiaries are local banks for all intents and purposes.
Conclusion: local banks when available. Speaking of which, bear in mind that the general rule is that a foreigner won't get a mortgage from a local bank if the foreigner doesn't earn (enough) income in the country. There are exceptions to that rule though. Not sure about Thailand.
Bear in mind that, when you can get a mortgage locally, it'll be at local conditions, which oftentimes will be (very) different from US conditions and they're harder to get than in the US.
In certain countries and certain cases, if you buy pre-construction, the developer will give you some financing. That's the way we bought all our properties in Mexico but it's the exception rather than the rule. But, when you get it, you can get yourself a killer deal.
Hope this helps.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Mike Lambert:
This isn't specific to Thailand but applies worldwide:
1. You won't get a mortgage for a property in one country granted by a bank in another country. So no mortgage from a US bank in a foreign country.
2. Only local banks will provide a mortgage. A branch of a US bank overseas isn't a separate entity so it won't grant a mortgage. A subsidiary of a US bank could in theory do it provided that they legally can and have been approved. It's not in their interest to be in the local mortgage business so they won't do it. There are notable exceptions like Canada-based Scotia Bank in certain locations across the world but these subsidiaries are local banks for all intents and purposes.
Conclusion: local banks when available. Speaking of which, bear in mind that the general rule is that a foreigner won't get a mortgage from a local bank if the foreigner doesn't earn (enough) income in the country. There are exceptions to that rule though. Not sure about Thailand.
Bear in mind that, when you can get a mortgage locally, it'll be at local conditions, which oftentimes will be (very) different from US conditions and they're harder to get than in the US.
In certain countries and certain cases, if you buy pre-construction, the developer will give you some financing. That's the way we bought all our properties in Mexico but it's the exception rather than the rule. But, when you get it, you can get yourself a killer deal.
Hope this helps.
In theory, the exception is bank like HSBC. Say you're American citizen with high account balance, you could literally buy UK or UAE property using HSBC Mortgage International Service.
- 3yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
Quote from @Carlos Ptriawan:
Quote from @Mike Lambert:
This isn't specific to Thailand but applies worldwide:
1. You won't get a mortgage for a property in one country granted by a bank in another country. So no mortgage from a US bank in a foreign country.
2. Only local banks will provide a mortgage. A branch of a US bank overseas isn't a separate entity so it won't grant a mortgage. A subsidiary of a US bank could in theory do it provided that they legally can and have been approved. It's not in their interest to be in the local mortgage business so they won't do it. There are notable exceptions like Canada-based Scotia Bank in certain locations across the world but these subsidiaries are local banks for all intents and purposes.
Conclusion: local banks when available. Speaking of which, bear in mind that the general rule is that a foreigner won't get a mortgage from a local bank if the foreigner doesn't earn (enough) income in the country. There are exceptions to that rule though. Not sure about Thailand.
Bear in mind that, when you can get a mortgage locally, it'll be at local conditions, which oftentimes will be (very) different from US conditions and they're harder to get than in the US.
In certain countries and certain cases, if you buy pre-construction, the developer will give you some financing. That's the way we bought all our properties in Mexico but it's the exception rather than the rule. But, when you get it, you can get yourself a killer deal.
Hope this helps.
In theory, the exception is bank like HSBC. Say you're American citizen with high account balance, you could literally buy UK or UAE property using HSBC Mortgage International Service.
It doesn't work like that. The bank isn't going to create a product for somebody just because they have money. HSBC UAE would have to be willing to be in the local mortgage business and get licensed to do it. And, even then, they might not offer the product to foreigners.
If you have a high account balance in the US, your HSBC US might give you a personal loan against your cash as collateral or HSBC UAE might give you one - if they offer that product (to foreigners) - against a guarantee from HSBC US, which would be back by your cash being held by HSBC US as collateral. There is no mortgage or financing involved so it's a cash purchase for all intents and purposes.
There are no exceptions.
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