All Forum Posts by: Adam McIntyre

Hey everyone, I'm about to put an offer in on my first property. I've never bought (and therefore never negotiated the price of) a house. So I'm curious what's the typical wiggle room you get out of a seller? It's a new House and the seller is the architect and builder. He knows there is a strong Airbnb demand in the area so he is reluctant to budge on price. However I know he doesn't want to hold this house too long. So, what would you consider a good % discount on the asking price? Would you consider paying full price a bad move if the numbers are reasonable? Or do you always look for discounts? Cheers!

@Steve Vaughan thanks for the reply - fixed interest it is (i suspected so much as well). Off to the bank today so I will discuss all this with them. And thanks for the reminder about PMI, when I was 18 I took out PPI on my credit card and wow was that pointless and costly.

RE: $100k, I make software apps and sell them from my websites. I sold one of my websites to raise the capital. Websites are kinda short term - especially the niches I'm in - so my plan now is to try and transition to long term property rentals.

Build a couple more websites, then sell to buy, hold and earn rental income of $6k per month (because I rarely spend more than that). 

I live in Thailand too, so I'm hoping to buy properties cheaper than back home in the UK, but still charge western tourists higher rental rates. That's my assumption, but I could be / probably totally wrong. 

Thank you all for the feedback, this is really interesting to hear. It's the mindset of a pro and an amateur. 

Another question related to this discuss would be: fixed interest or variable? 

Wow this is exactly the sort of comment I was hoping to hear. I never thought about the fact you're essentially paying for your own money back. 

I get so caught up on the total interest paid though that it does make me wonder if I played a slower game I could win the race.

Thanks for the reply @soh. Would you suggest borrowing for as long a period as possible or paying off as quick as is reasonably possible? I should also mention I'm looking to buy and hold not to flip.

I'm having a battle inside my head: • do I put a large deposit down on a house and pay high monthly rates to pay off in ~5 years Or • do I put a low deposit down and stretch the mortgage for cheaper monthly payments and more free cash flow for me Some background information -- I have $100,000 cash to spend and the house I'm looking at is around $150,000 so either way I will need to borrow some cash. The property is in a popular tourist location and will be used as an Airbnb rental. conservatively I expect it should bring in $2,000/monthly, but at worst it should generate $1,000 (already has a tenant paying this). My goal is to generate $6,000 per month in passive income whilst building up a property portfolio in my favourite places to travel between during the year. I don't want to pay rent and ideally I want the mortgages taken care of by tenants (or paid up). But what would you suggest? Paying the mortgage off within 5 years means I can take all the revenue from rentals and then borrow against the house to buy another. It'll take much longer to reach $6k per month but I'll be freed from monthly bank payments much faster. However If I take a longer term mortgage I pay more interest in the long run, but smaller monthly payments mean quicker cashflow for me and smaller payments during low season. It also means I can spread my $100,000 cash over 2-3 property deposits rather than just one. I'd love to hear what you pros suggest. I was always against having debt but since reading bigger pockets I see there can be some big benefits to finance. Thanks in advance!

Paul, thanks for the reply. Definitely some food for thought.

"..Just because you have 6 beds in the house doesn't mean you are going to get 6 paying warm bodies in the house.... with the demographics of your tourists, you will be renting it out to 2 people at a time most of the time. 2 friends or a couple. In this scenario you will get around $25/night. Maybe $40."

My target is to the rent the whole place, not individually. I'm just saying that if I had to go per-person for whatever reason, I have that as backup. Ideally I'd rent out for at least $100/night, which would still be cheaper than the local high-end hotels and just a bit more per-person than a shared hostel.

You're right to call out the current market demographics though - currently it is just cheap backpackers or luxury high-end travellers. I want to target the demographic in the middle, which I feel isn't currently catered for. To me a gap in the market is good, but I've never played with real estate before.

"Who is going to clean the place between stays?" I have some friends with local staff who can cover cleaning / maintenance.

