How do you invest in Vietnam real estate?
Vagabondone wrote:Curious the one you will rent for $1,400, how much did you have to pay for it?
Almost highest price per sqmin hcmc: 70 mil / sqm
But after checking the rent is between 1700 to 2000 $...
Vagabondone wrote:That really does not say how much you had to pay for the unit though. I take it you do not want to say? Which is fine.
tss tss
7,800,000,000 before discount
DELAFON wrote:7,800,000,000 before discount
Of course M. Delafon has not actually told us how much he paid, because he did not specify the discount. At the face value, $1400/month represents a 4.38% annual ROI. At $1700 it is 5.32% and $2000 represents 6.26%. These seem to be reasonable returns if the rents are truly obtainable . Perhaps we all need to come back in a year and see what this apartment is really renting for, if at all.
I know that our apartment sat empty for over a full year (we were the first and only rental tenants) and was sold to an owner-occupant for less than the original purchase price two years later. Fortunately for us, this timed exactly with our own planned departure. Of course Delafon may see appreciation rather than depreciation upon resale, but any vacant months would need to be calculated for opportunity cost of interest and subtracted in estimating any eventual capital gain. NOTE: This would be for analysis, not tax declaration.
THIGV wrote:DELAFON wrote:7,800,000,000 before discount
Of course M. Delafon has not actually told us how much he paid, because he did not specify the discount. At the face value, $1400/month represents a 4.38% annual ROI. At $1700 it is 5.32% and $2000 represents 6.26%. These seem to be reasonable returns if the rents are truly obtainable . Perhaps we all need to come back in a year and see what this apartment is really renting for, if at all.
I know that our apartment sat empty for over a full year (we were the first and only rental tenants) and was sold to an owner-occupant for less than the original purchase price two years later. Fortunately for us, this timed exactly with our own planned departure. Of course Delafon may see appreciation rather than depreciation upon resale, but any vacant months would need to be calculated for opportunity cost of interest and subtracted in estimating any eventual capital gain. NOTE: This would be for analysis, not tax declaration.
ah ah
7,8 bil before disc
8,6% disc
Tenant found in 2 weeks....
Sure, come back in one year...
Like this there is more for us now...
Will be then to late to do the same for you...
Good luck anyway!
Income. But by the time you calculate cap rate deductions the return is not much better, if at all, from a passbook saving account. And without the liquidity.
But Deflons situation is very revealing and educational. This tracks with everything else I have heard.
The. You have the exit strategy that real estate investors should consider before then ink the deal. And in this case it does not look good. Yes, I understand things that go up in value will cintinue to go up in value. But the truth of the matter here in VN most banks are insolvent due to non-performing RE loans. The gov’t has set up a fund to absorb these non-performing loans and take the property back through bankruptcy. When these asssets become RIO in due to bankruptcy the uptrend in the market will stop and the bubble will have burst. For now the RE investor can buy BK property at fire sale prices. And it will be the condo next to Feflons condo that he bought for 7b plus and they RE investor can now but for 1b Dong. The day is just around the corner I am afraid.
But thanks Deflon for sharing.
In the long term (10-20 years), similar returns can also be generated on the stock markets (when certain populist politicians stop inciting wars and economic wars).
Personally, I believe in value enhancement of land in and around HCMC, but I am sceptical about value enhancement of condominiums in tower buildings.
But let's let Delafon have his dream.
The banks in Vietnam aren't doing so badly.
A few years ago Vietnam founded the bad bank VAMC to support or save the banks.
Many banks have already bought back their NPLs.
http://english.vietnamnet.vn/fms/busine … -vamc.html
http://www.vir.com.vn/banks-accelerate- … 48321.html
So you se if you take Deflons investment, and assuming from what he has said he is not in some form of business such as a REIT or something his return based on cap rate is abysmal. Then if you compare his returns as a business entity and use ROI as a matrix he is really really abysmal. So he must bet on the cum that the property will appreciate tremendously to get a good return. And who knows. But in real estate and even in the stock market for that matter. When we hear everyone screaming that we are all going to get rich because the uptrend is just gettin started, that is the time to take your profits and wait for the candy in the candy store to go on sale. At the moment the time is to hit the exits and get into cash waiting for the sales to begin. This is true in all investments at the moment. In the stock market we watch for margin rates to rise. When they do we get out of town. In real estate you will see people bidding up the asking price and believing every sales pitch from developers. Time to get out. But happy investing to all. Hogs make money pigs get slaughtered.
