Pitfalls of looking for a Long Term Rental

[MrPlum]

I'm currently looking for a rental property and have been surprised that rents are as high as they are, considering the number of properties available. Whatever happened to all these property owners who can't sell and who would be happy just to have someone in the house taking care of it?

Here's an example. 3 bed 2 bath house on the edge of town, with a medium-sized garden. Owner is asking 27,000. I said 'this is expensive compared to the norm'. So she dropped it to 25k. I would have said 20k was realistic. Even though the house has been empty for 2 years, she would not drop any further.

Then there are owners who have rented the house at a good price for 2 or 3 months of the year, then get stuck with no tenants for the other 9-10 months. Will they drop their rates to achieve a year-round income? No.

Then you get the middle man/woman's cut. The owner has left them with the keys and I know would accept, say, 17k for a 3-bed home. I would pay this if it's nice. BUT. The person with the keys wants to skim an easy 3k per month and won't drop below 20k. So, I walk away. If the owner knew, I'm sure they would be pretty annoyed.

There are those that want big deposits and I know these are often not returned, so avoid them.

Then there is the 'falang' factor.

I'm going up and down the Sois expecting to find a good deal... after all, it is a buyers market... but keep meeting unrealistic expectations.

Perhaps it's me?

[buksida]

Its not you, I posted very similar experiences several years ago in this thread: viewtopic.php?f=20&t=814
The only difference today is that the prices are double.

[lomuamart]

I think that's been the case, certainly in HH, for many years. Owners will actually rather see their place empty than negotiate significantly on price.
You've just got to persevere and hope that something comes along. Word of mouth is a good method as well but I'm sure you've got your feelers out on that already.
Buks beat me to it.

[Siani]

I'm currently looking for a rental property and have been surprised that rents are as high as they are, considering the number of properties available. Whatever happened to all these property owners who can't sell and who would be happy just to have someone in the house taking care of it?

Here's an example. 3 bed 2 bath house on the edge of town, with a medium-sized garden. Owner is asking 27,000. I said 'this is expensive compared to the norm'. So she dropped it to 25k. I would have said 20k was realistic. Even though the house has been empty for 2 years, she would not drop any further.

Then there are owners who have rented the house at a good price for 2 or 3 months of the year, then get stuck with no tenants for the other 9-10 months. Will they drop their rates to achieve a year-round income? No.

Then you get the middle man/woman's cut. The owner has left them with the keys and I know would accept, say, 17k for a 3-bed home. I would pay this if it's nice. BUT. The person with the keys wants to skim an easy 3k per month and won't drop below 20k. So, I walk away. If the owner knew, I'm sure they would be pretty annoyed.

There are those that want big deposits and I know these are often not returned, so avoid them.

Then there is the 'falang' factor.

I'm going up and down the Sois expecting to find a good deal... after all, it is a buyers market... but keep meeting unrealistic expectations.

Perhaps it's me?

Yes, some are high, but you can make offers. Normally if it is a3 month rental they will do a good deal. Remember also that it is also low season, loads out there to rent. I think you can also place an add on the forum.

[Aussie Mark]

Good point Mr Plum

As you know my house is next door to where you curently live and sorry I forgot to get back to you .Unfortunately my house is not available, as you stated some are vacant for long periods, mine is vacant quite alot but I rent it at 30 000 bth per week and get about 10 weeks a year so thats 300 000 bht and could rent it long term for about 30 000 bth per month = 360 000 bht
I also like to holiday there about 6-8 weeks a year so long term I would have to rent whem Im there.I also know my other neighbour does the same. So that most probably why alot of people wont rent long term

[Aussie_Al]

Not sure if it my approach, or what.

But when I mention a year, or probably 2, for rental leases.
For me at leasat the price moves significantly.

Current position, without exact figures; is owner wanted around 18k a month on nearly new furnished 3 b/r place, new funiture.

The end of the day I got a 2 year lease, and while not being exact about my rent; lets say including all outgoings (elec. internet, cable TV, complex fees etc) a total of about 15 k a month

[Super Joe]

Good point Mr Plum

As you know my house is next door to where you curently live and sorry I forgot to get back to you .Unfortunately my house is not available, as you stated some are vacant for long periods, mine is vacant quite alot but I rent it at 30 000 bth per week and get about 10 weeks a year so thats 300 000 bht and could rent it long term for about 30 000 bth per month = 360 000 bht
I also like to holiday there about 6-8 weeks a year so long term I would have to rent whem Im there. I also know my other neighbour does the same. So that most probably why alot of people wont rent long term

Yes, that's what I've noticed the last year or two, rental demand has gone through the roof as the sales market stagnated, no surprises there. You have long stayers coming here and renting instead of buying as their predecessors did in years gone by, and you have a fairly drastic increase of 'visitors' to Hua Hin, some of whom rent for their fortnight, month, 2 months stay. For example during 2010's start of the high season, ie: Oct-Dec, international visitors to Hua Hin increased by a whopping 60% on 2009. Jan-Feb this year the data splitting resorts hasn't come out yet, but international visitors countrywide increased by 70% on 2009.

