@ RK Lectio

From the previous episode , the journey of acquiring my first investment property began with an unexpected twist

"I intended to rent a condo, but ended up owning one instead."

I arranged a meeting with a sales agent to view the actual property and check out the available units. At that time, the units hadn't sold out yet, so my wife and I asked the agent to show us all the available rooms. We finally came across a corner unit on the 6th floor, facing away from the main road, with a clear, open view unobstructed by tall buildings. The breeze flowed in all day if the windows were open, making it the only unit that felt truly spacious and comfortable. Interestingly, this unit had fallen out of reservation three times; three different potential buyers had failed to secure bank loans.

According to the agent, these weren't just any buyers—they had stable careers and seemed well-qualified. That day, my wife and I decided to "increase our debt" with the sole intention of finding a second home for me to live closer to work, so I could walk to the office without the hassle.

I decided to apply for a loan from the bank that offered the lowest interest rate at the time. The bank approved the loan, allowing me to borrow 80% of the property’s value.

At that time, my family was already carrying a mortgage of about 10 million on our main home. Purchasing this additional condo would raise our total debt to around 12 million. However, with our financial situation, we could manage the payments, which accounted for 35% of our monthly income. We considered this 35% burden to be our limit and decided not to take on any more debt.

I took ownership of the condo in November 2019, right after the first wave of the COVID-19 pandemic. The condo came with several promotions

Two years of free common utility fees Free furniture, including two air conditioners, curtains, a water heater, and a bed with a mattress Built-in features such as a shoe cabinet, kitchen counter, dining table, TV stand, and wardrobe We only needed to buy a sofa, refrigerator, microwave, and set up the internet, which was sufficient for a single person to live comfortably.

My wife remarked, "Since we’ve bought it for you to live in, take good care of it. We don’t know what the future holds. If you don’t stay here, and our child gets into a nearby school, at least he’ll have a place to live."

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The Beginning of My Real Estate Business

As time went on, my family encountered a kind friend who introduced us to a Buddhist monk. He taught us how to incorporate mindfulness and self-awareness into our daily lives, which brought a sense of peace back into our home. Laughter and smiles returned, and the idea of living apart never materialized—we moved back in together. That’s when I began exploring ways to rent out this condo.

I started by informing the condo’s juristic office that my unit was available for rent, asking them to contact me if anyone showed interest. I also posted rental listings on various websites.

About a week later, several real estate agents reached out, offering to help market the property and find tenants. At that time, I had no knowledge of how beneficial it could be to work with an agent. So, I consulted a young agent who was just beginning their career, which gave me a lot of insight into the role of an agent. In summary, here's what I learned

A real estate agent acts as a mediator, connecting property owners with potential clients. Agents can be either affiliated with a real estate company or work as freelancers. Some agents may ask for an exclusive agreement with the property owner, which means that if you agree to let them handle the sale or rental, you’ll need to stop marketing the property on your own and refrain from working with other agents. In my view, this approach seems unfair and restrictive for property owners.

If an agent successfully rents or sells the property, they receive a commission from the owner, based on a pre-agreed percentage. In my case, since I was renting out the condo, the agent’s commission was equivalent to one month’s rent. If the tenant renews the lease for more than a year, the commission terms can vary—either a yearly payment or a one-time fee at the start. The higher the sale or rental price the agent secures, the greater their commission.

The agent is responsible for preparing all the rental agreements. If they manage to rent out the property, they will arrange for the tenant to sign the lease and assist the tenant as much as possible until the process is complete, at which point they collect their commission from the property owner. Throughout this process, the owner can still meet with the clients—this isn’t against any rules. However, some investors prefer to hand everything over to the agent and just wait at home to receive the rent and a copy of the lease agreement.

In my opinion, even if you have an agent, you should still monitor their work and get to know the tenant well. How else would you know if the agent is trustworthy or how your tenant lives? The details of the lease are also crucial and should be reviewed carefully to protect yourself and your property. You can even use your own lease agreement if you prefer; this isn’t against any rules.

Renting out property is a business in itself. If you plan to own real estate and leave all the work to the agent while you stay home, the results of your investment will likely reflect the effort you put in. Afterward, the agent is supposed to take care of the tenant on your behalf, including following up on missed payments, maintaining the condition of the unit, and acting as the point of contact for minor issues like clogged drains or lost keys. For major problems, the agent will inform you so you can arrange for repairs.

All of my agents worked very quickly, bringing potential clients to view the condo regularly, but none of them closed the deal. Then one day, I received a call from an unfamiliar number. It was an expat who worked as an English teacher at a nearby international school. He wanted to move out of his old apartment and find a new place with convenient transportation. He had asked the condo juristic office about available units and got my number from them. I arranged for him to visit and view the condo. Here’s a summary of our conversation

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He really liked my condo. It’s a corner unit with a nice breeze, an open atmosphere, and it’s clean—perfect for a couple like him and his wife. They are a Christian family, and they join online prayers with their church community every Saturday. His wife has an electric keyboard for playing hymns, which they can do as long as the noise level is kept reasonable. The teacher has mobile internet, which is sufficient to create a hotspot for online meetings, although the speed is limited once he exceeds his data package. They cook their own vegetarian meals using an electric stove for simple dishes, not heavy Thai-style cooking. They don’t plan to have children yet and intend to stay in Thailand for the long term with no plans to return to their home country. He holds a valid work visa, has a clear employer, and is covered by social security as per labor laws. The reason they wanted to move to this area was for the convenience of commuting, with less traffic. During the COVID-19 lockdown, both had to teach online from their apartment, which led to high utility bills. When they inquired about the high costs, the apartment management simply responded that if they used more, they had to pay more, which left them dissatisfied. They wanted a new place where they could save some money. Initially, I set the rent at 10,000 baht per month, but I was prepared to negotiate, and we agreed on 8,000 baht per month.

