Should I buy a condo in Cambodia??

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HappyChappy
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Re: Should I buy a condo in Cambodia??

Post by HappyChappy »

clutchcargo wrote: Tue Sep 21, 2021 10:11 am
HappyChappy wrote: Tue Sep 21, 2021 3:26 am So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.
Just on that point there OP. I've wondered about these schemes of 0 or small deposit and then a monthly repayment from the developer.

I don't have much knowledge or experience with this..maybe other members can elaborate more.

Mrs Cargo once took me out to some borey development that was cheap like $50K or something out at whoop, whoop. She got all excited when the sales rep quoted a very small deposit and monthly repayment and you can move in straight away whilst paying off the mortgage.

But I was thinking:

1. I know this probably wouldn't apply to you OP coz you're looking at condos but who would want to live out so far to live in a cookie cutter? I wouldn't and it's cheap for a reason
2. I asked Mrs Cargo: OK, monthly repayment is only $XXX, how long is the term? She had no idea and hadn't asked. And sort of dismissed it with 'rent is dead money' argument. She's only focused on the monthly amount.
3. Now I think in this instance, it's the developer that was providing the mortgages although I have seen other developments advertised where they market them in partnership with one of the local banks. Anyway, to my mind you don't get anything for free in this world and if the the developer is providing the finance, his money is tied up so to speak (albeit secured over the property) and he will want a return on that money. Now with the 0 or low deposit and relatively low/manageable monthly, it seems to me their are 2 ways for the developer to make money as a 'pseudo bank'.

1. a very long term on the mortgage
2. the price of the property is inflated to begin with to cover that.

Hence if it was me, I would extrapolate the monthly by the number of years and come up with the total amount you will repay. Then I would do the same if you organised your own finance from a bank. Then compare the two. I don't know but I reckon the developer option may well equate to some sort of microfinance rate of interest 20+% whereas banks are approx. 10% (Sathapana says from 8.5%).

If I'm right about this, then in theory you could go to the developer and say you have your own finance, bargain hard and negotiate a discount on the purchase price given he's already inflated the price with his finance. But maybe he wouldn't do that coz really he might prefer people to buy at an inflated price and use his 20+% finance. I really don't know what rate they charge but something to explore.

It's funny Mrs Cargo really doesn't have a head for finance and wants everything done easily. Years ago she got sucked into a microfinance loan for a place near the airport. Why? Coz her sister recommended a nice microfinance guy who comes to your house and smooths over all the paperwork such that she hardly has to lift a finger. For her, the thought of going to a bank and asking for loan is onerous and humbling.. Doing some of the legwork to fill out forms, valuation on the property, evidence of her income is all too much.. However easy means 20+% interest. Ouch!
It appears that the catch is..........the interest is shocking, as mentioned above, I'll be buying a place worth 60k and at the end of the mortgage term (15 years) I will have paid 120k.

interest is high because they expect next to nothing down and credit checks basically don't exist, just turn up and agree what you can afford a month.
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Re: Should I buy a condo in Cambodia??

Post by HappyChappy »

Bitte_Kein_Lexus wrote: Tue Sep 21, 2021 6:53 pm
HappyChappy wrote: Tue Sep 21, 2021 3:26 amWell to clarify on a few points. I've got a girlfriend I plan to settle down with....but am not stupid enough to get a place in her name. I'm a credible teacher out here and plan to stay for years to come.....so if I'm renting anyway surely buying a place saves me from renting which is just dead money. I'm happy to just live in it with the hope that further down the line I will be able to rent it out if I plan on moving or re-investing.

So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.

My main thought is now, if I want back onto the property ladder, do I invest here and live in it saving me on rent. Or buy a place in Europe, rent it out, and have a nest egg ticking away elsewhere.

Really need to take some serious thought here because I would hate for it to all fall to shit and have a worthless apartment and no savings.
Allow me to give a few pointers as someone with some experience in the local RE sector. I've bought and sold many pieces of land and apartments. Nothing huge, just small-time investor stuff, but I do have experience in the whole buying/selling process and all that stuff.

If I were to do it all over again, I'd rather invest in my home country. Now, some of these Cambodian purchases were great (one with a 16XROI), but in hindsight, I could have used low interest rates back home to leverage myself more efficiently. Property would then be worth ~x3 more in a currently red-hot market. Where I'm from, houses are now selling within days and people have to bid higher than the asking price. I thus could have covered the mortgage easily and ended up with a nice rental income in a country with proper rule of law. I could have paid a company a flat rate (~8%?) to find tenants, deal with them, manage repairs etc. Plus something back home should I ever need to move back. Owning property is never "easy" anywhere, but Cambodia comes with its own set of headaches.