And imo it's this latter catagory, the 'tourist' visitors, that's keeping the prices high. Typically you see European families who seem to be flush enough, eating out every night etc, and also two familes sharing a 3/4 bed pool villa. Our's I always had down as 35k/month, but this last high season they were 45k/month but these people all seem to want to pay 55-60k/month

Then when you break it down for the two families, each with a teenage kid each who need their own room, and it works out that the 4no. rooms they would have booked in a hotel, are only costing 500B/day at 60k/month rent. Relative peanuts for these working folk having their big annual holiday. So a 35k/month rental that you would happily do a deal at 30k for a 12 month let, has suddenely doubled to 60k/month in high season. And high season so far has gone from November last year to June coming, ime.

So bottom line for MrP and others looking for a long stay 'value' rental, try to look outside properties and/or locations that catch the tourist trade, wherever that demarcation lies. It's akin to expats not often eating in the expensive tourist restaurants, but staying in their expensive rental properties.


Similar situation occuring with rents in UK:
Cost of being a tenant shoots up for the 10th month in a row, as UK rent prices hit record high during November:
http://www.dailymail.co.uk/money/articl ... ember.html

UK rents are rising at their fastest rate for three years as demand for homes to let continues to soar.
http://www.telegraph.co.uk/finance/pers ... -high.html


Another factor is that while there is a load of properties coming onto the rental market, from those going back 'home' for various reasons, as MrP rightly pointed out, there is 'some' level of counter-balance to this in that there is virtually zero 'new' ittinery rental properties coming on line, due to rain stopping play. And these 'rental' properties are essentially normal purchases by those still working and not planning to retire yet, many end up deciding to let them in the meantime.

SJ

[hhfarang]

Perhaps it's me?

I think that's probably it...

[Spitfire]

Totally agree about the ridiculousness of what some ask for rent now, even if it's empty. Why not knock it down a bit so that you are getting some business each month? Doesn't make any sense really.

The other factor, not yet mentioned, is that you're dealing with unprofessional and inexperienced landlords so you are gambling on that front too. They probably only have that property, or at most a couple and live in one themselves, or you are dealing with some thief that lives next door, and as mentioned, that wants to make something on the side.

So, often now, deposit is 3 months rent up front that is often not returned and they have no idea about tenant service or that a house needs maintaining outside of the tenants responsibility.

These points mentioned on the thread are not confined to Hua Hin, for sure.

It reminds me of the car market, no-one is buying 2nd hand cars but they won't knock a hundred grand off to shift it, they would rather keep it at an unrealistic price and not sell than have a "Sale" to make a sale to get cash flow.

Bizarre really, but it's probably a case of these people already being unduly rich and couldn't possibly contemplate the idea of giving a good deal, makes them feel better if they get to screw someone, must help them sleep at night and justify themselves to themselves.

[dtaai-maai]

I well remember my first rental in Thailand; a little bungalow right on the beach in south Samui. 8k baht a month. perfick. After a year, landlord says he want 10k. I said I'd leave, he said bye bye. I said, but if your bungalow stays empty for 6 months, it will be 2 years before you make up what you've lost. He said 'Alai nah?' It stayed empty for at least 18 months.

I'm sure we've all seen houses that have gone unrented/unsold for a year or more - response? Raise the price. Got to make up those losses somehow. Is it really as simple as that? Sometimes, maybe.

You also need to find a good landlord. I've had one (Thai) for over 3 years, but prior to that had two nightmares in 18 months in this area; one Thai, one Brit.

[lomuamart]

SJ,
I'm sure you're quoting accurate figures regarding tourism here (maybe from TAT?). But I just don't see it myself. OK, I don't haunt the bars as much as I used to and I don't eat in fancy restaurants so I'm left with the beach as my barometer.
November to February were definitely busy months and the tides were high so people were concentrated into a smaller space giving it the impression of being even more busy. Busy it was though.
For the past two weeks, with the tide well out so people less concentrated, I assure you that it's almost deserted.
I get a songthaew back from Khao Takiab and again during Nov-Feb the things were 75% full of westerners traveling in and out of town. Nowadays, there's maybe one or two.
Admittedly, this has only really been noticeable over the past month or so and there may well be an upsurge soon with Easter coming up. But that will only last a couple of weeks.
The figures just don't make sense to me based on my limited getting around town.
I will stand corrected though and good for HH if I'm wrong.