A week later, we met at a nearby shopping mall close to their current apartment. I explained the deposit requirements, which consisted of three parts totaling 23,000 baht

• 8,000 baht for the first month's rent
• 8,000 baht for the last month's rent
• 8,000 baht as a security deposit which would be refunded if the condo was in good condition upon move-out, or used for repairs if necessary.

This agreement included signing the lease, transferring the payment, and handing over the keys and access card.

I hadn’t installed a smart TV in the condo because I wasn’t sure if they were into watching TV. The family mentioned they didn’t need one since they watch everything on their computer. I also installed fiber internet, which really impressed them because it was essential for their work. They were fine with paying the monthly internet service fee.

I didn’t initially provide a washing machine because the building has coin-operated laundry machines in the common area. When I asked if this was convenient, the family exchanged a glance and then politely asked if it would be too much trouble for me to provide one. I assured them it was no problem at all (this was their second surprise). Since the unit hadn’t been rented before, buying a washing machine to sit on the balcony without knowing the tenants’ lifestyle didn’t seem wise—it would just waste the warranty period. But once I knew they preferred to do laundry privately, I arranged it.

I also offered a cleaning service from a trusted housekeeper to come once a month, as well as air conditioning maintenance twice a year, all at my expense. I would also handle the condo’s common utility fees.

“All you need to do is move in with your suitcase,” I told them. Before we parted, the family asked for a moment to pray for me and my family, thanking us for being so kind to them as tenants. That’s how we concluded our meeting that day.

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As of August 2024, when I’m writing this article, this family is still renting my condo, and they’ve renewed their lease for five years. Thanks to my wife’s excellent financial management skills, the mortgage on this condo has been fully paid off—it’s now entirely ours. This condo has become a stable income-generating unit in our family’s real estate portfolio, providing a net profit margin of 3.56% per year.

This case with the professors was relatively straightforward, but to think that real estate is always this easy would be a mistake.

In the next episode, I’ll share a more challenging real estate case—a property I inherited from my father. It’s an old building nearly 40 years old, plagued with structural issues and unfair treatment of tenants by the previous owner. Stay tuned for that story!

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Concepts to Share

Borrowing Can Seem Scary Because It Comes with Debt

That's true, but if borrowing is to purchase a cash-generating asset or to invest in a business that provides returns and sustains your family, then it makes sense. In my case, the interest burden was about 2.xx% per year, while the net profit was 3.56% per year. The difference is profit. However, borrowing comes with the trap, "If I want something, I’ll just borrow (from banks) for it." This is a very dangerous mindset if you're not careful and end up making risky decisions.

Fixed Costs

Whenever you own a condo, there are fixed costs to pay each year, such as the common utilities cost. This cost is paid to the condo’s management team to maintain the common areas like elevators, swimming pools, fitness centers, and salaries for security and housekeeping staff. These costs are usually outlined in the initial purchase agreement. For example, my most recent condo is 32 square meters, with a monthly common utilities fee of 45 baht per square meter, collected once a year: 45×32×12=17,280 baht per year

Often, when purchasing a condo, there’s a promotion for "free common utilities" for a certain period. Always confirm this with both the condo juristic office and the project developer to plan your finances accordingly. In my case, I provide free cleaning and air conditioning maintenance to all my tenants. These are also fixed costs. In summary, don’t overlook fixed costs when calculating rental returns. The 3.56% profit from my condo rental to the professors is the net profit after deducting all fixed costs. The gross profit margin is about 4.05%.

Visit the Property in Person, Invest Only in Quality Assets

I don’t trust what I haven’t seen with my own eyes. I don’t believe in promotional graphics, influencers, YouTubers, or TikTokers. I visit every room, ask the salespeople questions, and invest only in properties that are completed and ready for sale. I don’t invest in pre-sales or properties under construction. I observe the quality of the surrounding community. If the property meets my criteria, I add it to my watch list. I don’t rush into buying anything.

In the world of investing, there’s no such thing as quick riches. Real estate is no different.

Rushing to buy without screening the quality of the property is the first step to losing money. Buying pre-sales properties is like the first step toward failure. It’s like chasing stock prices out of fear of missing out, only to end up with misery.

How You Treat Your Tenants Reflects on Your Results

Owning rental properties is a business. The outcome of your investment depends on how much effort you put into it. The common misconception, almost a propaganda, is that owning a rental condo in a good location allows you to sit back and collect passive income without doing much.

If you’re thinking of getting into real estate, I urge you to abandon this mindset. It won’t just prevent you from reaching your goals; you might end up losing money, dipping into your savings, or even liquidating your portfolio. As I’ve said, renting out properties is a type of business.

From my conversation with the tenant, what would have happened if I hadn’t taken the time to understand his family’s lifestyle? If there was no washing machine or internet when they moved in, it would have been difficult for them as foreigners to ask for help. Understanding your tenants’ needs builds trust, ensuring they feel confident in your ability to take care of them. That’s why the teacher’s case ended well. Most tenants prefer to deal directly with the owner rather than through an agent.

In the next episode, I’ll share more challenging experiences in tenant management, emphasizing how crucial it is to understand your tenants