A few issues I see in your case:
1-It appears you don't have enough to buy cash or even for a downpayment. This means you've got no choice but to use local banks.
2-There aren't many "zero interest" options. On paper, a few offer low interest, but you're looking at getting the end product years down the line. Otherwise, you're looking at 5-6% minimum (for 2-3 years, then 8%+), but as a foreigner, only a few banks will take you on and they'll charge 9-12%. That's huge and will make your condo way more expensive than on paper if you can't afford to pay it off FAST. Local banks do allow for early repayments (as opposed to banks back home), but if you can't come up with cash quickly, your 63K tiny condo ends up costing 120K and you'll have trouble offloading it at that price.
3-As mentioned, build quality is an issue in both boreys and condos. If you're done paying after 8 years and now you need a bunch of serious repairs, you won't be happy. I'd choose a house over a condo.
4-As mentioned, Evergrande could have serious repercussions on the local real estate market. Wait and see...

I think your home country or Portugal/Spain would be better long-term options as a foreigner. I mean, I don't regret buying here, but at the moment I don't think it would be worth it. Literally tons of empty boreys and condo towers, and prices are high all things considered. Especially condos. The market for fairly priced condos is very limited, and people can't find buyers. Otherwise you're looking at a 300K+ condo, which is completely bonkers given local infrastructure and worker's salaries.
I think this comment nails it....

"I thus could have covered the mortgage easily and ended up with a nice rental income in a country with ***proper rule of law***. I could have paid a company a flat rate (~8%?) to find tenants, deal with them, manage repairs etc".

I can buy a place in portugal and the rent I would get from it would cover the mortgage, plus I pay an agency to deal with any of the more laborious processes of being a landlord and it becomes easier to manage. Continue to rent here and I'll have the ability to move and live where suits me at the time.

The thing is for me is the situation of wanting to stay out here and the resentment that comes with renting when I have to option to buy.

At this stage I'm going to extend my rental lease for 6 months while I way up the benefits / negatives in more detail.
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Re: Should I buy a condo in Cambodia??

Post by Clutch Cargo »

HappyChappy wrote: Mon Sep 27, 2021 7:34 pm
clutchcargo wrote: Tue Sep 21, 2021 10:11 am
HappyChappy wrote: Tue Sep 21, 2021 3:26 am So far I think I've found some places that actually have 0% down payment. So I move straight in and start paying a mortgage. Failing that I can get a 10 percent mortgage and realistically have the money ready by mid/end of 2022.
Just on that point there OP. I've wondered about these schemes of 0 or small deposit and then a monthly repayment from the developer.

I don't have much knowledge or experience with this..maybe other members can elaborate more.

Mrs Cargo once took me out to some borey development that was cheap like $50K or something out at whoop, whoop. She got all excited when the sales rep quoted a very small deposit and monthly repayment and you can move in straight away whilst paying off the mortgage.

But I was thinking:

1. I know this probably wouldn't apply to you OP coz you're looking at condos but who would want to live out so far to live in a cookie cutter? I wouldn't and it's cheap for a reason
2. I asked Mrs Cargo: OK, monthly repayment is only $XXX, how long is the term? She had no idea and hadn't asked. And sort of dismissed it with 'rent is dead money' argument. She's only focused on the monthly amount.
3. Now I think in this instance, it's the developer that was providing the mortgages although I have seen other developments advertised where they market them in partnership with one of the local banks. Anyway, to my mind you don't get anything for free in this world and if the the developer is providing the finance, his money is tied up so to speak (albeit secured over the property) and he will want a return on that money. Now with the 0 or low deposit and relatively low/manageable monthly, it seems to me their are 2 ways for the developer to make money as a 'pseudo bank'.

1. a very long term on the mortgage
2. the price of the property is inflated to begin with to cover that.

Hence if it was me, I would extrapolate the monthly by the number of years and come up with the total amount you will repay. Then I would do the same if you organised your own finance from a bank. Then compare the two. I don't know but I reckon the developer option may well equate to some sort of microfinance rate of interest 20+% whereas banks are approx. 10% (Sathapana says from 8.5%).

If I'm right about this, then in theory you could go to the developer and say you have your own finance, bargain hard and negotiate a discount on the purchase price given he's already inflated the price with his finance. But maybe he wouldn't do that coz really he might prefer people to buy at an inflated price and use his 20+% finance. I really don't know what rate they charge but something to explore.