[hhfarang]

I think that is somewhat the case Lomu. Our house is on the market and during this past high season (November through February) we had at least two prospective buyers per week looking which was a big uptick from previous months. There has been no one looking at it for the last six weeks so I'd say things (at least in the real estate market) have slowed since the winter holiday season ended.

[Super Joe]

SJ,
I'm sure you're quoting accurate figures regarding tourism here (maybe from TAT?). But I just don't see it myself. OK, I don't haunt the bars as much as I used to and I don't eat in fancy restaurants so I'm left with the beach as my barometer. November to February were definitely busy months and the tides were high so people were concentrated into a smaller space giving it the impression of being even more busy. Busy it was though.
For the past two weeks, with the tide well out so people less concentrated, I assure you that it's almost deserted. I get a songthaew back from Khao Takiab and again during Nov-Feb the things were 75% full of westerners traveling in and out of town. Nowadays, there's maybe one or two.
Admittedly, this has only really been noticeable over the past month or so and there may well be an upsurge soon with Easter coming up. But that will only last a couple of weeks. The figures just don't make sense to me based on my limited getting around town. I will stand corrected though and good for HH if I'm wrong.

The figures were only for October-February though, as there's nothing out yet for TAT Statistics in March-April 2011. International visitor numbers do drop off April onwards historically, so what you've noticed sounds right, it doesn't normally drop off as sharply as you've seen though, except for last year due of the red shirt trouble. It might well turn out that we just had a very busy Nov-Feb high season compared to previous years, and that the low season doesn't mirror the same relative increases!?

The Tourism Authority is the source, and sure the data could be manipulated, but that has been attached to their data since I've been coming to Thailand, so I look at it that if this year's is inflated, so was last year's and therefore all relative. If not relative then it'd all be getting 'exponentially' out of control by now: http://www.tourism.go.th/2010/en/statis ... php?cid=31

So I was basically saying from what I've seen first hand is just how much these short-term 'tourists', ie: staying up to a couple of months, have an effect on the rental market. When they're doubling, or quadrupling in Aussie Mark's case, the normal monthly rates in high season (a good 5 months), then landlords aren't going to be so keen to drop below their lower rate, and commit to it long term. But I believe there's a rake of rentals out there to favour the long-term expat deal-wise, a bit further afield than those servicing tourists, just need sniffing out.


SJ

[buksida]

Tourist numbers aside there is no explanation for the fact that landlords here would rather leave the place empty for two years than offer a discount and actually earn some coin.

Defies logic to me ... then many things do here!

Reading through the old thread I started in 2004 about the same thing it is interesting to note that prices are now generally 70-80% higher (apart from Sarge's bargain basement ) and the number of available rental properties is exponentially more. Those that bought 5 years ago and are now renting for 50k a month (or smart enough to discount a little to expats during low season) must be happy.

[Super Joe]

The explanation for anywhere empty around 2 years must be that the owner isn't really that bothered about letting it. The thing with Thais holding out for a high price, while losing business at a slightly lower price only seems to bother us farangs. It's probably also the case that people who come out 2-3 times a year and tries the same place that's empty again, only to be told it's still 30k/month, isn't aware it let for 30k/week while they weren't here. If there really is a whole load of properties left empty for a year plus, then there's less supply than we think.

You're right about the 50k thing, 4 years back before ours were built, I had to rent a standard 3 bed pool villa for sister in Soi 94, it was 32k/month but got it for 30k. Now they're 50k in the aftermath of a massive recession. But I think that's what the market naturally does when sales market is depressed. And I bet, like we've seen before elsewhere, these prices will drive increases when sales market picks up eventually.

Hua Hin's residential make-up has been based around foreigner-friendly developments/neighbourhood's full of 3 bed properties with pool or access to pool. And these have become 'tainted' by tourist families with money to burn, and instead of paying 42k for a 2 week holiday in hotel bills for them and kids (2no. rooms x 1,500 Baht/night), they rent a nice family house with pool for 30k for the fortnight. That's suddenely doubled the rent they could expect from us that live here.

The rental market for these 'typical' properties has become like tuktuk drivers, they want 200B from us for a 100B trip, cos that's what people staying in the Hilton pay them to go to Grand Market. It's not like touristy shops and restaurants in that you know where they are, and can avoid them. It's the downside to living in a developing and popular holiday resort, there's plenty of upsides, one being a rapid growth in real estate investments, something I've been banging on about for 5 years.

But there's loads of properties outside this group that present excellent value rental-wise, mate rents a comfortable, no-frills 3 bed bungalow, small garden area, for 18k/month, between Soi 102 and 112.


SJ