Difference Between Renting An Apartment And A Condo in Bangkok

Many people ask, “what’s the difference between an apartment and a condo in Bangkok?” Well, condos are individually owned units whilst an apartment is a block of rental units owned by a company, family or individual.

There are, of course pros and cons to renting an apartment over renting a condo and hopefully this article will shed some light on the apartment versus condo rental issue, and help you with your final decision.

Rental prices

When it comes to price, you’ll be glad to know that there is no difference whether it’s an apartment or condo you choose to rent in Bangkok. The rental rate is usually determined by the location, age and grade of building, size of unit, number of bedrooms, facilities, décor and furnishing.

Utility bills.

Now, this is where the main disadvantage lies in renting an apartment over a condo. Apartments tend to have a minimum charge for water (usually around 1000 baht per month) and a surcharge on electricity (around 5 – 6 baht a unit compared to the 3.75 baht charged by the MEA). All this can amount a hefty difference in utility bills at the end of every month.

I live in a 3 storey townhouse with a family of 6 and my water bill has never exceeded 500 bht a month, ever. We do a lot of washing and drinking too!

Building management fees

These fees apply more to condominiums rather than apartments which have already factored this cost into the rent. This is what you call the community fee that goes to maintaining the buildings, facilities, security etc. For condos, this cost around 25-40 baht per square metre depending on the building and its location. The more exclusive your condo. The more your fees are going to be! Most of the time, this fee has already been included in the asking rent by the landlord. However, if you managed to push the rent down significantly and got you a laughing good deal i.e. a nicely furnished 95 sqm 2 bedroom in the CBD for 25,000 baht/month, then it’s likely that your landlord will be expecting you to pay this management fee instead! That’s fair enough don’t you think?

Others

At the end of the day, whether you are renting an apartment or a condo, who you rent it from is extremely important. With condo owners, it is sometimes easier to negotiate on the rent since these individuals can be more flexible, compared to an apartment which charges standard rates that are usually non-negotiable. However, finding a suitable condo for rent is a little trickier on your own since you’ll have to know which building and what unit is available for rent. You’ll also need the owner’s contact too! That is where property rental agencies like Bangkok Finder can help you.

The other thing is maintenance. It’s definitely a lot more convenient if you are living in an apartment since there is usually an in house maintenance guy hired by the building at hand. However, I know of many condo owners who take very good care of their property and have their own handyman who usually responds within a day or two. The cost can be foot by the landlord or the tenant depending on the initial agreement. Usually, structural repairs, electrical wiring and plumbing costs are borne by the landlord, and minor repairs are the charge of the tenant. However, the cheaper your rent, chances are the more you’ll have to account for in maintenance cost during your lease tenure.

Apart from that, apartments and condos offer 24 hour security and feel safer for most, compared to living in a house. There is also NO chance of flooding inside your home, which is a major concern for most people looking to rent or buy in Thailand and the other bonus is, NO MOSQUITOS! That truly is bliss.

Well, that’s about it really! Ready to start your search? Here are apartments for rent in Bangkok and condos for rent in Bangkok.

Second Homes – Condo Hotels Make Sense

The Compelling Facts…

What if… Just 5% of the Baby Boom Generation learned of a cost effectice way to own more than 1 home in retirement? 75 million boomers will retire over the next 15 years, 5% equals a demand of 250,000 condo hotel units per year, every year unitl 2020.

What if… you could buy a second home/condo, use it when you wanted, and a professional (hotel manager) optimized the rental income and minimized the expenses while you were not in residence? Would this be more desirable than the alternative of doing-it-yourself for at least 5% of the population?

What if… you could deduct several homes instead of just 1 or 2?

What if… you could say you have condos in Town & Country and on The Slopes & Shore? And all these condos cost you less than just one traditional second home?

What if… all these properties appreciated like your home has?

The Condo Hotel opportunity will be the choice of more than 5% of the Baby Boom Generation, and the trend is just beginning. The condo hotel industry will also breath new life and prosperity into the hotel industry, making quality and ‘the best located’ hotels more profitable than ever. Condo hotel will separate the real estate business from the hotel service business and create a win-win for condo hotel ownership and hotel guests. Lastly, retirees of the next decade will expect more and be able to afford a higher lifestyle through condo hotel. These are the premise of this paper.

THE POWER OF THE BOOMER GENERATION…

Why are Baby Boomers Important?

