Flipping a Bangkok Condo – how not to do it

flipping a bangkok condo

 

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Having already bought one condo I decided that I would buy a second as a way to make some money by flipping it before it had finished being built. This isn’t a story about me making money but a warning to those who see it as an easy way to make money as I believed flipping a Bangkok condo would be.

My Plan

My plan was to buy somewhere taking advantage of a pre-sale discount and then sell it on for a profit when demand increased and the sale price went up. If the property wasn’t sold then it would be kept to rent out. This was never going to be a place for me to live as I bought a 24sq meter unit so it was only really suitable for a single person.

With the upcoming new skyline and subway routes being built there are so many condos being constructed that you can buy a new condo anywhere around the suburbs of Bangkok. I chose to get a second place close to where I lived near Ramintra as there would be a couple of lines intersecting and it is a popular commuter area for people working in central Bangkok. I also knew the area well and could see benefits of being there and thought it would be an area with future benefits.

The Condo

I bought a room at the Cube, Nawamin on the day it launched for 1.37 Million Baht which included a 20,000 Baht first day discount and guaranteed lowest price. One of the benefits of this place was being able just to pay a small deposit and then small monthly amounts until the building was complete. In total I owned the place for 9 months before I sold it on when the final large payment was due on the down payments.

In total I paid the following amounts:

initial deposit: 10,000 Baht

second deposit 20,000 Baht

months 2-5 – 4,500 Baht per month

month 5 further deposit 25,000 Baht

months 6-9 8,000 Baht per month

Total amount paid : 105,000 Baht

During this time I had the contract signed but ownership would not be transferred until the final payment was paid, 1 year after the initial deposit.

flipping a bangkok condoThe contract I signed gave me 3 months leeway in terms of missed payments before the agreement was cancelled. I was also permitted to change the name on the contract free of charge before final payment which made it easier to flip. After 9 months I decided to put the condo up for sale as the selling price for my unit type had now increased to 1.6 million and the complex had almost sold out. As you can see from the picture to the left the building had progressed and prospective buyers would have the chance to see what the building would look like, not just look at mock pictures.

I used DDproperty, Craiglist and also offered an incentive to the sales team at the condo building to get the room sold. I put it up for 120,000 Baht thinking I should be able to easily make a small profit as the unit value would be less than the current selling point by 80,000 Baht. I wrote the advert in both English and Thai on all sites which helped increase interest and increased the number of people who read it.

In the end I sold for the price I was due to pay and broke even. If it hadn’t sold within the 3 month period I would have been able to continue payments and try again later. When you add in the time spent doing this and traveling around to sign papers then it probably cost me a few thousand baht but in the end it was a lesson learnt and not a disaster.

In the end the buyer I found was from DDproperty and she was Thai. The sale was made on the final day before the contract would have been cancelled so things got stressful. Also I couldn’t have done this without my Thai girlfriend as she was responsible for communicating and dealing with the buyer. If I had to do this myself it would most certainly have gone unsold.

Why Wasn’t it Successful?

So what led to the lack of profit on the sale?

Firstly I think with the huge amount of buildings going up there is a large supply and although there are some good deals it is definitely a buyers market right now. Along the new sky train route on Ramintra I have seen at least 15 new condo projects, as well as countless other finished or almost finished buildings. Due to this people weren’t looking to pick up old rooms but going directly to the showrooms of upcoming projects.

Another key reason is that the condo itself wasn’t a “special” room. By this I mean it wasn’t in a prime location and the room was pretty ordinary. New condos in prime central locations create a lot of fanfare which helps increase demand and awareness. A lot of people want to buy these places and often if it is a small development there is the possibility to flip a condo for a reasonable profit as developments sell out quickly. The problem is there aren’t many of these places which sell out almost instantly and create a huge demand. Also rooms which are different from others are easier to flip. Corner rooms, 2 bedroom+ units and places with special views or a large size will be easier to flip. I also think there are inside deals to be had where if you know the right people you can buy before the general public and maybe even get a lower price than advertised.

Finally even if there had been a high level of demand there were other people doing the same thing with the same type of room at the property. On DDproperty I saw at least 3 other rooms at the condo and one of them was the same size as mine and was advertised at cost. I guess they were just desperate to offload it and this meant I had to revise my asking price too.

Would I Do it Again?

Looking back on the process it left me thinking if I would do it again and the answer is that I wouldn’t. Overall if I had sold for my original asking price I would have only made 15,000 Baht which isn’t a bad amount but it is hardly life changing. I also think I couldn’t deal with the stress of doing it multiple times over to make reasonable cash. If one unit couldn’t be sold then I would be obliged to buy it in full or to lose all the money paid which would be a nightmare situation.

I still feel that it is a renters market at the moment due to the high number of properties available and the discounts you can get. This process would be worthwhile if you would be happy to live in the condo, or could get a decent rent for it, if it failed to sell. For this to work you would need to buy a more expensive property in a good location which is beyond my budget.

I think I’ll leave it to the millionaires who have inside contacts to make these deals profitable. I’m sure when the value of the unit is several million baht then it is possible to make a decent chunk of change on each sale but for me putting half a million down as a deposit isn’t possible.

About Richard 176 Articles
British guy living and working in Bangkok, Thailand since 2013. Running LifeInANewCountry.com teaching and writer of Settling in Thailand expat book.