Property Investment: Investing by renting out a property

There are multiple types of investments, such as personal investment, bond or debenture investment, or passion investment. Today PropertyScout will introduce you to property investment, in which you can invest by renting out the property when you feel like passing it on.

The different types of property investment

Property investment is an interesting type of investment many are sure to be familiar with by now. In recent years, despite increasing competition of this type of investment due to new properties and developments debuting, it is undeniable this method of investment is worth every penny.

1. Investment on a daily rental basis

This method of investment benefits you in the form of regular rental payment such as a condo unit, a house for rent, or a warehouse, for example. This method is recommended for those who would like to make money full-time as well as investment in properties located in famous landmarks locally in Bangkok such as Phayathai or in other provinces such as Chiang Mai or Phuket. The reason why it is recommended to choose these locations is because tourists are greatly attracted, which then equals to increasing demand. You can also use a condo, commercial building, or even your house as a living space akin to Airbnb or Hostel.

2. Investment on a monthly rental basis

This method of investment is similar to the previous method in that this method allows the investor to make money, making this method just as popular as the previous. It is advised, however, that investors prepare backup money in advance to not be burdened in the future.

The following are suggestions for investors who would like to use this method for investing:

• Upon acquiring the property, the investor can redecorate the unit before renting out the property to help the tenants' decision in choosing to rent the property.
• Take note of the various factors to consider in choosing a property such as location, suitability, and the rental yield.

3. Speculation

This method of investment has proven to be popular with professional investors, allowing them to make profit in just a short period of time. Therefore, investors are expected to not only have the knowledge but also be an expert in the way of pricing within that location, with customers wanting to buy or rent the condo being their target customer. Moreover, these customers tend to miss out on news and updates, finding out afterwards that this development or project seems intriguing and would like to own or rent there, mostly well-located condos. Then the investor would buy the properly in an unusually reduced price or reside in a location that is sought-after in the market, assuming the price could possibly rise in the future. The following are types of speculation in property investment.

• Investing in a condo is an investment with short-term compensation, such as pre-emption investment. Once the condo development has begun reservations, there will be a one-month period of speculation by selling pre-emption certificates, which also doesn't exactly guarantee the investor complete property ownership rights. However, the unit will be placed on hold until property ownership rights are granted once down payments are completely fulfilled (usually 15-20% of the property's full price).
• The contract requires a fee of 50,000 - 70,000 baht.
• Recommended for those with lump sum or are prepared to make possible down payments, the latter of which averages between 6000-8000 per month.

4. Property Fund

The purpose of a property fund is for property investment and it is a closed end fund which will require registration as securities with the stock exchange of Thailand and is an investment through an asset management company in the form of a real estate fund. The goal of a property fund is to use the money gained from the sales for managing the invested real estate in order to receive returns in the form of rental or net profit from operations, rather than investing for development and resale.

• This method of investment in recommended for any new investors of all ages who are concerned about losses, as it is a relatively straightforward process which will guarantee continuous long-term compensation.
• There are many options to choose from when it comes to investing with real estate funds such as hotels or service apartments' office buildings. Once the real estate funds have managed and receive the rent from the investment, management fees will then be deducted before compensating in the form of dividend payment, averaging between 3-8%.

5. Renovation

This method is a low investment in favor of a surprisingly high compensation. When buying a brand new or second-hand room to list out for the next tenants, renovation is a surefire way to add more value to your property by renovating or making necessary maintenances as you would like.

Conclusion

We hope you found this article regarding property investment and the different recommended methods useful in your investment goals. Just make sure you have the right amount of money for the investment, choose the right method that suits you, and be prepared for additional payments such as contracts or property renovation/maintenance, and you will be able to make money off of your invested property in no time! In the meantime, let us know what you think in the comments below.

Got further questions? Contact us!

If you have any further questions regarding property investment, or just anything related to properties or real estate including buying, selling, or renting, please don't hesitate to speak up and contact us. Our property consultant team will be very happy to help answer your questions and concerns.