Vagabondone wrote:Hogs make money pigs get slaughtered.
As a newbie, I started buying shares shortly before the dotcom crisis in 2000.
After 3 months with 30% profit I got greedy and invested further until about 80k$.
Then the bubble burst and I had lost the most of my money because I made all the rookie mistakes.
If I hadn't sold anything, I would be rich. After the crash I had sold all shares including about 200 Amazon shares for about 15 US$ a share (what is the Amazon share today? 
).
Since then I have become more pragmatic about investments. 
Vagabondone wrote:Not sure what you are pointing out Andy.
You wrote in a previous post:
But the truth of the matter here in VN most banks are insolvent due to non-performing RE loans.
You can also find newer information about the fact that the strongest banks here in Vietnam are on a good way.
But this is not the subject of this thread. But banks and the lack of many things needed to make wise RE have made a shaky market. At least in my opinion and from what I read. I just can not see it as a rosy picture myself. But if I were VNese And could not invest in my own country then I would not have much choice. Much of this discussion depends on what other opportunities are available to you. In investing we always move from investment vehicle to investment vehicle to get the best return. Unless you just invest in a permanent portfolio which over its history has returned 9.75%. Which is darn good long term.
sad but true in alot of places. market never accounts for that.
Thaiger wrote:some people just have so much money they dont care about the rent returns etc. it's peanuts compared to their investment trust returns etc.
sad but true in alot of places. market never accounts for that.
True. If the rental market doesn't work out for him, Delafon can always fill the place up with some of the homeless orphans that he is supporting. 
For sure the better investment
Vagabondone wrote:Sorry to make you uncomfortable. No need to reply with an answer if you do not wish to. Abstract figures are not really very helpful to the conversation. But I do understand it is a private matter. Thanks
You does not make me uncomfortable.
It takes more than that...
This is a very concrete figre for me..
Private?
Vagabondone wrote:Yes, your calculations at correct from a point of view of ROI solely. But that is not how investment real estate is calculated. And if it were this to would not be a good return. THIGV alluded a bit to a part of the calculation for cap rate ( this is how we measure return on real estate investments) .
My calculations were sort of "back of the envelope." I would note a few things however. My assumption is that he paid cash, is fully invested and not leveraged. As the purchase is new the purchase price should be the same as current value. Also property taxes and maintenance fees are very low in Vietnam so don't factor much into the calculation of cap rate. As such, ROI and the cap rate should not be significantly different.
Understand. heck we could call the return any handle we wanted to put on it to come up with a raw gross return. Call in ROI, Cap rate, yield etc. Taken from just that perspective, the return that Deflon provides with his changing number is atrocious. Mind you we are speaking gross.
If we were trying to come up with a true, lets say, cap rate, which is the NET return, not gross we would figure like so: We would take the gross income ( this is just as it suggest, but generally we calculate a 5-10% vacancy rate). But as we have heard from other here that sometimes a place will stay vacant for month and months. And the property like Deflon mention is not in the sweet spot of the market so he will struggle more to keep them filled..
Then we take any property management fees and deduct those.
Then we deduct maintenance cost. Yes, here most maintenance while occupied is provided by the tenant. But once vacated you are going to have make ready expenses
etc.
Then we must deduct taxes. Have have no clue what they are here.
The we deduct insurance cost. Again I have no clue how much it would cost and how much ones liability would be here in Vietnam. But imagine you invested a 1/3 of a million in the place in D8 that caught on fire and it was your apartment that was destroyed. Worse yet that it was your rental that they died in.
Do the above and you come up with the cap rate. So using the best case scenario and the returns you figure for gross profit of 6.26% and the bank is paying 7%. You have tied up a 1/3 of a million dollars in a non-liquid asset with a lot of risk. When you could simply put it in the bank and sleep. And you his gross income is going to be no where near what he dreams of.
