Recently, I saw some very honest videos of people who made some money in properties. This guy made some (small) investment into purchasing a condominium in Thailand, and in a short while decided to reinvest his profits into buying his second property.
While his first made money, his second turned out to be the albatross around his neck.
Basically the couple worked for 5 years and saved. With that savings, they used the savings to look around for an investment property which they bought and paid the downpayment,stamp and legal fees etc. This first property was located near the center of Bangkok, near the BTS and was deemed as of good value, and the mortgage repayments were helped mainly because they found good tenants and the rental payment covered the mortgage payments.
Later, the first property appreciated in price, and they borrowed some more off the new increased valuation (bad move) and reinvested into another condominium with another developer in another part of Bangkok. They plonked their downpayment and made their progress payments for the yet to be built condominium (off plan purchase) as the prices dangled by the developer were pretty good.
The developer was late in the progress of the condominium. They ran into cashflow problems and went into bankruptcy. So, the couple were left scrambling to recover their losses from the second property - when COVID hit in 2020. Foreigners were leaving the country in droves due to lack of work and it was psychologically safer to ride out the pandemic in one's native land where the medical costs are normally 100% covered should one fall ill with COVID. So their first investment property also went tenantless.
The couple were saddled with 2 mortgages and no incoming cash from any forseeable tenant. Luckily they both were still working, else it would have been a major catastrophe. After several months of desperate efforts, the husband managed to sell the first property for below valuation and clear both mortgages with interest and they left with no savings but were not in some big financial black hole.
Too many variables are at play here :
1.the developer's financial situation are unbeknownst to potential purchasers of condominium units. They can go bust. No one is deemed TOO BIG TO FAIL unless they were big banks in USA.
2. Economy can often and takes a massive hit from Black Swan events like the Great Financial Crisis of 2008 and COVID 19. Everything goes south and people are left without livelihoods, jobs and good health.
3. Authorities do not always work in tandem with developers ; do not assume that there will be no sudden change in foreigners' quotas to own property, loan to valuation ratios or other Government policy changes. Foreigners will always bear the brunt of Government's U Turns in policy involving properties. Take a look at Malaysian properties for example.
4. In many democracies the Government changes every 4 to 5 years and policies go out the window.
Making money calls for a multitude of things to be all aligned at the same time.
1. The investor's cash must be the amount he is prepared to lose all or most of.
2. 90% of any business or investments go bust very soon. So do you know of anybody who has not lost any money in equities (all transactions net profit ?).
3. Luck plays a big part in making money.
When you make the first decent amount. EXIT. Don't outsmart the market or competitors by staying longer than what is absolutely necessary. There are many hungrier, smarter and more desperate people than YOU.
You invariably will lose more or all of your capital.
The only way to leave a casino with a small fortune is to enter with a large one.
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