Include a condo investment strategy. What do I need to know if I don't want to ‘stick to the doi
ofInvest in a condoIt is one of the most popular forms of investment for young investors, thanks to its ease of management and great earning opportunities, but without careful planning, novice investors may be in a situation called ‘addicted‘, meaning that the property does not add value or cannot be rented out as expected, which is what investors want to avoid. This article will introduce you to the key strategies for investing in condos for profit without risking it.
1. Choose a location with high potential
Location is the most important factor to consider, no matter how good the condo is. If the location is bad, the demand for buying or renting will be low, making the condo investment high risk. Before deciding to buy a condo, it is important to carefully study the location, focusing on the location that is likely to grow, such as near the skytrain, near shopping malls, educational institutions, and medical facilities. In addition, it is worth checking whether other projects in the same area have a buy-sell price or rental rate to evaluate the value.
Examples of high potential locations in Bangkok include Chatuchak, Ratchadaphisek, and Thonglor, a convenient lifestyle and travel area with opportunities to generate returns in both rent and resale in the future.
2. Set clear investment goals.
You must have a clear goal of what you want to invest in the condo, such as renting, resale in the future, or creating value from the decoration and renovation of the condo, because each goal will have a different investment method. If you want to rent the condo, you should choose a condo that is suitable for the target group of tenants, such as a one-bedroom condo for student tenants or office workers, but if you focus on resale, you should choose a condo that is likely to increase in price in the future.
Tip: Investment in a condo for rent should consider a rental yield. Typically, the optimum rental yield is 5-7% per year.
3. Study the burden of related expenses.
In addition to taking into account condo prices, remember that condominiums have monthly and annual costs, such as common fees, insurance, and maintenance fees, which should be factored into the cost of condo investment. Choosing a condo that has too high common fees can affect its long-term return, so before buying a condo, it's a good idea to check these details carefully.
A word of advice: compare common fees for condos in the same area to determine their suitability. Do not choose condos with a common fee that is more than 10% of the monthly rent.
4. Analyze market trends
The success of condo investments depends on monitoring and analyzing current and future market trends, such as the rate of increase in sales prices, changes in demand for buying and renting. If the condo market in some areas becomes saturated, it may be a bad sign for new investors, but if there is a metro or shopping mall project under construction nearby, it may cause a price spike in the future. Keeping up with market news and trends is not to be overlooked.
Resources to follow: real estate news websites, research reports from real estate consulting firms, and information from the Department of Land.
5. Diversify by choosing to invest in multiple projects.
If you have a large enough budget, investing in multiple condos and diversifying risk in different locations can help reduce risk, because if one project has another problem, it may still generate ongoing income, such as investments in both the downtown zone and in developing suburbs.
Example: Invest in one condo close to the city skytrain station to focus on renting and one in a high-growth suburban location awaiting future value addition.
Successful investment in a condo without being addicted to it requires detailed planning and research. Whether it's choosing a good location, setting clear goals, considering cost burdens, tracking market trends, and properly distributing risk. If investors can follow these strategies, the chances of success in condo investment will be higher and they won't have to risk the ‘addictive‘ situation that no one wants to experience in the real estate industry.