I'm selling some houses and leasing some commercial spaces in center of HCMC. and an Californian guy asked about a house that I wanna sell.
After several emails asking about the price, address, reason why want to sell,... he asked me "What could I rent out the unfurnished house for?". To make sure not waste time of each other, I asked him if he knows anything about real estate in Vietnam because. He said he knows well.
But in the last email, after knowing the price, he replied:
"Cam on for the information. The asking price you say is 16B VND or $762,000 usd and it is F/C. You say it will rent out at $1800 per month. The net operating income, after operating expenses including 10 % for property management and applying vacancy factor, might be in the range of $1000 usd per month or $12K usd per year. If you divide the net operating income by the asking price, then my return on $762,000 is 1.57 %. The return is not good unless this property is in a rapidly appreciating area.
I can put 16B vnd ($762,000 usd) in a Viet bank for one year and get 7.99 % annual return or approx. $60,960 usd in annual interest. It appears I am better off with money in the bank.
I would be willing to consider buying the improvements only and lease back the land from owners with an option to buy the land under the house. Let me know if your sellers are open to this"
Am I silly to not to understand the business the way he's thinking or does he knows nothing about real estate in Vietnam? Is this the way an investor consider a business: rather put their money in a bank than invest in business.
Any one can help me with the interest from the bank & the return he's saying, please? I don't know where he gets 7.99% annual return. There's no such interest rate of USD account in any banks in Vietnam.