Property Investment Bangkok | Resale – Flipping
Real Estate flipping originally meant purchasing mournful, damaged properties in order to repair them in order to increase their market value. Simply saying, investors buy undervalued properties, renovate them, and then sell them within a certain period of time for a profit. Although it is not as simple as it sounds to settle, this classical method has proven its benefits. But nowadays, a more rewarding Real Estate flipping strategy has emerged in both Bangkok and Pattaya, providing investors with large profit in very short amount of time.
Indeed the Real Estate market is booming in Southeast Asia and Thailand is enjoying the building of new project condominiums at a terrific rate as condos grow everywhere in the biggest cities of the Kingdom. Basically, developing projects (and thus not completed yet) usually show the following payment plans:
- Booking: usually between 50,000 and 100,000 THB. This “security” allows developers to ensure the Buyers would not abandon their purchases during the following days and thus would proceed to the signature of the contract.
- Signing contract (within 15 days or 1 month after Booking): a certain percentage has to be paid whilst signing the contract that can range from 10% to 20%.
- Installments: usually 20% to 35% of the total amount are spread over the construction period and need to be paid every month by the Buyer.
- Transfer of Ownership: Final step. When the project condominium reaches completion, the remaining 50% to 70% is paid.
These percentages vary from a project to another although they normally follow the scheme previously described.
Therefore, investors purchase units before the construction starts when prices are the lowest. Then, prices will constantly increase according to two main factors: Sales and Construction status. Simply saying, the more the developer sells, the more the prices increase. Also, construction reaching middle to top floors of a building will definitely drive prices up. Afterwards, flipping the unit consists in selling your unit(s) before the last payment (Transfer of Ownership) needs to be made in order to get a high profit out of your investment. What gets really interesting is that investors can offer prices in the market that are lower than those offered by the developer at the same stage.
Here is an example of a highly profitable flipping strategy. In Q4 2013, the brand new project condominium The Riviera Wongamat was launched in Pattaya. One of our most dedicated investors bought 5 units (1 Bedroom – 35sqm) on top floors at a very early stage. As he was buying bulk and thanks to our valuable relationship with the developer, we could negotiate a nice discount allowing him to buy at only 90,000 THB/sqm (3,150,000THB for one unit). Six months later, in early March 2014, BTS Property Group flipped three of those units (the remaining two units were kept for rental return) at 100,000 THB/sqm (3,500,000 THB for one unit) whilst the developer was already selling at 125,000 THB/Sq.m for such highly demanded units. He previously had to pay 15% as Deposit, thus 15%*3,150,000*3 = 1,417,500 THB in total for those 3 units; and we sold them for 3,500,000 THB each for a total profit of 1,050,000 THB. Therefore, and considering our commission on the deal, his total ROI (Return On Investment) reached 45% in only six months!
Flipping units in the Thai market can be really rewarding and perfectly matches investors looking for high ROI over a short period of time. This is more risky as units need to be sold before transfer of ownership and projects have to be carefully chosen. Here at BTS Property Group, we provide investors with professional advice towards finding the right project condominiums and buying at the right time to enhance returns. Moreover, we enjoy close relationships with renowned property developers in Thailand. Thus, when our investors are buying bulk (5 to 20 units at once), they can enjoy huge discounts making their initial investment even more attractive and profitable in the future.
Please do not hesitate to contact us if you would like more information on that matter.
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