Long and Short Term Investment in Real Estate
Real estate is a business with high investments, high returns and high risks. Real estate investment can be done in many ways and we categorize real estate investors by term and purpose of investment, which is divided into 2 major groups as follows:
1. Short-term investment
Investors of this type can be called a profit investor by reserving condominiums or new project houses and selling at a higher price when the project is almost finished, but cheaper than buying directly with a sales office (generally, when almost finished, sales price by a sales office increases 5–10%). This investment will use less money than a long-term type. For example, a condo priced at 1.5 million baht has other expenses, such as the deposit, contract fee, and reservation money, which would total 75,000 baht. It is then required to make a profit from selling the reservation slip at 50,000 baht, and the buyer must pay to buy this reservation slip at the price of 125,000 baht. So, the reservation seller will able to make a return on the investment (ROI) of up to 66%.
With numbers like this, many people may be interested, but you have to know that “Selling the condo’s reservation slip, its profit is as high as risk” because if you cannot find buyers, you might sell it at cost or lower, and if you try to sell during a period of economic downturn, it is hard to find buyers. Selling the reservation slip without losing money must be considered from factors as follows:
Good to best location in those areas, and the project must pass the Environmental Impact Assessment (EIA).
Sold out within a year. A year reservation amount or sales of all rooms or houses in the project must be sold out within 1 year.
Low reservation price and low down payment. They must be not over 5–10% to make it easier to sell, and to keep the investment from being too high and with too risk.
Sell it before the building is finished, because imaginations are always more beautiful than the truth, the true might be not same as example room. Moreover, you will have competitors, other investors who make more sales offers, giving buyers have more choice. So, you will sell it with more difficulty.
Sell during an economic upturn, as the time that buyers decide to buy or building is finished tends to be period of economic upturn because people have superior purchasing power, and at this time it can be sold at a good price.
2. Long-term investment
Investments of this type arise from the concept that numbers of people increase, whereas the amount of land stays constant. Investment in real estate for housing will a value that can increase at a faster pace than inflation. So, it is considered as a safe investment. This investment allows for 2 sources of income:
Capital Gainwill be obtained when a property has a buyer, which has a few important principles to consider.
The tendency of land development or taking benefit from land in that area, the interesting area is the area where people are interested to move to for living, run a business, or for travel.
Building conditions for calculation of the value of the sales.
If sold at the right time, the sale will be considered to make a profit when sales are more than total capital + interest. When you have paid, you should obtain profit not less than 6% per year (IRR = 6%) (This wins an interest rate and wins an investment in bond definitely)
Dividend Yield this type of income is considered as consistent profit. It is suitable for a person who purchases the property with cash or loan at the lowest amount. On average, return from rent is nearby interest rate of bank is about 5–7% in a general area and 10–15% in a popular area. Areas that are good for investment will have 3 characteristics, as follows:
Near is an advantage: near offices, companies, school
Convenient travel: located in an area that has good transportation both bus, port, railway transportation such as trains, sky train and subway.
 No robbery: At least, it must not have a history of housebreaking or a low level that can handled by a strong security system.