"Is there local competition that can undercut your prices." Ideally I don't want to undercut people. I'd prefer to provide higher quality accommodation for slightly more/the same price  as competitors over entering a race to the bottom. 

"Is it possible that govt regulations may interfere with your plan? If the government doesn't give you problems, how are you going to deal with the local organized crime if you are stepping into their territory?"

Nationwide government changes could cause a stir, but nothing locally. In fact Thai authorities in one province did come out and say any foreigners renting their condos need to acquire a work permit. I think this'll go nationwide soon.

One way I'd like to try and counter attitude changes against Airbnb / STR is by branding my property, creating a website and marketing it independently. Then if Airbnb is banned, I still have some goodwill. I will also run my rentals as a local company too so if I need a hotel license I will do that too.

Hi everyone, so glad to have discovered this forum. I'm looking to get some feedback on my plan and potentially make a start into the world of real estate.

I am looking to build my first vacation property which I will use partly as a home for 3-6 months of the year, and the other 6-9 months hopefully rent out on AirBnb.

I will build a two bedroom property so that even during periods that I am using it, I can still rent out a room to cover my running costs. Also, when it's listed on Airbnb full time I have the option to offer 2 private rooms and a sofa bed if renting the entire place doesn't work out.

The house will be in Pai, Northern Thailand. I'm going to build something like this. Including land, my architect says it can be done for $100-$120k cash.

My concern, however, is the market.

The whole of pai is largely a market of low-budget backpackers paying $6-10 per night to stay in ****** hostels. There is also a small but very well catered for luxury market of 5* hotels. Overall, I'd say 90% of the total visitors to Pai are tourists, with the other 10% expats and locals from the nearby city of Chiangmai taking weekend trips.

I will be building this property with the majority of my available cash, so I want to make sure I can earn at least $1,000/month profit when I'm not using it ($2k+ would be the goal). (I recently sold a business and now I'm in the icky middle phase where I have to figure out how to make money again)

So I've been weighing up the pros and cons:

PROS

1. I love Pai. I love spending time there. Living in Pai for 3-6 months of the year without needing to pay rent is a massive thumbs up (especially when I'm not earning an income right now) 
2. Currently Pai tourists are catered for by either cheap hostels or high end hotels. There is no inbetween modern short term rental properties with nice kitchens, living rooms etc. I feel that if I build it, they will come (or, they're already there with nowhere to book). Personally one of the reasons I've decided I want to build a house there is because I'm tired of having nowhere I can rent short term that's high enough quality.
3. At the very worst, if I had to rent the property out full time it should be able to rent to someone for $1,000/monthly
4. If I can offer accommodation for 6 people (2 double beds and a sofa bed), at $100/night that's still only $16 per person which would almost compete with hostel prices to groups of travellers.
5. Pai is a huge tourist destination and it is only growing. The local government are working on upgrading the airport so larger planes can land (currently only 12 seater single engines can) and the 3-hour road from the next major city has recently been upgraded. There's certainly no shortage of travellers to attract.

CONS

1. There are so many cheap hostels and cheap hotels here the government recently stopped giving planning permission to hotels until further notice. There is a lot of competition on the low end and the high end.
2. As a foreigner I can't actually own the land my house is built on. (it's in my missis' name and leased to me for 30 years but still a risk worth mentioning)
3. If my gut is wrong and there isn't room for a middle-market short term rental, I'm down a serious chunk of cash.
4. Pai is reliant on tourism. If tourism drops for whatever reason (military coups, bird flu, earthquakes, typhoons etc) I'm screwed.

The one overriding factor in this debate for myself is that I love Pai. However the investor inside me wants to minimise risk. But I also see this as an open market. The nearest AirBnb in quality (imo) charges $25/n and is booked out constantly. I've stayed there myself and it looks good but it's only acceptable for a night or two. It's not a home.

I have a feeling that once I commit and do this, I'll be so booked out that I'll think "why did I ever worry?". But feedback from professionals like you folks is always a smart idea too.

Maybe you can share your worries when you started out? Where they ill founded or not? Or maybe you can simply poke some real good holes in my plan.

Cheers!