Real estate investing is one of the many ways that you can earn money, whether passive or active income. So, if you want to invest in Phuket luxury apartments and other properties, it’s important that you know the basics before you dive in. The more you know, the less likely you are to make costly mistakes.
Is the market ripe for investing?
The local real estate market can be affected by economic downturns, changes in interest rates, and other risks that an investor should avoid. It’s important to conduct comprehensive research of the local market before you invest in anything.
- Keep an eye out for investment trends, interest rates, property prices, and the market performance in different regions and locations.
- Analyse local rental rates, supply and demand, a neighbourhood’s demographics, and any current and future development plans.
- Based on the data gathered, you can then formulate a sound investment strategy that will guarantee profit with minimal risk.
Do you know the difference between buying and investing?
- Buying real estate is often used when purchasing your primary residence, which often involves personal and emotional decisions.
- Buying real estate isn’t always considered a good investment, depending on the location and ongoing expenses.
- Investing in real estate is designed to help you build wealth, often requiring making decisions based on a business and financial sense.
- It’s important to analyse potential returns against all investment risk before investing in a property.
- You don’t always have to buy a physical property when investing in real estate. Real estate investment trusts (REITs) exist for this particular reason, but you have to decode every factor involved to make the best investment decision.
Do you know the type of property you want to invest in?
Not all properties are created equal, and one could earn you profit, while the others may bring losses and risks.
- You may have to choose between two main categories—commercial and residential property, which are then made available as either established or new builds.
- Rental properties are recommended for long-term gains, allowing the investor to earn passive income.
- Buy-to-sell properties are how you get higher returns within a short period of time, but this type of investment comes with additional risks.
- Investing in holiday lets or properties in holiday destinations offers seasonal returns, as rental income could fluctuate wildly depending on the season and the popularity of a holiday location.
Do you understand the legal framework?
Property laws in Thailand have certain restrictions when it comes to foreign ownership, and it’s important that you know what they are to ensure legal compliance.
- Foreigners are not allowed to own land but can buy condominiums with qualifications. A condominium unit is available to foreigners on a freehold ownership, provided that 51% of ownership in the condominium development is by Thai nationals.
- You may invest in property using a leasehold agreement that usually lasts up to 30 years. In a condominium development, this applies when the 49% quota of the overall unit size has been reached.
- A foreigner can own a property through a Thai limited company if they’re a shareholder. This is only permitted if a company has two Thai shareholders and at least 51% of the total shares are owned by local nationals for entities.
In addition to the questions above, you also need to calculate the full costs of an investment, from the purchase price down to the ongoing expenses, such as maintenance, property management, and legal administrative fees. For a stress-free transaction, partner with Zest Real Estate (Oct) when shopping for luxury apartments in Phuket.
