Tips for property investors

Before buying any property, the first question any potential buyer must ask is the reason for the purchase. Are you planning on buying as your primary residence, a holiday home or as an investment? In each case, the thought process that you need to go through will be quite different.

If you are buying purely as an investment, it is important to "think with your head and not with your heart". Rather than basing your purchasing decision upon what you personally would like to buy, you need to clear your mind and focus purely upon the numbers, as in many cases the best investment properties could very well be something completely different from the type of property you would choose personally.

One of the first decisions an investor must make is an "exit strategy", as this will have a major effect upon deciding what type of property to buy. Someone who is planning on keeping a property indefinitely and is purchasing primarily for receiving a regular income will have a different strategy from someone who is looking to make a quick return by "flipping" a property _ for example, buying a property at an early stage and then selling either during the construction process or shortly after completion.

You've probably heard the old cliche{aac} that the three most important factors to consider when purchasing property are "location, location and location". Cliche{aac} or not, this is still very true, as it is the element that will have the greatest effect on the returns on your investment. Put yourself in the shoes of the person who you expect to rent the property or buy it from you when you decide it is time to sell. Which factors are going to be of most importance to them? If you are buying in Bangkok, then some of the most important factors to consider are how prestigious the area is, ease of access to transport to the inner city, closeness to shopping malls and other entertainment areas. If you are buying in Pattaya, then the most important factors will be how close to the best beaches the development is, proximity to the city centre and whether there are sea views from the units.

Remember that real estate follows the basic laws of supply and demand _ as is the case with all commodities. As a result, it is always a wise investment strategy to buy in developments which are as rare as possible. For resort cities such as Pattaya, this will be projects located right on the beach. For major cities, they will be in the city's most upmarket areas, as close as possible to the main business and entertainment districts, where there is little land remaining for new developments.

For those looking at optimising their rental income, attention should be paid to the yields that are possible to achieve from the property, which are calculated by dividing the anticipated annual rental income by the purchase price. Raimon Land publishes this information in its annual Condominium Focus reports. Generally speaking, any development offering potential rental yields of more than 5% can be considered an excellent investment.

Construction quality and the level of maintenance should be other major considerations for an investor looking for long-term appreciation. A well-built and well-maintained development is an asset that will continue to appreciate for decades. Poorly constructed and maintained buildings will soon look tired and neglected, with the result that prices will stop increasing at some point and could even fall as newly built developments appear more attractive to buyers.


Prepared by Raimon Land Plc