The writer of a new book, “Shortcut to Real Estate Millionaire”, who prefers to be known simply as “Itchy”, found his way to big bucks by buying condos with small deposits and long bank loans, then renting them out so the tenants pay the mortgage and expenses and the asset values steadily increase alongside. His new book is a Thai-language step-by-step guide so you can do it too.

He claims that portfolios worth over 300 million baht have been amassed so far by himself and others implementing his scheme – not bad for someone who only graduated in 2008.

“The ideal is to generate passive income by using financial acumen while spending the minimum time,” he says. “This is as opposed to active income which is where we trade our time and expertise for pay.”

Each chapter of the book addresses a particular topic – budgeting, targeting, negotiating, financing, closing, renting – and concludes with actionable steps anyone can take to move closer to the dream while avoiding wrong turns and potholes.

“I found out that even in Thailand some condominiums can yield more than 8% and you can borrow at 5%-6%. When you factor in principle repayment, you are looking at break-even while the property becomes yours.”

What’s more, with a good job and youth on his side, he found he could borrow 80%, 90%, even 100%.

“Some banks won’t lend buy-to-let but others will,” he said.

“Even if you are limited as to how much a bank will lend you by your salary, the model holds good whether you can borrow 1 million or 10 million.”

“If you can’t get 100%, you can save up 10%-20% from your salary, if you don’t aim too high.”

Itchy didn’t. His average unit price is 3 million baht and his mortgage terms are generally 30 years.

“I push the term out as far as possible to get the best cover from the rent.”

The downside is that you’re not immediately generating cash-in-hand. Typically, Itchy’s monthly instalments are about 2% of the total cost. It’s easily covered by rent but doesn’t leave much over.

But you can start taking profits fairly early on.

“After three years, you can refinance with another bank or renegotiate with the same bank for a lower rate to bring the repayments down so you can generate a small cash profit monthly.”

What to buy? Second-hand is best…

“The rental risks in established buildings that have proven to perform well are much lower than  new buildings with no track record. What’s more, the higher purchase price per square metre of a new unit relative to the rent you can get leaves your yield at around 5% whereas a well-chosen second-hand unit will give you 8% or even higher.”

HipFlat.com property search portal helpfully posts average selling prices and 3-month rental yields for over 23,000 condos in Bangkok and Pattaya.

“Once you have a property in your sights, arm yourself with historical occupancy data for the building from talking to its principal agent or having a look yourself. Then go to the owner and negotiate the price down very hard.”

To find tenants, use the juristic person representatives in the building and/or professional agents who target your market.

“Don’t be afraid to borrow,” he counsels. “You soon see that it’s not that hard to connect the dots. Then you start to feel confident and can grow the model.” Bigtime.

More information at www.businessitch.com including a downloadable worksheet and other support materials.