That is just taken deflons case. I do not know what the situation is in France. When Ilived in Europe it was difficult to leverage a property. But in my country we can buy with little down. So our cash-on-cash return is magnified greatly. For example: you buy a property worth $100,000.00 and you put 5% down .You have $5,000 invested. You sell it a year later for $110,000. Your cash-on-cash return is is 100%. Whereas if you pay all cash the return is 10%.
My personal view is that all of this depends on where you are from and where you are able to invest. Obviously for a Vietnamese they have little opportunity to invest elsewhere. For me being an American a better place to invest is America.
But this was not the question of the thread. The bottom line I suppose is if you are happy and think you have made a great investment that is all that matter. I wish I could count the number of friends here thing they have stumbled on easy street when they can make these huge returns on a bank time deposit here. Not long ago it was much higher than it is now. But you will find a boat load of people that think they have found the mother load to fast money.I have news for them. If they think these trades here are great go to Argentina where they can currently get 20.47%. My gosh I will be rich in no time at all. But they fail to take into account that all but about 3.00% of that currently is
inflation or currency risk. No matter where you go you are not boing to be able to beat what the yield is in the USA. But I ramble on.....
I especially liked the paradox, "he should have put the money in the bank", then, "the real estate bubble is going to bust so the banks will fail".
So much statistical info is not available from this government. I think this jabber will just prevent others with investment experience from contributing. Thanks Delaphon, you have thicker skin than me for sticking around.
gobot wrote:What a bizarre discussion. I keep reading hoping to find some gems of information. Yet the only concrete offering so far is from Delaphon who has kindly provided his recent investment figures. This unleashed all manner of criticism, all negative, from the those who don't appear to be similarly invested. Delaphon shoulda done this, done that, ... (he's right here, you don't need to refer to him in the third person). Shouldn't we be asking the real live investor, how did you choose that development? is your strategy short or long term? where did you find a tenant?
I especially liked the paradox, "he should have put the money in the bank", then, "the real estate bubble is going to bust so the banks will fail".
So much statistical info is not available from this government. I think this jabber will just prevent others with investment experience from contributing. Thanks Delaphon, you have thicker skin than me for sticking around.
To be honest, I cant see him making a profit on that apartment. In 5 years the place will look like most of the buildings here. There is a glut of apartments in Saigon, not sure who will be buying them. The only way I see of making a profit is buying off the plan and selling before completion.
I prefer land, less profit, but you are not dealing with shonky builders and dodgy agents. Just bought our 4th block of land, and so far profit is around 30-40% in 4 months on each block.
gobot wrote:What a bizarre discussion. I keep reading hoping to find some gems of information. Yet the only concrete offering so far is from Delaphon who has kindly provided his recent investment figures. This unleashed all manner of criticism, all negative, from the those who don't appear to be similarly invested. Delaphon shoulda done this, done that, ... (he's right here, you don't need to refer to him in the third person). Shouldn't we be asking the real live investor, how did you choose that development? is your strategy short or long term? where did you find a tenant?
I especially liked the paradox, "he should have put the money in the bank", then, "the real estate bubble is going to bust so the banks will fail".
So much statistical info is not available from this government. I think this jabber will just prevent others with investment experience from contributing. Thanks Delaphon, you have thicker skin than me for sticking around.
Amen.
As I said above, we should all put this back on the shelf for a while and come back next May/Jun and see if he is willing to tell us if he has kept his places fully rented and at what prices. If he has sold any, hopefully he will be willing to disclose both the selling as well as the purchase price, net and not confused by discounting. Mark this space.
DELAFON wrote:Like this there is more for us now...
Will be then to late to do the same for you...
Good luck anyway!
I really doubt this will be the last time appreciation is available in Vietnam. A year from now, prices may be 100% higher or 50% lower, or even the same. Only time will tell. It may be now is the time if you are a speculator but it if you are buying for shelter, It is never too late.
Indeed Delaphon was the first person I think to put a number to the investment question here. Although I am not certain he knows his numbers yet it certainly satisfied some of the questions I had.
