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Buying multiple properties for let

If you are looking to live off the income from property rental in Pattaya, then putting together the correct portfolio of suitable properties will be an important first step.

Of course it is easy to see property rental yields are providing a much better return than that of a savings account and so putting money to work in the property market makes sense in this current time of low interest rates.

Still it is wise to ensure that over the longer term, interest rates will stay low, and although currently the outlook is indeed for this to happen, periodic checks of the economic backdrop would be warranted whilst in possession of a property portfolio.

Next is to choose the types of properties to make up the holding. Smaller studios look enticing as these can be bought for barely 1 million baht and rent out for around 8,000 to 11,000 baht per month providing in excess of 10% return in some cases.

Of course you will need to fill many of these in order to enjoy the total return expected and so it is worth also covering other sectors in the market and buying medium sized one or two bedroom properties in the luxury market. Whilst these might provide slightly less yield they are often easier to fill and may be subject to stronger capital appreciation as compared to studios and smaller one-bedroom apartments. The latter form the mainstream market and construction of new units in the budget sector continues unabated, whilst the luxury market is arguably less prone to over supply.

Next is getting the location right. Choose city centre properties or those close to amenities so they can be filled more easily. Very central properties will suit both long and short-term lets and so will provide ultimate flexibility when looking to secure tenants.

Although houses are possible to rent out these are typically more remote and so it is worth sticking to condos which also have the benefit of be¬ing able to be secured on a freehold basis.

The size of a portfolio depends on the amount of capital you might wish to put at work, but in order to provide a comfortable income, 8 to 10 properties would be a sensible number to aim for.

Once the properties are in hand they need to be carefully prepared for rental. It is worth choosing decor and furniture that is similar for each place so that you can interchange interiors where necessary.
Make sure interiors are modern and clean cut. It is worth looking at the current offerings from developers since most of these brand new apartments are fully fitted and the project owners employ the most talented interior designers in order to sell their units. It is worth noting these properties will also become your competition as people vie to rent or buy, so by ensuring your offering is every bit as enticing as those offered by developers of new buildings you can position yourself advanta¬geously in the market.

As for management of the properties this will take two forms. First is the management of the rental contracts and this will include finding new tenants in a timely fashion so as to minimize any period of vacancy. Look to employ an agent to take care of rental management as they will be well connected and should be able to find tenants in good time. For the high season you might consider renting for shorter lets, e.g. 1 month or even 1 week. This will require active management and pre booking so as to ensure that the higher rentals that can be attained from shortterm lettings remain in place on a continuous basis.

The other part of the management isin regard to maintenanceand responding to tenants needs. It is worth having properties located within reach of your main residence so you can attend to these matters personally. Of course you could also employ an agent, (maybe the same agent) to manage the properties on this basis but it will be important to ensure they can provide a rapid and reliable response. Some agents have good connections with tradesmen such as airconditioning maintenance companies, roofing contractors and other technical experts.

It is also worth having a legal team in place ready to be on hand to draw up letting contracts and following up with late payments etc. Again some agents have these in-house but it is important to make sure that things are working perfectly especially if you plan to reside further away from the properties and as such plan to rely on their services.

With a mid sized portfolio, look to bank on 80% occupation. You should be able to enjoy an income of up to 100,000 Thai baht per month from an outlay of little over 10-12 million baht. This compares well with all other investments currently and there will also be room to enjoy capital appreciation at the current time also.

Look to review periodically your holdings and tweak them as necessary. If, for example, it is becoming more difficult to rent out smaller studios and one bedroom apartment then look to adapt your investment to the market and change some smaller units for higher end properties.

It is worth also looking at alternative locations such as having some property in Pattaya and some in Bangkok. This will enable you to smooth out the low season since the capital city can supply year round demand. You will also be able to take advantage of the potential for faster appreciation in the capital as prime sites are becoming harder and harder for developers to secure, leading to faster appreciation for well-located properties.