Trading Activity Explained
It is impossible for us to guarantee you any type of returns without being able to trade the properties. Trading them and utilising our group of companies is where the proﬁts come from to offer the guarantees we are.
We have various ways we are working the current market conditions to yield proﬁts some we have done lots of testing and are just about to launch and others which are tried and tested with proven results.
We are selling properties with Rental Guarantees
We are ofﬂoading large batches of properties to Real Estate Investment Trusts
We are offering other incentives with every property sale
We are also offering other incentives to the tenants that rent our properties
We are offering multiple terms in which our clients can buy our properties such as:
- Property Exchange
- Rent to Buy
- Fractional Ownership
- Rental Guarantee
All of these along with our own Real Estate agencies and Marketing companies give us the advantage and enable us to trade more proﬁtably.
Explained in further detail
The stategy applied when “trading” of any kind is simply this:
- We buy something
- We change something
- We sell something
This is a well-researched, heavily funded, tried and tested formulae, completely safe, completely ethical and realistic investment plan.
Our most frequently used method is:
- We buy a property at a distressed price
- We turn it into a Rental Guarantee Property
- We then sell at a higher price
ETA Rental Guarantee when selling at the Fair Market Price is:
- The cheapest
- Has the lowest entry level
- The most secure
- Has the most variety
- The most ﬂexible
- Has the best investment beneﬁts
This is in an industry tens of millions of dollars a month globally
Please see the following link:
ETA Rental Guarantee
The table below shows the discounts (subject to the bank valuation) that ETA needs when purchasing properties to make the “Rental Guarantee” product viable.
We need to acquire properties at a price that is lower than the “Fair Market Price” by 30% so that we can sell the property at the “Fair Market Price” with a Rental Guarantee and offer a Buy Back Guarantee and be profitable.
The following adjustments can be made from these ﬁgures:
2% more for sea view
4% more if beach front
We also have the beneﬁt of being able to sell a completed freehold Real-Estate asset at a price point that makes us:
- The cheapest product on the market. Selling ﬁnished properties at as much as half the price of the off-plan options being offered by our biggest competitors.
Again, because the cost to acquire these properties was low, we have the ﬂexibility to offer the following options:
- Pay 50% of the bank value and “take your title deed home today” this promotion also comes with a 10% NET per year Guarantee with a 200% “buyback at the end of the term.
Price that means we hit every market
This means we are offering a freehold investment property from 500,000 THB.
Prices the competition cannot compete with
We are going to be selling built condominiums for as little as 800,000 THB enabling you to walk away with a title deed next door to where one of the most significant players in the industry that is achieving sales of 700 million THB per month are selling the same size unit off plan for 4,000,000 THB.
As mentioned, ETA has the database of customers who have invested in this industry through who will now become our competitors to the sum of around USD 800 million or 20,000,000,000 THB.
We are also giving full legal authority to our legal partner Magna Carta to be 100% transparent with our ﬁnancial details to our investors, and we have employed them to do the books on all of our other associate’s businesses in Thailand.
We are going to offer the option to invest in this product with your existing non-performing assets be taken in exchange and a fair market rate being offered.
This enables us to take full advantage of the oversupply in the market and publicly talk the truth about what’s going on with Pattaya Real Estate market.
Due to the fact that we are buying some properties so cheaply, we have decided to utilise the units the best way we can. One of the ways we are doing this is by offering them to local Real Estate agents to incentivise them pushing our products further.
In the last two months pre-launch and while we haven’t had any infrastructure in place or been dealing with any local agents, we have still made sales of nearly 200,000,000 THB.
Not only do we believe that we will sell in large volumes, but we think that we have every chance of getting a large share of what is a multi-billion dollar a year industry.
How we make money
The fund buys properties at a lower price point than they know ETA will purchase them back for on Rental Guarantee.
Subject: Studio in Cliff
Ownership: Foreign name
Size: 38.5 Sqm
Info taken from the Thailand property on 19/05/2010 https:// www.thailand-property.com/condo/3165/the-cliff
Bank value average: 92,000 per Sqm – 3,500,000 THB
Market average: 66,000 THB per Sqm – 2,500,000 THB
Readily available at below 2,000,000 THB
Lowest price advertised: 1,700,000 THB
ETA Rental Guarantee can purchase a property subject to a 39% discount with the bank.
3,500,000 THB – 39% = 2,130,000 THB at 55,000 THB per Sqm
We have been purchasing these for cash at prices as low as 1,600,000 THB over the last two months.
Initial outlay – 1,600,000 THB
Sale to fund – 2,100,000 THB
Net proﬁt – 500,000 THB
ROI – 32%
“The true value of a Real Estate Asset”
The costs to construct NET if you own your cranes and machinery with the salaried workforce:
Construction – 9,000 THB – 12,000THB per Sqm to ﬁnish and furnish – 2-star 14,000 THB – 5 stars 25,000 THB
Net cost to a developer construct on average projects ﬁnish location in the city – 60,000 THB per Sqm.
Including sales and marketing plus the charges of money over construction, a developer would be looking at to break-even of around 70,000 THB per Sqm – this is an average yes done can furnish for 40,000 THB and others will cost 100,000 THB.