81 million US Baby Boomers* (born between 1946-64) began to reach retirement age (59 ½) in 2004. 28% of the US population is a Baby Boomer. 2016 is the peak year, with 4.3 million 59 year old birthdays. A Boomer turns 50 every 7.4 seconds this 2005!

*Many non-US Boomers will choose to retire in the USA to be closer to the world’s best health care system.

per year: 4,000,000

per day (4.0 mil / 365): 10,958

per hour (10.6 k / 24): 456

per minute (456 / 60): 7.1

Boomers have just begun buying their second/retirement homes.

Michigan has 234,000 second homes, California has 237,000 and Florida has 483,000. 6.4 million people own a second home, up over 40% since 1995. By 2010, an estimated 10 million people are expected to own a second home, despite 9/11, this is a 56% increase in just 5 more years and could be considered a boom market by any measure. More people will buy in the next 5 years than have purchased in the last 10 years, competition for desirable retirement residences will only intensify, appreciate in values will follow suit. Low rates have helped fuel this real estate market, but they are a smaller part of the equation than is commonly believed. Currency exchange rates have a much more dramatic inflationary effect on resort area real estate.

The trend began in 2001, and intensified as interest rates fell in 2002-03, causing some boomers to “buy early”. Real estate further became the investment “du jour” as it became clear in 2001-02 that the stock market was ‘not returning the level of investment returns’ that many boomers had built retirement savings expectations around.

This lack of security and control in the stock market, and its positive effect on real estate investment, will be discussed further in this report.

In addition, tax ramifications for second home ownership has helped encouraged second home ownership says the Wall Street Journal “In addition to low interest rates and demographics, the second-home market has been helped by the Taxpayer Relief Act of 1997, which established new rules for the treatment of a capital gain on a principal residence. Under the old law, taxes on gains were deferred if the seller bought a new home of equal or greater value up to two years before or after the sale of the primary home. In addition, sellers over age 55 could claim a one-time exclusion of $125,000.”

New rules repealed the mandatory gain-deferral and increased the exclusion to $500,000, as long as a taxpayer owned and used the principal residence for two of the five years preceding the sale date of the home. Plus, the exclusion now can be claimed every other year.

These tax changes “liberated” sellers from the pressure to trade up to avoid a tax hit. Instead, says an NAR spokesman, it has encouraged many sellers to trade down to more modest digs, while using the remaining proceeds to purchase second and third homes. Tax changes have created a whole new form of property ‘trading’, where there is a tax advantage to buy a new home every 24 months, allowing a capital gain profit with zero tax cost. For many savvy investors, this has created a true ‘cottage industry’ in home flipping.

“The second-home market can accommodate 100,000 to 150,000 new housing starts a year over the next 10 years”, estimates David Hehman, CEO of EscapeHomes.

But why second homes? As many professional people have discovered, as technology allows us to ‘work from anywhere’; why not work from someplace beautiful, someplace ‘vacation-like’, from the cottage? The evolution of the home office has turned to the cottage office.

The typical vacation-home buyer is 55 years old and earned $71,000 in 2003, while investment-property buyers had a median age of 47 and earned $85,700.

For properties purchased between mid-2003 and mid-2004, the median price of a vacation home was $190,000 compared with $148,000 for investment homes. In contrast with the last available full-year price data in 2001, vacation homes have appreciated 12.8 percent from $168,500, and investment homes have risen 25.4 percent from $118,000.

Nearly one out of five second homes will become primary residences after retirement – 27 percent of vacation homes and 14 percent of investment property. “In addition, buyers were looking to diversify portfolio investments,” Mansell said. “This is now the most frequently cited motivation for purchasing a second home.” In listing the reasons why they bought second homes, respondents said there were some differences depending on the type of home. Overall, 30 percent of buyers wanted to diversify investments, 28 percent sought rental income (37 percent investment vs. 7 percent vacation homes), 14 percent wanted a personal or family retreat (29 percent vacation vs. 8 percent investment), 6 percent planned to use for vacations (16 percent vacation vs. 2 percent investment), and 5 percent had extra money to spend.