I think I have said this before about the subject as t pertains to VN. It depends on what country your from and what investment opportunities you have. For a local this may be the best. For those that live in a country that leverage can not be used this to may present an opportunity here. But in regard da to a comparison of investing in my country there is nothing here in regards to investment income on real estate purchased here. As for speculation there may be some legs left on this cycle. And real estate everywhere I have been runs in boom and bust cycles. Put another way a buyers market or a sellers market. I believe here in Vietnam we are at the peak of the sellers market and it will soon be a buyers market.
And if you grade these comments as bazzar Gobot so be it. But in the scope of the question asked and the wa in which investing in anything is always considered there is a lot more to the conversation than just raw figures, or any figures.
I just went through this forum to get some information !!! , as I can see many has experience in vietnam and has a good knowledge re I assume..
The information I am trying to gather is as below if anyone can point me out on the correct direction it would be nice with the past experience they had ,and how they have dealt with it ,it can help many people
Last year I got involved in 2 apartment , I have the purchase agreement/house key , utility bill under my name
But neither one I haven't received any pink book ,
1 does anyone has got a pink book under your name
2 normally how long does it take for you to get it
3 have any developers said they will do it for after 6-8 months ,once all the apt are filled ,is it legitimate...?
4 ,based on what I heard on this thread was a little curious about this scams which are circulating ,can anyone cheat , when sale/purchase cont under a foriegn owner ,interns of the red book
5,what are the exact documents needed to full fill this process at that time hopefully when it comes (let's think positive for a moment)
6, normally after which period of time does the construction company start to process the pink book application
7 ,how can i sell the apartments with a pending pink book ,if needed ,what kind for obstacles I need to get myself into
8 what is the income tax that the seller need to pay ,which the buy is not willing to pay ,how is the calculation on that ,
9. Also in terms of future does owning an apartment gives you the eligibility for residency visa in vietnam,like some other countries
10 ,what was the list of documents that was used when the application process was done for the red book,and the duration ,
Thanks in advance
Marlan123 wrote:Hi guys
I just went through this forum to get some information !!! , as I can see many has experience in vietnam and has a good knowledge re I assume..
The information I am trying to gather is as below if anyone can point me out on the correct direction it would be nice with the past experience they had ,and how they have dealt with it ,it can help many people
Last year I got involved in 2 apartment , I have the purchase agreement/house key , utility bill under my name
But neither one I haven't received any pink book ,
1 does anyone has got a pink book under your name
2 normally how long does it take for you to get it
3 have any developers said they will do it for after 6-8 months ,once all the apt are filled ,is it legitimate...?
4 ,based on what I heard on this thread was a little curious about this scams which are circulating ,can anyone cheat , when sale/purchase cont under a foriegn owner ,interns of the red book
5,what are the exact documents needed to full fill this process at that time hopefully when it comes (let's think positive for a moment)
6, normally after which period of time does the construction company start to process the pink book application
7 ,how can i sell the apartments with a pending pink book ,if needed ,what kind for obstacles I need to get myself into
8 what is the income tax that the seller need to pay ,which the buy is not willing to pay ,how is the calculation on that ,
9. Also in terms of future does owning an apartment gives you the eligibility for residency visa in vietnam,like some other countries
10 ,what was the list of documents that was used when the application process was done for the red book,and the duration ,
Thanks in advance
If you buy an apartment or house in a new building project, it can take up to a year before you receive the Pink Book.
With a reliable seller this is regulated in the purchase contract and you must pay the last 5% of the purchase price only after you have received the Pink Book.
A purchase contract from a reliable seller also regulates maintenance payments and service payments and comprises about 10 -20 pages.
How the whole process works is described here.
https://tranio.com/vietnam/buying/
http://www.keppelland.com.vn/pdf/Guide_ … n_Soft.pdf
Good luck to get your pink books.
Is it land in the outskirts or inner city or along the propose railway lines?
bizdeals wrote:Where is the best place to buy real estate at the moment in hcmc for possible greatest appreciation in 3 years time?
Is it land in the outskirts or inner city or along the propose railway lines?
The area near the new train line has already increased greatly. I would look at outlying areas with good access to the city, eg Binh Chanh, Long An, Dong Nai.
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