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Investing in real estate or having interest-bearing account?

Hi there,
What would be better/safer: investing in real estate in HCMC or having an interest-bearing account in a Vietnamese bank (that can also be foreign bank in Vietnam)?
I've been told in Vietnam interest-bearing account can be 8%?
What would be pros/cons of these 2 options?

The safer option is in the bank. The higher return may be property,if you buy right.

But is it 8% interest? Why so high? I've never seen such a high rate in Europe...

It's high because the lending rates are also very high. It was 14% about 5 years ago, and lending rates were 20-22%.

I've never put my money in the bank nor has my wife or any of her 7 siblings and their families.

8% eh? Man I've been missing out on all those free money.

Many will encourage buying, but how difficult is it to sell? If you are stuck with the 'investment' what good is it if you want/need to sell it?

Personally, I like to plan backwards. That is, what are my options to liquidate the asset when needed.

Remember, Vietnamese like 'new and trendy' things, so a used property might not be as appealing when there are many new buildings being constructed.

7Steven :

Many will encourage buying, but how difficult is it to sell? If you are stuck with the 'investment' what good is it if you want/need to sell it?

Personally, I like to plan backwards. That is, what are my options to liquidate the asset when needed.

Remember, Vietnamese like 'new and trendy' things, so a used property might not be as appealing when there are many new buildings being constructed.

Agree, but I have noticed more and more locals are buying renovated properties which are generally much cheaper than the new flash joints being built. But overall yes you are correct on the old versus new theory.

khanh44 :

I've never put my money in the bank nor has my wife or any of her 7 siblings and their families.

8% eh? Man I've been missing out on all those free money.

So where do you keep your billions of dong?

can't say lol

Damn, I was hoping to make a quick buck.

When interest rates were 17% it was great, but the downside was for  the poor buggers who were borrowing at around 22%.

interest rate 17%, inflation must have been 20+%.

I see people paying 100+% interest because they don't understand compounding. They see the daily or monthly payment breakdown without factoring their initial deposit and get screwed easily.

Do share.  ;-)

khanh44 :

can't say lol

I've just been to HSBC, they told me 3.9%. The 8% I heard was from Eximbank.
Anyway, I plan to invest in real estate but i'm just afraid it might burst soon.

There is another option which is , I believe, more feasible, you get 85% of profit from the rental program, higher than the interest rates and absolutely own the property for the whole life. Buying condotel is a new model property in Vn but popular in foreign markets.
Do not hesitate to pm me for more information
Thank you !

Ok, PM sent.

elena2710 :

There is another option which is , I believe, more feasible, you get 85% of profit from the rental program, higher than the interest rates and absolutely own the property for the whole life. Buying condotel is a new model property in Vn but popular in foreign markets.
Do not hesitate to pm me for more information
Thank you !

Be very,very careful. Only invest what you can afford to lose. Most banks are giving 7.6% for 1 year, the staff at HSBC have advised you badly.

Condo-hotels are a bad investment, they promise the earth and give you very low returns, read below.

Additionally, there are tons of financial risks with condo-hotel investments. First, there are risks when buying into an HOA community. You also have the risks that come with owning part of a hotel such as a downturn in the economy or poor management of the property. Lastly, the allocation of expenses between the condo-hotel units and other portions of the property – such as a developer-owned hotel or retail space – presents a risk.

colinoscapee :

Most banks are giving 7.6% for 1 year, the staff at HSBC have advised you badly.

Thanks so much for this reminder. I forgot the rule n1 in Vietnam: always ask many people to get a proper answer... I will ask another one...

colinoscapee :

Condo-hotels are a bad investment, they promise the earth and give you very low returns, read below.

Additionally, there are tons of financial risks with condo-hotel investments. First, there are risks when buying into an HOA community. You also have the risks that come with owning part of a hotel such as a downturn in the economy or poor management of the property. Lastly, the allocation of expenses between the condo-hotel units and other portions of the property – such as a developer-owned hotel or retail space – presents a risk.

Thanks again. I very appreciate this advise. I just wanted to know more about this type of investment.

That's wise thinking ...
When you plan to enter an investment, always think about the 'exit plan' too.
It can be very frustrating if you wait around struggling to sell a property, sometimes even up to a year or more (or sell it more quickly at a lower price), then simply going down to the bank and getting your money + interest. I would take the latter idea all day long ...

Thanks buddy :)
Yeah I plan to buy a property but not the cheapest one otherwise I might struggle finding tenants and resell it then.

Most Vietnamese I know buy those standard rings you see in the gold shops & rely on the fluctuation in the gold price. You can invest with foreign currency in the Agri Bank interest is low & the money gained on interest must remain in Vietnam the capital invested can be sent home.

Be careful foreigner.  Once you transfer money into vn and cash out in "vnd" to get the 8% CD interest. At the end it will be very very very difficult to exchange back to usd and transfer out ( I mean the legal way ).  Do your research before cash out in vnd.

I opened an account with Sacombank for similar reason, higher interest rate plus the expectation of AUD decreasing against the dong. Wasn't planning on putting a lot in, just a little as another way to diversify. A few days after I opened it, I went to deposit but was told I'm not allowed to deposit money into my own bank account because I'm a foreigner. Only way to deposit is by 'verified' depositor, like from employer or something like that.
Kind of weird, I guess some banks have different policies.