“Because the typical second-home buyer is a baby boomer, it’s likely over the next decade that second-home sales will remain historically high,” Lereah said. “The boomers are still in their peak earning years and have both the wherewithal and the desire to purchase vacation homes and investment properties.” Ninety-two percent of all second-home buyers see their property as a good investment. In addition, 38 percent said it was very likely they’d purchase another home within two years, breaking down to 47 percent of investment buyers and 16 percent of vacation-home buyers.

The 9/11 effect, and family values is another unpredicted phenomenon that many experts sight when discussing the second home market. The theory says that as Americans were shocked by the events of 9/11, they wanted to create more ‘family together time’ and come together in vacation destinations where far-flung family members could rejoin as a whole unit. Drive-to destinations were first to experience the effects on family-tourism from 9/11, these resort locations within a 2-5 hour drive from metro areas actually saw increases in occupancy immediately following 9/11. The theory is still evolving, but through my own surveys of boomers, this effect has merit on cottage demand. Drive-to vacation cottages is still the fastest growing market.

Can the demand for second home, resort properties and retirement residences be truly measured or is it just another version of real estate investment hype? A new study by NAR, shows that 23 percent of all homes purchased in 2004 were for investment, while another 13 percent were vacation homes. In addition, there was a record of 2.82 million second home sales in 2004, up 16.3 percent from 2.42 million 2003. The investment-home component rose 14.4 percent to 1.80 million sales in 2004 from 1.57 million in 2003, while vacation-home sales rose 19.8 percent to 1.02 million in 2004 from 850,000 in 2003.

The figures have merit and factual measurement. Real estate values in nearly all ‘vacation, resort, and retirement’ areas have out paced the overall market by double digit (alarming) rates. The working communities of America are not only lagging, but in many cases falling in real value (when adjusted for CPI inflation).

(A note about inflation & currency: All too often we read reports about the increasing value of assets like real estate without any discussion of the cost of inflation in these increases or the exchange value of the currency being used to value the asset. If the dollar falls in purchasing value by 30% against other currencies, the value of real fixed assets should correspondingly rise by 30% (if they are desirable for purchase by foreigners). Real estate markets that have a high level of foreign investment will appreciate quickly as the dollar falls, and fall if the dollar strengthens (Hawaii circa 1990s). If the Consumer Price Index (CPI) rises by 3%, then the value of a home that rises by 5% has truly only increased by 2%. It is disturbing to this author that this is not more openly discussed by our mainstream press, who by profession are journalists with liberal arts degrees, not MBAs. Watch the true inflation-adjusted appreciation rate, no the media hype.)

Can these high rates of appreciation in second home markets really continue? Many experts believe, “Yes!”, it can sustain for a long run (not months, but years). The fundamentals of rapid appreciation equate to supply growing slower than demand. Supply in areas such as South Florida have been rapid (78,000 new or planned condo units entering the Broward/Dade county market by 2007), but material shortages and hurricanes have slowed the ramp-up and created a large amount of pent up demand chasing reduced supply. Also, the foreign buyer demand in the Miami area is extremely high, this means these buyers are using currency that is 20-30% strong than last year. A 30% rise in property values is easily absorbed in this environment.)

In areas such as Arizona and Las Vegas, water concerns and lack of infrastructure and skilled laborers have slowed the rapid pace, but the grow rate is still staggering. Other scenic second home destinations, like the mountain states, Pacific Northwest and Florida Keys have environmental hurdles which raise the barriers to entry for developers and restrict supply. A restricted supply in the face of demographically empowered demand is always a formula for rapid price appreciation (CA in 1970’s).

What goes up must come down? Yes. But a 20% per annuim rise for 5 years, followed by 5 years of stagnation or a 10% loss, is still 5%+ annual growth rate (worse case). If leveraged at 90%, the return on initial investment is still 44% per year. The hard part is making sure the best years are in the beginning… even hard is selling at a peak. It is estimated that there are between 40-90,000 new condo hotel units coming to market by 2008.

The demand for these units will exceed 1 million buyers, so the price of condo hotel units could be much higher than presently expected.

55 Plus Condominiums – What Are the Benefits of Condo Living for Seniors?

Some people eagerly plan for and transition to 55+ communities while others vigorously resist even considering such a move.

Myths and misperceptions about “retirement communities” persist, despite the increasing popularity of such residence options for people 55 years and older. Let’s look at some of the positives and negatives to living in senior condo communities.

