Investing in condos for rent: How to survive? See the 4 expenses you should know.

When talking about investments that have the opportunity to provide returns or income to investors consistently, I believe that many people will think of renting a condo. If the condo is in a good location, convenient to travel, and always has tenants, it can help generate income for us continuously. In addition, the price of the condo has the opportunity to increase continuously. When selling, you can make a profit.

But now, it can be said that this is an era where condos in the city are mushrooming. Wherever you look, you see condos everywhere. Therefore, investing in condo rentals requires more careful consideration. And now, many people are buying condos to rent out.

For those who want to borrow money to buy a condo for rent, it is recommended not to borrow more than 60% of the condo price because renting a condo should calculate the costs completely. The main ones are:

1. Monthly installments. Easy calculation: If you borrow 1 million baht, you will pay 7,000 baht per month.
2. Common area fees. The average is around 40 baht per square meter per month.
3. Agent fees. In the case of using a service to find tenants through an agent, you usually pay a fee of 1 month of the rent.

In addition, there are other costs from buying a condo, such as transfer fees (2% of the appraised value), mortgage fees (1% of the loan amount), and expenses incurred during the time of renting the condo, such as personal income tax on rental income.

For example, take out a loan to buy a condo for 1 million baht, size 25 square meters, to rent out, and collect approximately 6,000 baht in rent per month.

It can be seen that if you request a loan from a bank of more than 60%, it may cause condo rentals to yield losses. Therefore, you should borrow from the bank no more than 60% of the condo price. The rest, use your capital as a down payment. The more you put down and borrow, the monthly installments will not be so high. This will help the rental income cover the installments and expenses incurred each month.

In addition, condos that most people buy for investment are usually located in prime locations, near the train, near communities, and shopping malls, giving tenants many options. Many condos have continuous tenants, while some may not have tenants all year round.

Therefore, those who are going to invest in a condo should have reserve funds to cover various expenses, such as monthly installments and common fees during the period when there are no tenants. They also need to set aside some money for room maintenance because it is possible that the security deposit collected from the tenant may not be enough to repair and re-rent.

The fourth expense that condo investors should know is the Land and Buildings Tax Act, which has been in effect since 2020. If you buy a condo as a second residence, you will have to pay taxes from the first baht as follows:

Although renting out a condo is an interesting investment, investors can get a return or steady income from rent. Still, investment also comes with risks, such as not having tenants, renting out at a price lower than the installment, or other expenses.

Therefore, investors should study information and prepare their finances well before investing in condos for rent.