Main myths about real estate investments

In society, the image of real estate has become entrenched as an eternal value that can be invested in without errors. It is believed that concrete and brick always bring profit, and square meters protect against inflation better than gold. However, myths about real estate investments create false confidence and distort the perception of risks. To invest wisely, it is necessary to debunk and rethink every misconception, especially in the conditions of the modern market, where classical schemes increasingly fail.

Myth #1. Real estate always appreciates in value

Truth: price growth in Thailand is cyclical and speculative, depending on tourist flow, developer activity, and international demand. In 2015–2019, Pattaya and Phuket demonstrated annual growth of 7–10%. However, starting from 2020 — during the pandemic — prices for secondary housing dropped by 15–20%, especially in the condo segment in areas without sea views.

Causes of volatility:

• Oversupply in resort areas;

• Overestimated expectations of “surefire” resale;

• Dependence on foreign demand and flights;

• Decrease in interest from Chinese investors;

• Restrictions on land ownership by foreigners.

In Thailand, one cannot count on a constant rise in property prices. The myth of eternal price growth creates inflated expectations and leads to unjustified real estate investments, especially in projects at the excavation stage.

Myth #2. Rental income provides stable returns

Reality: rental income in Thailand is subject to strong seasonality and depends on location, property type, and tourist flow. During the high season (December–March), properties in Phuket and Samui can yield up to 7–9% annually, but during the low season (May–September), they may remain vacant for 3–5 months.

Risk factors:

1. Downtime due to the rainy season;

2. Airbnb restrictions in some provinces;

3. Frequent booking cancellations;

4. Property wear and the need for monthly cleaning;

5. High competition in the budget condo segment.

Example: A 32 m² apartment in the Kata Beach area in Phuket priced at $120,000 can generate up to $7,000 in gross annual rent. But after deductions:

• 30% agency commission for short-term rentals;

• $600–$800 for services (laundry, cleaning, wifi, check-in/out);

• $1,200 for annual furniture updates/minor repairs;

• $400 for taxes (municipal and condo combined);

Final yield: 3.8–4.5% annually, if there are no vacancies. The illusion of stability creates a false picture of profitability for investors, which is considered one of the myths about real estate investments.

Myth #3. Long-term is safe

Truth: owning real estate in Thailand involves legal nuances, especially for foreigners. The most common scheme is leasehold (30-year lease) with an extension option. Real property rights (freehold) are only available in limited projects and only for apartments (not land).

Important considerations:

• Foreigners are prohibited from owning land;

• Projects may not receive lease extensions after 30 years;

• Some developers disappear after construction completion, leaving management issues;

• Inability to rent out through Booking.com or Airbnb without special permits.

Holding a property for 10–20 years only makes sense with a clear operational strategy, understanding of ownership form, and maintenance reserve.

Myth #4. Commercial real estate investments yield higher profits

It is believed that offices, warehouses, and retail spaces are more profitable than residential properties. In practice, commercial real estate requires more control and is highly sensitive to economic crises. After the pandemic, over 30% of offices in Moscow switched to flexible lease formats or remained unoccupied. Shopping centers in regions lose tenants, and business clusters require constant modernization.

Commercial properties incur losses if:

• The tenant ceases operations;
• The leased format becomes outdated (e.g., call centers or mini-offices);
• Rental vacancies extend for months;
• Repair costs exceed monthly income;
• Regulatory changes prohibit certain activities.

Myths about real estate investments in the commercial sector create inflated expectations of profitability, ignoring the need for experience and management.

Myth #5. The cheaper, the better

Inexpensive real estate may seem attractive: minimal entry thresholds, quick payback. However, in most cases, low prices indicate low-quality locations. In million-person cities, housing in residential areas on the outskirts may cost 2–3 times less than in the center but remain vacant for months.

Risks of cheap properties:

1. Difficulty in resale.
2. Lack of infrastructure.
3. High crime rate in the area.
4. Inconvenient transportation accessibility.
5. Poor technical condition (pipes, wiring, lack of elevators).

Saving on the entrance often turns into constant expenses for maintenance or attempts to “repair expensively.”

Myth #6. Mortgage always increases profitability

For foreigners, getting a mortgage in Thailand is practically inaccessible without a permanent residence permit or work authorization. Even with a bank account, the interest rate starts at 7% annually, the term is up to 10 years, and the down payment is a minimum of 50%.

Options:

1. Purchase through installment payments from the developer (usually up to 24 months, interest-free).

2. Using a loan in one’s home country — and transferring funds to an account in Thailand.

3. Purchase through a Thai company — a complex scheme associated with risks and legal costs.

Mortgages in Thailand are the exception, not the rule, and the strategy of “credit for rent” is almost impractical here.

Real parameters of successful deals: debunking myths about real estate investments

To avoid pitfalls, intuitive assumptions must be replaced with specific analytics. An investor shapes profitability by considering all components:

• Initial price per 1 m²;
• Average long-term rental yield — 3.5% in the capital and 5.7% in regions;
• Apartment payback period — from 17 to 23 years with stable occupancy;
• Income tax from rent;
• Repair costs;
• Maintenance expenses — about 5% of annual income.

Myths about real estate investments disappear when replaced by cold calculations, real metrics, and critical thinking.

Reality check — the main filter for investors

A savvy approach to real estate begins not with belief in guaranteed income but with a thorough audit of conditions, location, profitability, and risk. Each property requires calculation, scenario planning, liquidity assessment, analysis of neighboring offers. Superficial beliefs and myths about real estate investments lead to costly mistakes. Success belongs to those who do not idealize square meters but manage them as an asset, alive, requiring attention, investment, and strategy adjustments.