It's funny Mrs Cargo really doesn't have a head for finance and wants everything done easily. Years ago she got sucked into a microfinance loan for a place near the airport. Why? Coz her sister recommended a nice microfinance guy who comes to your house and smooths over all the paperwork such that she hardly has to lift a finger. For her, the thought of going to a bank and asking for loan is onerous and humbling.. Doing some of the legwork to fill out forms, valuation on the property, evidence of her income is all too much.. However easy means 20+% interest. Ouch!
It appears that the catch is..........the interest is shocking, as mentioned above, I'll be buying a place worth 60k and at the end of the mortgage term (15 years) I will have paid 120k.

interest is high because they expect next to nothing down and credit checks basically don't exist, just turn up and agree what you can afford a month.
Of course if inflation was rampant and/or real estate prices booming that option might not be so bad. However now, that doesn't exist and you'd need a crystal ball to know what will happen in a few years. But anyway, if one can, I would stay clear of vendor finance.

Interesting you mention the lack of credit checks but I suspect the vendor is not too worried about default coz if one does, they hold the title anyway and can kick out the buyer and probably hold the deposit.
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Re: Should I buy a condo in Cambodia??

Post by Kammekor »

clutchcargo wrote: Mon Sep 27, 2021 8:09 pm
Interesting you mention the lack of credit checks but I suspect the vendor is not too worried about default coz if one does, they hold the title anyway and can kick out the buyer and probably hold the deposit.
Plus the 1% closing commission they charged you.
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Re: Should I buy a condo in Cambodia??

Post by armchairlawyer »

This is worth a read, on the topic of condos (scroll down to 30 Sep post at 5.17pm), business-and-finance/the-beginning-chin ... l%20estate
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Re: Should I buy a condo in Cambodia??

Post by nerdlinger »

I’m not an expert but it seems like one option is to put the money you would have put into a condo into a REIT instead and use the dividends to offset your rent. The point being that you’d be hedged against property prices (and therefore rent) shooting up, and REITs generally do better than typical stock index ETFs.
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Re: Should I buy a condo in Cambodia??

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nerdlinger wrote: Tue Oct 05, 2021 4:18 am I’m not an expert but it seems like one option is to put the money you would have put into a condo into a REIT instead and use the dividends to offset your rent. The point being that you’d be hedged against property prices (and therefore rent) shooting up, and REITs generally do better than typical stock index ETFs.
I like your thinking, assuming you are thinking of US REITs.
But REITs are companies and putting all your money into one is risky as the management can fcuk up. There is an ETF, ticker XLRE. This includes the full range of REITs, commercial as well as residential. And some commercial may not do so well, office and hotel REITs being examples.
Resi and public storage REITs have a much better outlook. My faves are AMH, AVB, CUBE, PLD, PSA. The first two give you upside with the US resi market and a good yield along the way. The storge REITs have a good outlook at the moment as they can ramp up their rents much more quickly when demand permits, and demand atm is hot, so good potential for re-rating by sell-side analysts.
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Re: Should I buy a condo in Cambodia??

Post by Doc67 »

@HappyChappy

Here you go, a $97,500 condo bought in 2019, and now can't sell it for $75k. Chances are you could get it for $65k is you wafted the cash in his face.

housing-for-rent-sale/under-market-pric ... 46768.html

In the UK (where we are both from) 100K to 65k in 2years would be the mother of all property crashes. UK property is a one way bet, it is not like that here.

A $30k+ loss in 24 months is $1250 a month. Quite a lot for a 55sq metre apartment.
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Re: Should I buy a condo in Cambodia??

Post by phuketrichard »

as they are overbuilding condos ( at least in PP)
the value of ur new condo is worth less in 2 years and continues to decline yearly, than what you paid for it,
IF you could sell it

Land on the other hand .........
In a nation run by swine, all pigs are upward-mobile and the rest of us are fucked until we can put our acts together: not necessarily to win, but mainly to keep from losing completely. HST
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Re: Should I buy a condo in Cambodia??

Post by nerdlinger »

armchairlawyer wrote: Tue Oct 05, 2021 9:48 am
nerdlinger wrote: Tue Oct 05, 2021 4:18 am I’m not an expert but it seems like one option is to put the money you would have put into a condo into a REIT instead and use the dividends to offset your rent. The point being that you’d be hedged against property prices (and therefore rent) shooting up, and REITs generally do better than typical stock index ETFs.
I like your thinking, assuming you are thinking of US REITs.
But REITs are companies and putting all your money into one is risky as the management can fcuk up.
UK but yeah. My tentative maybe-plan is spread it across a few companies and maybe one US or EU reit-based etf. Gonna look for ones investing outside London itself cause it looks like a lot of people in that particular city are leaving for various reasons (Work from home, Brexit etc) and I don’t fancy the bubble’s chances of stretching much further.
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