Banks value the Real Estate at an average of around 80,000 THB per Sqm
This is correct as they follow the right process needed to evaluate a property:
80% of the true value is in these 4
- Land size
- Sqm meters constructed
These elements should only equate for 20%
- Building type
- Price bracket
- Ownership status
- Guaranteed income
How to Value a Property
“Pattaya in numbers”
Population of Pattaya
Residents approx – 1,000,000
Tourists at any time – 500,000 – 1,000,000
Total beds in Pattaya combining all property types – approx 3,000,000
Residential Real-Estate sales in Pattaya – approx. 1,500,000 per month
- Chinese 60%
- Thai 20%
- Rest of World 20%
What are they buying?
- 30% 0-2,000,000 THB
- 35% 2-3,000,000 THB
- 20% 3-5,000,000 THB
- 10% 5-10,000,000 THB
- 3.5% 10-15,000,000 THB
- 1.5% 15,000,000 THB+
Why are they buying?
- 75% for investment or dual-purpose invest/use
- 15% to live
- 10% holiday home
How many are sold with Rental Guarantee
- 55% – includes sitting tenants
Realistic Achievable Rental Rates
- 2-4% NET at 100% occupancy
- -2% Net loss when calculating subject to average occupy rate over five years, not accounting for any decrease or increase in either capital gain of rental income.
- (link to full financial breakdown over five years)
Pattaya Real Estate has an occupancy rate of under 30% but yet due to the factors listed below continues to launch new projects. The price they are selling at is inﬂated as the greed only grows hungrier with each project selling out.
Click this article for further break down:
THE WORST IS YET TO COME | PATTAYA PROPERTY REPORT
Here is another article from Bangkok Post conﬁrming the same:
Thailand’s Pattaya city faces an oversupply of condominium units
“Market Behavior Brief”
As in every market when an individual price rises for a reason, then another has to drop for precisely the same reason.
Explaining further using betting terminology, imagine a 2 horse race or a football match (cup ﬁnal to win so no option of a draw) that are both even money( bet $6- if you are right, you get $12 back and if your wrong you get nothing back – so you either proﬁt $6 or lose $6, that’s why it’s called “even money” $6 for $6) to win – if one horse/team started being “backed” (supported in the market) because people thought it/they would win the prize would “shorten up” to 4/6 as a result of that the horse/team that isn’t being “backed” would then “drift” to 6/4.
This would mean if you placed $6 on the winning horse at 4/6, you would receive $10 back meaning a profit of $4, not the $6 as before but as a direct result of the winning, a horse’s price becoming less the losing horse’s rate became more.
When a standard condominium sells for 50% more than it should in volume and an already saturated market, then it can only mean one thing:
Another condominium will be available for 50% less.
Pattaya fuelled by foreign economies is a Tourism, Retirement and Expatriate hot spot attracting people from all over the world. Being one of the leading holiday destinations for Europeans over the last two decades. In 2008, when for the first time in history, the masses considered alternative investment options and overseas investment is becoming fashionable after losing trust in the “system”; Thailand attracted considerable foreign investment into Real Estate, which quickly gained pace. It was not long before many identiﬁed room in the market for “managed property investments” as the investors were not here full time.
2009 was the birth of the “Rental Guarantee Concept
- Different markets
- Language barriers
- The Financial crash
- The Rental Guarantee
- The massive oversupply
- The continued construction
- The cost to construct
- Thai foreign ownership laws
- Thai rental laws
All the above listed factors mean:
The Property Margin per Sqm/Rai in the Naklua, Pattaya, Jomtien, East Pattaya Areas
- Off-plan projects – 80,000 – 300,000 THB
- Off-plan RG projects – 100,000 – 250,000 THB
- Completed Real Estate – 10,000 – 300,000 THB
- Land per rai – 3,000,000 – 200,000,000 THB
The most undervalued property I found was:
Location: Jontien Beach Soi Welcome, 50 meters from beach road 65 meters from the sand.
Property: 5 story guesthouse
16 rooms – total 1,060 Sqm
Ground ﬂoor commercial area – 80sqm
Finish: Furnished to 2-3 Star
Total Sqm – 1,140 Sqm
Land – 230 Sqm
Purchase price – 10,500,000THB
Price per Sqm – 10,800 THB per Sqm
This is less than it costs to construct and that’s not factoring the land. The most expensive on the market.
Built – 300,000 THB per sqm approx Off-plan and sold – 320,000 THB per sqm
The most expensive Rental Guarantee – 250,000 THB per sqm paid in full and still pre construction currently 2 years behind schedule.
Average prices per Sqm:
- Off-plan purchases – 100,000 THB
- Rental Guarantee properties – 130,000 THB
- Resales of completed – 65,000 THB
Biggest Examples of Craziness
Location: Pattaya beach front next door to central Festival
Land value: 200,000,000 per rai
Average sales price per sqm – 85-90k
Easily bought for – 80,000 THB per sqm
This is a built condominium in a prime location which can be purchased cheaper than:
Project: Riviera Jomtien
Status: Under Construction
Location: 2nd Road in Jomtien
Land value: 12,000,000 THB per ra
Average sales price per sqm: 100-120,000 THB
It is 20% more expensive to purchase an unconstructed property in an area where the land is only 6% of the cost of a completed feature is available for.