The big myths of 55+ living

These are five common myths about 55+ communities:

  • My own home is the best place for me – Many seniors (and their children) believe that the parents retain their freedom and independence when remaining in a long-time home.
  • I stay connected with my friends and activities when living in my current home – People often think that their activities and close connections will be sacrificed if they move to a senior community.
  • It costs me less to stay in my home – This may or may not be true depending on the current expenses of taxes, mortgage, utilities, upkeep, and the financial footing of a particular senior community.
  • My children will help when I need them to – This may or may not be a realistic expectation.
  • Senior communities are full of old, sick, and dying people – This is often a major concern for seniors.

Benefits of 55+ living

Sometimes it is the children of retirees who object to their parents moving to a 55+ community. Senior condominium living can offer some pretty wonderful benefits for both seniors and their families.

  • Safer living – The family home may no longer be safe for its senior resident(s). There is yard work to be done, maintenance and other chores to keep up with, and some homes cannot be easily adapted to accommodate changing physical needs and limitations.

Senior condominium living is designed to provide a physically safe living environment for its residents.

  • Maintenance is taken care of by the community’s staff.
  • Living in a 55+ community offers additional protection against those who prey on elderly people who are known to be living alone.
  • Senior-based condominiums are often designed with emergency response systems that can be activated by their residents when needed.
  • Staying connected, active, making new friends – Many seniors find their circle of friends diminishes with each season. A spouse dies, a neighbor moves, children live far away. It is easy to become isolated.

Loneliness is often one of the bigger dangers of living alone as a senior. 55+ communities can help nurture current and new friendships and activities.

Many senior communities offer physical and cultural activity enrichment programs to help their residents remain engaged in the healthy interaction of daily living.

  • Healthier living – It isn’t always possible for children to take care of a parent’s health challenges, increasingly limited mobility, ensuring that the parent is eating properly and taking medicines on time.

Many residents in 55+ communities find their sense of independence and well-being increases. Adult children experience a tremendous sense of relief that a parent or parents are living in a safe and healthy environment where they can be looked after on a regular basis.

Condo living isn’t for every senior but it can be a wonderful alternative to living alone. The supportive network of activities, friendships, and care (as needed) can bring a new quality of life in one’s senior years. Many seniors wonder why they didn’t make the move sooner!

Benefits of Owning a Condo

Buying property can be a frustrating and confusing process for many people. There are many to consider including price, different types of property, size and location. You want to make sure that you can be happy living in the property you choose to buy.

Condos are rising in popularity as an alternative to single family homes. Condo buyers can include individuals, new couples and small families. No matter what type of property you are interested in buying, researching the area and development is very important. Finding a condo that fits your needs takes time, investigation and patience. Condos have many different perks to offer and finding the perfect association is well worth it.

When purchasing a condo, you become a member of the condo association and are able to benefit from all of the extra community facilities. Many condo complexes have gyms, pools, sports facilities, activities for children and much more. Finding out exactly what the benefits of each complex are is important in making the right decision. These fun perks can make your life more convenient and sometimes save you money on entertainment and recreational activities. Most of the time you will pay a flat rate for the use of all of these facilities, making it important to decide whether or not you will use them enough to make it a worthwhile expense. If not, a condo could contain too many extra expenses to make it a good investment.

Maintenance is another important benefit to be aware of when looking into condos. Being a part of the condo association usually includes an on-call maintenance service that will be available to fix a leaky faucet or electrical problem without appointments or large fees. Keep in mind you will be charged a flat rate for maintenance regardless of anything going wrong in your unit. The convenience and speed of this service can be very helpful and it is comforting to know that you will be taken care of if anything does happen.

Choosing an area that you are comfortable living in is important. Most condo complexes are located in more developed areas such as cities and downtown areas. This is perfect for some people who love to be in the middle of action. Take in to consideration the placement of the complex you are looking at. Is it near high traffic streets? Will it be noisy late at night? These are questions you want to ask yourself before purchasing a condo. Benefits to living in an urbanized area can include proximity to shopping and public transportation, lots of entertainment options, and convenient access to other city amenities.

Condos usually have some sort of security system/guards that will make you and your belongings feel safe and secure while living in the complex. This is one of the major benefits of a condo association. You can leave your home for vacation without a house sitter, leave your younger children at home with more security and feel safer when you sleep knowing someone is keeping tabs on what is happening in your building.

Condos are a great investment and can be a wonderful choice for a place to live. Do your research to figure out what is right for you.