The reason is they are afraid of money laundering.  You can transfer but not cash deposit

NPBD :

The reason is they are afraid of money laundering.  You can transfer but not cash deposit

Maybe they should concentrate more on government officials laundering money overseas.

Hello,

For the bank:
- If put money into the bank, you can open saving account, the reference rate is around 6,5-6,6% (VND currency) for fixed over 12 months. 12months later, you come back to the bank, get the money back + interest (no tax applied for saving account).
- If open bank account, the deposit must be foreign currency exchange to VND at the bank when you open account. After that, you can transfer money from oversea to account in Vietnam.
* Please noted that this is one way transfer cause of Vietnam bank law does not allow return transfer at the present. You cannot transfer money to oversea except you work in Vietnam and have envidence for your income.
* You can register for internet banking, and visa/master/debit bank card (5days-2weeks to get the card), it can use for payment online, and others payment in the shop, restaurant, hotel, supermarket, or even payment oversea.

For the real estate,
Vietnam real estate law allow foreigners to buy real estate in Vietnam, own for 50 years with residence purpose.

At the present, it is still not clear in few point for example: what if real estate get income/capital gain, how to transfer the profit to oversea, how to get mortgage loan, how to re-sell,... It will need time to complete the law process. So, if you scare of risky, this time is not your time to buy.

However, if you have money and don't have another investment option, you are living in Vietnam or you know management company can support you in Vietnam, real estate is a safe way also..., then you can buy one.

Because it is needed time to hand-over the house, the rental rate in HCMC is quite attractive now, and high population with young generation, we all need a house in the future. I think you can get income everymonth in cash or in another way.
In the future, when the law is fixed, you can think the exit option for it. Many foreigners bought real estate in HCMC now already. And any investment always go with risky, that's the interesting of investment.

Just for your information!
Trang

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Tran Thi Thu Trang :

Hello,

For the bank:
- If put money into the bank, you can open saving account, the reference rate is around 6,5-6,6% (VND currency) for fixed over 12 months. 12months later, you come back to the bank, get the money back + interest (no tax applied for saving account).
- If open bank account, the deposit must be foreign currency exchange to VND at the bank when you open account. After that, you can transfer money from oversea to account in Vietnam.
* Please noted that this is one way transfer cause of Vietnam bank law does not allow return transfer at the present. You cannot transfer money to oversea except you work in Vietnam and have envidence for your income.
* You can register for internet banking, and visa/master/debit bank card (5days-2weeks to get the card), it can use for payment online, and others payment in the shop, restaurant, hotel, supermarket, or even payment oversea.

For the real estate,
Vietnam real estate law allow foreigners to buy real estate in Vietnam, own for 50 years with residence purpose.

At the present, it is still not clear in few point for example: what if real estate get income/capital gain, how to transfer the profit to oversea, how to get mortgage loan, how to re-sell,... It will need time to complete the law process. So, if you scare of risky, this time is not your time to buy.

However, if you have money and don't have another investment option, you are living in Vietnam or you know management company can support you in Vietnam, real estate is a safe way also..., then you can buy one.

Because it is needed time to hand-over the house, the rental rate in HCMC is quite attractive now, and high population with young generation, we all need a house in the future. I think you can get income everymonth in cash or in another way.
In the future, when the law is fixed, you can think the exit option for it. Many foreigners bought real estate in HCMC now already. And any investment always go with risky, that's the interesting of investment.

Just for your information!
Trang

Very detailed answer. Thanks :)

Yep, I think real estate is a nice and safe option... even if small crisis might arise in 1 or 2 years.

Unless the law has changed, you are permitted to send out of Vietnam what you brought in, as long as you have the documents to show the original deposit. You can't send out more than what you brought in.

tranus :

Yep, I think real estate is a nice and safe option... even if small crisis might arise in 1 or 2 years.

Make sure you have a good lawyer, fake documents are rife in Viet Nam. There have been a few cases in the news of late about people selling houses that weren't theirs.

You are welcome! My professional. You should know all including profit, risky, and process before decide. Thanks!

colinoscapee :

Make sure you have a good lawyer, fake documents are rife in Viet Nam. There have been a few cases in the news of late about people selling houses that weren't theirs.

Yep I work with a lawyer and I will also deal directly with the developer.

Hi,

From previous home/condo ownership experience, there is a risk no matter which country you are in. The market could be up or down at any point in time but it will always go back up if there is demand (like in HCM since it is the most populated city in VN). I do agree with you about looking for high end properties as he return in investment either in rent or resale is higher. Do look for good location as it is a very important factor for a long term investment (just my 2 cents).  We have been living in HCM for a while and the bank interest rates have been going down rapidly form the teens to the single digits so if you want a long term investment, a property is the way to go. As I recall my convo with HSBC, they advised that as long as you transferred the money through legal means and prove it was for property investment, you could transferred them out when you sell so please keep all paperwork and trail.
We are vietnamese expats working in the real estate and property management for expats. If you do need any information or help in looking for a place, please pm me. We could help as we have our vietnamese real estate network set and have help expats before.

Easterbunny :

We are vietnamese expats working in the real estate and property management for expats. If you do need any information or help in looking for a place, please pm me. We could help as we have our vietnamese real estate network set and have help expats before.

Yeah thanks but i've almost already moved on.

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