Moreover, not to mention the vast oversupply of condominiums along Jomtien 2nd road compared to the lack of available residential properties in Pattaya beachfront.
Example number 2:
Project: Nordic terrace
Location: Pratumnak Hill Soi 4
Land value: 50,000,000 THB per rai
Average sales price per sqm: 40-60k THB
Easily bought for: as low as 30,000THB sqm
This is a very well constructed and spacious condominium that is sold as much as 1/8th the price of;
Project: Nordic Terrace
Status: Construction 2 years behind schedule (not started)
Location: Pratumnak Hill Soi 2
Land value: 30,000,000 THB per rai
Average sales price per sqm: 180,000 THB per sqm
Sold for as much as: 240,000 THB per sqm
The are 200 meters apart, Nordic Terrace being closer to the sea and Nordic Palace is only accessible from Soi 2
It is not currently built and sold at eight (8) times the price.
The power of marketing has reached a ridiculous level. We have an oversupply, and new builds are overpriced due to sleek marketing meaning built is becoming under-priced.
Another route we utilize when we are managing the cash ﬂow is the legal lending rate in Thailand – Kai Faak
We have calculated the price at which we need to acquire a property to sell it with a “Rental Guarantee” that is feasible and minimal risk. As long as we can purchase at a rate equivalent to the % shown in the graph below (discounted from the final sales price – bank valuation price), we know that we have a variety of options available to us that all make it wholly viable and also profitable.
Please see below the various ways we can go
Bank value of the Cliff: 92,000 THB per sqm average
Bank value or unit: 3,542,000 THB
As above shows units between 3mb – 5mb require a 39% discount so 3,542,000 x 39% = 1,381,380 THB
Our maximum purchase price: 2,160,602 THB
Sale price 3,500,000THB
ETA agent comm – 3%
Sub Agent comm if not ETA – 7% 3,150,000 THB
Original purchase price – 2,160,602 THB
Net profit – 989,398 THB
Rental Guarantee to the buyer – 245,000 THB (7% of 3,500,000 THB)
Property Management/ Maintenance – 10,000 THB
Wear and Tear – 25,000 THB
Total Annual Liability – 280,000 THB
Realistically Achievable Income
Market rate 15,000 THB per month
Minus 1 month for agent comm
Minus 3 months unoccupied
Total Achievable Income – 135,000 THB
Annual Deficit – 145,000 THB
Total Deficit over five years – 725,000 THB
Kai – Faak (sale with right or redemption)
Thailand maximum interest rate – 15%
Kai Faak agents commission max – 5%
We have our own Kai Faak agencies that enable us to lend securely and legally and receive 20% interest per annum.
Compound interest is calculated by multiplying the initial principal amount by one plus the annual interest rate raised to the number of compound periods minus one. The total initial amount of the loan is then subtracted from the resulting value.
Here is an example of what the “initial profit” would turn into after five years compounded at 20% per annum.
This was done using the compound calculator on money chimp – http://www.moneychimp.com/calculator/compound_interest_calculator.htm
Initial profit after five years in Kai Faak is more than enough to cover the annual deficit and still return a healthy profit.
2,461,916 THB – 725,000 THB total deficit = 1,790,000 THB total profit
2,461,916 THB – 725,000 THB total deficit = 1,790,000 THB total profit
Obligation to buy back a condo that has had a reliable tenant for five years for 3,500,000 THB in which I have made a 1,790,000 THB profit. Plus, other unencumbered properties that had been securing these guarantees. So, the option to get a mortgage is always there.
Simply use the initial profit to make up the deficit on a monthly basis:
7% of 3,500,00 THB / 12 = 20,416 THB per month
135,000 THB / 12 = 11,250 THB per month
20,416 THB – 11,250 THB = 9,166 THB
Initial profit per month
989,389 THB / 60 = 16,489 THB per month
Initial profit – 16,489 THB per month
Monthly deficit – 9,166 THB per month
As you can see our initial profit margin is sufficient enough to enable us to meet our commitments comfortably.
“Please note we have used very conservative figures here to show the math and at the highest price we will buy at. On average, we have managed to acquire properties at these prices, making our initial profits considerably higher.”
Utilising our network of companies, we are doing multiple things that give us more options when it comes to making sure both our clients and ourselves are secure.
1) Constructing our own properties
2) Renovating run-down properties
3) Love Pattaya All Inclusive Packages
4) Utilising the units to house our staff, for maximising the occupancy rates.
Then, we also have some new concepts we are soon going to launch the most notable being “Love Pattaya All-inclusive” packages which we hope to have ready before the end of the year.
We are going to start offering all-inclusive packages to both tourists and full-time residents.
We will be doing standard packages also and be giving away local produce. The deluxe packages will include imported foods and drinks.
We have bought a business to run the concept from. For a few months, we will be calculating the costs to run.